Policy proposal for regulating E-money in Seychelles |03 March 2022
The press conference (Photo: Louis Toussaint)
The Central Bank of Seychelles (CBS) has given an update on the policy proposal for regulating of E-money in Seychelles.
The update was given by the Governor of CBS, Caroline Abel; the Financial Surveillance Analyst, Cyril Benoiton; the Financial Inclusion Analyst, Brigitte Lucas and the director for Financial Inclusion and Market Conduct Division, Liz Julienne.
Mr Benoiton gave a general presentation on the new regulation. “The introduction to the E-money regulation serves to open up the E-money ecosystem whereby potential investors have a proper guideline to follow when they want to be licensed for them to offer E-money related services within the context of Seychelles while abiding by international guidelines. We do currently have existing E-money requirements provided for in Section 35 of the National Payment System Act (NPSA) and Regulation 20 of the National Payment (Licensing and Authorisation) Regulations. However, existing legal provisions are not granular enough to ensure that Payment Service Providers (PSPs) are guided on the requirements for providing E-money. The introduction of the E-money regulations will provide more information to potential investors in terms of licensing requirements.”
Mr Benoiton noted that the E-money regulation has been introduced in line with the modernisation of the National Payment System (NPS) and Fintech Strategy. It is also in line with the Government Digital Agenda.
The population need to understand that products such as debit cards, credit cards and internet banking are not considered as E-money in the context of the E-money Regulations as they are linked to a customer’s bank account. All cryptocurrencies are also not considered as E-money for the E-money Regulations as they are a versatile form of e-money which is not held at par value. Schemes such as reward programmes are excluded as they are not equivalent with fiat money.
What is E-money regulation?
Mr Benoiton explained that this regulation is mainly to strengthen the legislative framework which governs E-money in Seychelles and the Regulations is to be used to license, regulate and supervise electronic money institutions: Licensing, Prudential, Reporting, Notification, Fees, Offences and Penalties, Compliance,Technical, Data Protection and Privacy, Safeguards, etc.
The expected issuance of the E-money Regulations is scheduled to be mid-year 2022.
Ms Brigitte Lucas gave an update on the digitalization journey.
“Following the Cabinet approval of the Digital Economy Agenda (Seychelles Fintech Strategy and the National Payment System Modernisation Plan included), the Digital Economy Steering Committee was created. This was followed by Fintech roadshows with key sectors.”
Ms Lucas shared the list of activities done so far:
• Digital Financial Services that is Convenient, Affordable, Reliable, Efficient and Safe (C.A.R.E.S).
• Introduction of disincentives to the usage of paper based instruments and incentives to increase the usage of digital financial service.
• Undertaking a study to assess the affordability and reliability of internet and network connection locally.
• Creation of an entity to manage and operate payment systems platforms locally.
• Amendments of the legislative framework alongside the necessary projects.
• Financial Consumer Protection Act.
• Digital Financial Literacy.
• Introducing the relevant framework to facilitate innovation in the market.
• Implementation of a new Credit Information System and associated legislative framework.
Governor Abel explained that moving to a digital economy makes transactions faster but we also recognize the risks. “We have to make sure that cyber security is a major component in the implementation of such a project. All frameworks should be put in place in order to protect the consumers when we are encouraging them to move towards digital economy. This will also create more businesses which we have not seen yet. With the pandemic, the world has been pushed towards digital economy.”
However, Governor Abel recognised that there will always be a group of people who will not be able to use technology. “We need to educate the population and also make sure that the banks and businesses are still offering the necessary services to the public.”
The investors who will come to invest in Seychelles will have to abide by the regulations and CBS will monitor closely this process.
In this fast developing world, Governor Abel said that it is not only the banks who can do money transactions. “In Seychelles, we gave license to Airtel under the current regulation and we saw that we needed to improve certain regulations. But the amount of transactions through Airtel money is not significant on the market and it did not really change the financial landscape of the country. With this regulation that became clearer and with the support of the government, the company has to relook at its model and bring more competition on the market. At the end of the day we want to see services become cheaper on the market,” explained the Governor.
Ms Julienne explained that one of the components in the modernization plan is to look at all the different platforms such as Paypal, Samsung Pay, and Apple Pay among others. “The time should be appropriate to introduce new platforms but with the new regulations, the investors will be able to follow specific guidelines.”
In order to promote the global inclusivity of technology, Governor Abel urged more engagement from the participants in the system, not only banks. “As a business, if we are unable to accept a card, it is important to share this information with the CBS so that we can investigate.The engagement with DICT is firm and we are working closely with them as we do not have all the necessary skills. We are already working with them on the study of affordability and internet connection and also worked with them on the Cyber Crime Bill. With digital economy moving forward, we need to work closely and share necessary information. Seychelles already is removing cheque in its system and when we look at Seychelles demography, we will never be able to eliminate cash. Our strategy is not being cash less but cash light society,” concluded Governor Abel.