Business

Local companies ready to remit funds over mobile phones, but await BOJ approval

Shamille Scott Business reporter scotts@jamaicaobserver.com

Sunday, March 30, 2014    

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At least two local companies are ready to offer remittance service through mobile phones in Jamaica, but they await the go ahead from the Bank of Jamaica (BOJ)

The central bank last week gave Jamaica Co-Operative Credit Union League (JCCUL) authorisation to offer its e-payment system — bill payment and phone call minutes top up — to the 900,000 members among the 38 credit unions that make up the organisation, following the pilot phase, which was conducted across 12 credit unions.

But JCCUL already has the technology to roll out remittance services and business-to-business transactions in place, according to Heston Hutton, managing director of Centralised Strategic Services Limited (CSS), a subsidiary of JCCUL that provides strategic services to the credit union movement network.

However, they cannot deploy such services without the BOJ's nod.

Meanwhile, food and financial services conglomerate, GraceKennedy, which operates First Global Bank and which runs the largest remittance business in Jamaica says its application to offer mobile money is still under review.

"Up to last week, the BOJ told us that our file is still under review and just this week we had a strategic review about how we want to position the products we hope to roll out soon," said Don Wehby, CEO of GraceKennedy, told Sunday Finance last Wednesday. "We are ready, we are just waiting on the BOJ."

As for getting into the remittance business, Hutton says talks with MoneyGram International to become an agent are advanced.

"We have been talking to them for some time, so I could say we have established a relationship" said Hutton.

In Kenya, money transfer companies virtually disappeared as remittance services migrated to the mobile money system, called M-Pesa. There, persons who sign up, pay money into the system by handing cash to an agent, typically in a corner shop — who credits the money to the M-Pesa account. Cash can be transferred to others using a menu on the user's mobile phone.

Once these companies get the green light to offer services, which include e-money stored in a device such as a mobile phone and SIM card gets authorisation, a new wave of doing business will be made available to the country's unbanked.

It means that Jamaicans who don't have bank accounts will soon be able to carry out transactions using a cashless system.

Furthermore, these payment instruments and services will make paying for goods and services easier.

It's well known that a huge segment of the Jamaican population — as much as 70 per cent — is unbanked.

There is a general comfort level with the use of mobile phones, not just to communicate but to do several other things, noted Hutton.

"The unbanked group does a significant number of transactions, muliple times per day," he said.

BOJ indicated that it had closed the files on four of the 13 entities that approached the regulatory entity to offer electronic retail payment services.

Entities and their agents authorised to provide retail payment services will have to be transparent regarding their terms and conditions of service

Companies that have applied will have to go through periods of assessment.

The first stage is a business assessment that involves a review of the business plans, financial strength, managerial and technical expertise and the governance and administrative arrangements that will be employed by the applicant.

Once the central bank is satisfied that the company has a legitimate operation, they will move onto doing on-site evaluations. Moreover, they will be subject to continuous assessments by regulator.

The BOJ is responsible for the regulation and supervision of clearing and settlement systems in Jamaica.

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