The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank yesterday made good on its pledge to introduce electronic payments regulation by mid-year 2017, unveiling a short one-month consultation on the proposed supervisory framework.

The regulator, in a statement, acknowledged that the feedback deadline was “abbreviated” to allow it to vet and license existing providers of electronic payments solutions.

It confirmed that the Payment Instruments (Oversight) Regulations 2017, released yesterday, were the first step towards licensing non-bank providers via a formal supervisory framework, bringing them under the Central Bank’s oversight.

“The Central Bank is taking an abbreviated approach of one month for this consultation process in order to ensure that private interests, which already exist in providing innovative payments solutions, can be vetted for licensing and supervision within a transparent framework,” the Central Bank said.

“Following the consultation process and any revisions to the proposed framework, the Regulations will be promulgated. A further review of the Regulations will occur within one year’s time, to take constructive account of any initial experiences.”

The regulations, if adopted as is following a consultation process that will end on June 9, will bring all electronic retail payments and electronic money products, such as stored wallets and cards, under the regulator’s purview.

The consultation launch meets the pledge by John Rolle, the Central Bank’s governor, to implement regulations that will enable it to license non-bank electronic payments solutions providers by mid-2017.

The move is part of the Central Bank’s bid to cause “a significant shift” from Bahamians’ reliance on cash, with electronic banking solutions, such as the Internet and mobile apps, also seen as filling the void left by the loss of commercial bank branches on Family Islands.

Mr Rolle told Tribune Business in March: “The Central Bank’s emphasis is therefore now on facilitating expansion of e-payments services, which may also be provided through non-bank providers.

“We intend, before the end of the second quarter of 2017, to put preliminary regulations in place so that we can begin licensing such solutions providers. Considerable interest is being already being expressed by local firms to enter such markets.”

Newly-legalised web shops are among the leading contenders to obtain such licenses, especially since they already have a physical presence throughout the Bahamas, especially in the Family Islands.

This, combined with the sophisticated gaming technology they employ, makes them a ‘natural fit’ to provide electronic payments solutions through affiliates, especially since they are already effectively in the money transmission business.

Other contenders for the licenses referred to by Mr Rolle are more conventional payments solutions providers, such as Cash N’ Go and Omni Financial Services, provider of the Mango card.

Outlining the criteria it will use to award licenses, the Central Bank said yesterday: “It is the Central Bank’s view that safety and soundness measures, to protect the public and to deter individuals and companies with questionable solvency or business practices from entering the money transmission market, are critical components of the proposed regulatory regime.

“In pursuit of these objectives, the Central Bank will take into consideration, among other factors, the size of these businesses, the risks that may be associated with their operations, the potential impact on the profitability of the entity, and balance these with the need to protect consumers and the best interests of the financial system in the Bahamas in the process of supervising these institutions.”

The regulator added: “Electronic retail payment instruments and services, in particular, require specific guidelines in order to ensure the trust of the population in cash-less instruments, financial inclusion and a more efficient provision of services by non-deposit taking institutions.

“Given that retail payment and electronic money services may also be vulnerable to misuse for money laundering and terrorist financing, a crucial objective of the Central Bank is to ensure that providers and their agents engage the proper internal systems, policies and controls to guard against perpetrators of money laundering and terrorist financing.”

Emphasising that the integrity of the Bahamian payments was vital to the efficient conduct of commerce, the Central Bank added: “Payment systems are an essential component of the financial infrastructure of a country.

“A safe and efficient infrastructure is critical to the effective and smooth functioning of the financial system. It also helps maintain and promote financial stability.”