Tanzania becomes the first country in East Africa to require a curtain
wall between money transfer and mobile phone services. There are six
mobile phone operators including Bharti Airtel whose mobile money
platform is Airtel Money, Tigo (Tigo Pesa), Vodacom (M-Pesa), Zantel
(Z-Pesa), latest entrant Halotel (V Money), and Smart Tanzania, which
has not ventured into the mobile money business yet. PHOTO | FILE
By JOSEPH MWAMUNYANGE
In Summary
- The unbundling of mobile money from telephone companies is expected to come into effect from next year, after telcos filed applications to form new subsidiaries to comply with a July 1 ultimatum issued by the Bank of Tanzania.
- The laws require a payment system provider, that is not a bank or a financial institution, to establish a separate legal entity to manage electronic payment accounts. The subsidiary is then required to set up a trust.
- Tanzania becomes the first country globally to achieve wallet-to-wallet interoperability, which is the transfer of money between all mobile operators.
Tanzania plans to issue separate licences to mobile phone
companies running money transfer services in a move to secure customers’
interests.
The unbundling of mobile money from telephone companies is
expected to come into effect from next year, after telcos filed
applications to form new subsidiaries to comply with a July 1 ultimatum
issued by the Bank of Tanzania.
Tanzania becomes the first country in East Africa to require a curtain wall between money transfer and mobile phone services.
The matter has proven controversial in Kenya following proposals
for M-Pesa, which competitors believe helps Safaricom retain
subscribers, to be run as an independent company that offers mobile
money services to all telcos.
“All the companies that were requested to create a trustee to
manage their mobile money business have done so. The trustee will hold
customers’ money,” said Bernard Dadi, manager of National Payment
Systems at Bank of Tanzania.
The directive followed the coming into force of the National
Payment Systems Act, 2015 and the Electronic Transactions Act, 2015 last
year.
The laws require a payment system provider, that is not a bank
or a financial institution, to establish a separate legal entity to
manage electronic payment accounts. The subsidiary is then required to
set up a trust.
First country globally
Tanzania becomes the first country globally to achieve
wallet-to-wallet interoperability, which is the transfer of money
between all mobile operators.
There are six mobile phone operators including the latest
entrant Halotel, whose mobile money platform is called V Money. The
others are Bharti Airtel (Airtel Money), Tigo (Tigo Pesa), Vodacom
(M-Pesa), Zantel (Z-Pesa) and Smart Tanzania, which has not ventured
into the mobile money business yet.
Bank of Tanzania Governor Benno Ndulu said five mobile money
service providers in the country have over 63 million subscribers, a
third of whom are active — meaning they made a transaction at least once
a month.
“Besides the current mobile phone operators, there are others
that have applied for mobile money transfer licences including banks and
other financial institutions. They all have to meet the stringent
conditions set out in the Act,” said Mr Dadi.
The central bank in collaboration with the bankers appointed by
the applicants and the Tanzania Communications Regulatory Authority is
now evaluating the applications on the basis of their financial
soundness.
The appointed bankers will act as the trustees.
“The applicants have to provide details that are aimed at
safeguarding customers’ money. We want to finish the exercise by the end
of this year,” said Mr Dadi.
The central bank has already issued a licence to Halotel.
The central bank has already issued a licence to Halotel.
“In the case of Halotel it has been easy for us to evaluate
their submissions because they are quite new in the market and did not
have as many issues as those firms that have been in existence for much
longer,” said Mr Dadi.
The verification process also requires the Tanzania Revenue Authority to confirm an applicant’s tax compliance status.
The case of Kenya
Kenya has introduced regulations to deal with dominant players
in the telecommunication sector whose enforcement could see giant mobile
operator Safaricom spin off its mobile money business trading under the
brand name M-Pesa.
The M-Pesa platform has over 16 million subscribers with rivals
Airtel having about 4.2 million, Orange 196,335 and Equity Bank’s
Equitel with 1.52 million subscribers during the period between January
and March this year.
However, the proposed regulations dubbed Fair Competition and Equality of Treatment 2015 Regulations, which are in the Communications Act, are yet to be debated in parliament.
Under the proposed regulations, Safaricom could be required to
separate its mobile money unit from its mobile phone services and
infrastructure businesses, which could weaken its position in the
market.
However, the Communications Authority of Kenya said such
regulations must be informed by findings and also if current competition
laws fail to deal with a perceived market failure
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