Mobile Banking, Mobile Money and Telecommunication Regulations

Abstract

Providing mobile money through mobile phones is a value-added service offered through telecommunication companies. Its issuance involves both telecommunication and bank regulations. But for complaints about this service, the first avenue for redress is often the telecommunication company, if not the telecommunication regulator. This paper investigates the interface between telecommunication and banking regulations and policies to provide safeguards without hindering the industry. However, much of what has been written regarding the regulatory issues with respect to e-money and m-money has been from the side of banking regulations. Banking regulations are based on the need for addressing problems of information asymmetry and controlling, for good or ill, the creation of money outside the government monopoly. It is about regulating risk to the system and risk to the economy. Moreover, bank regulators define their object of regulation for m-money not on whether the relevant entities call themselves banks but on the terms and conditions of how the money that they take from customers are treated and whether or not they extend credit to customers. Among the issues that have been commonly discussed with respect to mobile money pertain to authentication, such as knowing your customer (KYC), authorization and integrity of the transaction, monitoring the amounts kept by individuals and the amounts they send (anti-money laundering), security and redress mechanisms, among others.