MAURITIUS: NATIONAL PAYMENT SYSTEMS REGULATIONS – KEY FEATURES
The Bank of Mauritius (BoM) has recently issued the National Payment Systems (Authorisation and Licensing) Regulations 2021 (Regulations), which were made operational as from 1 June 2021. The Regulations are being issued two years after the promulgation of the National Payment Systems Act 2018 (NPS Act) in January 2019.
As a recap, the NPS Act sets the framework for the regulation, oversight, and supervision of payment systems in Mauritius, and sparked the launching of the new National Payment System branded as MauCAS (Mauritius Central Automated Switch) by the BoM in August 2019. The aim of the NPS Act was to fundamentally modernise the Mauritian retail banking system by devising an appropriate and effective framework for digital modes of payments.
As electronic money and digital payments become increasingly accepted locally, the BoM now seeks to provide, through the new regulations, clear guidelines to prospective payment service operators to conduct payment services.
In a nutshell, the Regulations provide for:
- the authorisation process of operators of payment systems, clearing systems or settlement systems (Authorisation);
- the licensing of payment service providers (Licence);
- the form and manner for applying for an Authorisation or a Licence; and
- the applicable fee for obtaining an Authorisation or a Licence.
Authorisation to operate
Existing operators of payment systems, clearing systems or settlement systems or existing payment service providers (other than banks or companies licensed by the Financial Services Commission to provide payment intermediary services exclusively outside Mauritius), have until 21 September 2021 to submit an application to the BoM, for an Authorisation or a Licence for their respective activities.
Corporate entities are now allowed to apply to the BoM for an authorisation to operate a payment system, clearing system or settlement system in Mauritius, or to apply for a licence to act as a payment service provider in Mauritius.
Relevant applications must be effected using the prescribed form now being made available and must be accompanied by the prescribed fees and relevant documents required by the Regulations.
The Regulations impose a number of substance requirements on a licensee, such as:
- having a principal place of business in Mauritius, and the staffing requirement and estimated operating costs must be commensurate with the size and complexity of its business;
- having an adequate number of suitably qualified full-time officers, including a CEO and other senior officers, and
- having in place an anti-money laundering and combatting the financing of terrorism (AML/CFT) and proliferation transaction monitoring system, as well as such other monitoring systems as are commensurate with the identified risks and the size and complexity of its business.
Furthermore, the board of directors of a licensee incorporated in Mauritius must consist of not less than three persons, of whom at least one must be an independent director. The BoM may, having regard to the scope of the activities of a licensee, require that its board of directors comprises such additional number of directors as it may determine - the appointment of the additional directors will be subject to the prior written approval of the BoM - and may determine the number of its independent directors having regard to the size, complexity and ownership of a licensee.
Conditions applicable to issuance of electronic money
The Regulations provide further conditions where an application for a licence involves the issuance of electronic money and management of stored-value accounts, or where a payment service provider or bank intends to issue electronic money. The applicant, payment service provider or bank must show, inter alia, that no credit services are being provided, that electronic money is issued on receipt of funds for an amount exactly equal to the monetary value offered, the collected in exchange of the electronic money are maintained separately in a trust account, traceability of funds collected and deposited in the trust account is ensured, and reconciliation mechanisms are in place.
Minimum capital requirements
The minimum capital requirement is MUR 5 million for all payment services, save for remittances, payment initiation, and small e-money issuer services (i.e. issuers with yearly turnover not exceeding MUR 25 million) where the minimum stated capital threshold has been reduced to MUR 3 million, and account information services where the same is MUR 1 million. Moreover, the minimum capital requirement is comparatively higher for an operator of a payment, clearing or settlement system, being at MUR 50 million.
Every licensee is required to provide, within such period as the BoM may determine and, in any event, not later than one month after such statements are made, a duly certified copy of its audited financial statements for the financial year, prepared in accordance with the International Accounting Standards and such guidelines as the BoM may issue, subject to these being prepared for such shorter period as may be specified by the BoM by notice, and an auditor’s certificate attesting that the licensee complies with the NPS Act, the Regulations or other regulations, any guideline and any instruction issued by the BoM.
The need for consumers to use contactless and digital modes of payment as alternatives for cash payments during the COVID-19 pandemic has fueled the initiatives of the BoM to limit cash in circulation and digitalise payments to cope with the new reality.
It is clear that the publication of the Regulations emanates from the strong willingness of the BoM to speed up the adoption of digital payments by ensuring secure and efficient operation of payment systems. The obligation for an Authorisation or Licence, tied with strict substance requirements and additional conditions applicable to electronic money issuers and payment service providers, illustrates BoM’s initiative to ensure adequate monitoring and assessment of the payment service providers and their services.
There is no denying that the Regulations form a crucial part in transforming the payments landscape in Mauritius, particularly with the imminent rollout of the country’s nation’s central bank digital currency (CBDC), which is anticipated for end of 2021.
In line with the Government’s vision to establish Mauritius as a competitive regional fintech hub, the recently gazetted Finance Act 2021 has also amended the Banking Act to introduce a regulatory sandbox authorisation to experiment with fintech, regtech or other innovation-driven financial services falling under the purview of the BoM. In the same tone, it is expected that the BoM will also be empowered to establish a fintech innovation hub and digital lab.
We are hopeful that these regulations and upcoming amendments will provide an appropriate regulatory framework for existing and new payment service providers, fintech and regtech players, as we witness the island economy embark on a revolutionary era of digital payments and developments.