Bank and Non-bank partnerships

Overview

ROLE IN DELIVERY OF E-MONEY SERVICEWHO PLAYS THIS ROLE?
BANKNON-BANK
License to issue e-money
 
 
Direct communication with regulator to request authorization for, e.g., new services or revised transaction limits
 
 
Contractual agreement with customer
 
 
Branding of e-money service 
 
Delivery of e-money service (directly and/or through agent network) 
 
Safeguarding customer funds
 
 
Bank and Non-bank partnerships

ADVANTAGES & DISADVANTAGES

Advantages

  • Enables central bank to directly supervise banks, without restricting non-banks from design and branding of e-money services.
  • Historically used to enable partnerships between banks, telecom operators and fintech.
  • May need only limited updates to existing regulations.

Disadvantages

  • Lack of direct communication between financial authority and non-bank – may increase risk of undetected operational and consumer protection abuses.
  • Requires financial regulator to coordinate with other regulators (e.g., telecom regulator) often in an ad-hoc manner.
  • Non-banks require bank approval for new products and services, changes to account limits, etc.
  • Telecom operators may use control of telecom channels to restrict access among competitors.
Bank and Non-bank partnerships

Country Examples

South Africa

MTN South Africa - MoMo