Legal and regulatory aspects of mobile financial services
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Authors
Perlman, Leon Joseph
Issue Date
2012-11
Type
Thesis
Language
en
Keywords
Agents , Airtime transfer , Airtime -based SOV , Allocation of loss , Allocation of risk , Anti-Money Laundering (AML) , Aristotle , Australian school , Auto-subscription , Banks , Banks Act , Bilateral Juristic Act , Bottom of Pyramid , Branchless Banking , BSD , Business of banking , Cash-In /Cash out , Central Bank , Claim school , Competition Commission , Condictiones , Consumer protection , Consumer Protection Act (CPA) , Contract law , Convergence , CTF , Dedicated Banks Bill , Delict , Regulatory philosophies , Deposits , Deposit-taking , Directives , Dodd-Frank , Electronic Commerce (e-commerce) , Electronic Communications and Transactions Act (ECTA) , Electronic Funds Transfer (EFT) , Electronic money (e-money) , Electronic Money Directive (EMD) , European Union (EU) , FA Mann , Fiat , Fiat-based SOV , FICA , Financial inclusion , Financial literacy , Foley v Hill , Hacking , ICASA , Kenya , KYC , Legal capacity , m-Banking , Means of exchange , Means of payment , MFS , MFSP , Miller v Race , Minors , MNO , Mobile Banking (m-Banking , Mobile Commerce (m-commerce) , Mobile Financial Services (MFS) , Mobile Financial Service Provider (MFSP) , Mobile Financial Services Provide (MFSP) , Mobile Financial Service Providers (MFSPs) , Mobile Network Operator (MNO) , Mobile payments , Mobile payments (m-Payments) , Mobile purse , Mobile wallet , Money , Money Laundering (ML) , m-Payments , m-pesa , National Consumer Commission , National Payment System , National Payment System Act (NPSA) , Non-Banks , NPSA , Orthodox school , Oversight , Payment instrument , Payment Service Regulatory Authority (PSRA) , Payments law , Pooled accounts , Position paper , Proportional regulation , Prudential Regulation , PSD , PSPL , PSRA , Redeemable funds , Regulator's dilemma , Regulatory capture , Remittances , Regulation of Interception of Communications Act (South Africa) , (RICA) (South Africa) , Security , SIM Card , SIPS , South African Reserve Bank , SOV , Specie , Store of Value (SOV) , Stored Value Account (SVA) , Subscriber , Supervison , Systemic risk , Telecommunications , Transformational banking , Trust accounts , Unbanked , Underserved , Underbanked , Unit of account , United Dominions Trust (UDT) , Unjustified enrichment , USA , Value Added Services (VAS) , Wallet , WASP , WASPA , Additive banking , Regulatory arbitrage
Alternative Title
Abstract
The thesis deals with the emergence of bank and non-bank entities that provide a range of unique
transaction-based payment services broadly called Mobile Financial Services (MFS) to unbanked,
underserved and underbanked persons via mobile phones.
Models of MFS from Mobile Network Operators (MNOs), banks, combinations of MNOs and banks, and
independent Mobile Financial Services Providers are covered. Provision by non-banks of ‘bank-type’
services via mobile phones has been termed ‘transformational banking’ versus the ‘additive banking’
services from banks. All involve the concept of ‘branchless banking’ whereby ‘cash-in/cash out’ services
are provided through ‘agents.’
Funds for MFS payments may available through a Stored Value Product (SVP), particularly through a
Stored Value Account SVP variant offered by MNOs where value is stored as a redeemable fiat- or mobile
‘airtime’-based Store of Value.
The competitive, legal, technical and regulatory nature of non-bank versus bank MFS models is discussed,
in particular the impact of banking, payments, money laundering, telecommunications, e-commerce and
consumer protection laws. Whether funding mechanisms for SVPs may amount to deposit-taking such that
entities could be engaged in the ‘business of banking’ is discussed. The continued use of ‘deposit’ as the
traditional trigger for the ‘business of banking’ is investigated, alongside whether transaction and paymentcentric
MFS rises to the ‘business of banking.’
An extensive evaluation of ‘money’ based on the Orthodox and Claim School economic theories is
undertaken in relation to SVPs used in MFS, their legal associations and import, and whether they may be
deemed ‘money’ in law.
Consumer protection for MFS and payments generally through current statute, contract, and payment law
and common law condictiones are found to be wanting. Possible regulatory arbitrage in relation to MFS in
South African law is discussed.
The legal and regulatory regimes in the European Union, Kenya and the United States of America are
compared with South Africa. The need for a coordinated payments-specific law that has consumer
protections, enables proportional risk-based licensing of new non-bank providers of MFS, and allows for a
regulator for retail payments is recommended. The use of trust companies and trust accounts is
recommended for protection of user funds.
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Description
Citation
Perlman, Leon Joseph (2012) Legal and regulatory aspects of mobile financial services, University of South Africa, Pretoria, <http://hdl.handle.net/10500/13362>