Mobile Money Regulation – A Story Arc of Best Practices and Emerging Realizations

This paper explores the evolution of mobile money regulation, highlighting regulatory concerns about balancing benefits with potential risks. Regulators in various countries have developed innovative solutions to protect consumers and facilitate mobile money. These solutions include allowing for nonbank electronic money issuance and proportionate due diligence.

Mobile money regulation is emerging from a South-South conversation and knowledge transfer, rather than being dictated from traditional centers of financial regulatory authority and expertise. The South-South knowledge transfer and a commitment to financial inclusion goals make this emerging domain distinct from others. There seems to have been three developments in mobile money regulation, and a fourth one seems to be taking place. These developments have taken place in different countries at different times and together have created the regulatory environment for mobile money. They are:

• Establishment of proportionate due diligence for client identity requirements, namely Know Your Customer (KYC) and Customer Due Diligence (CDD) processes;
• Authorization of nonbank entities either to accept deposits or to issue electronic money;
• Provision of license to an alternative payment system that rides the rails of the telecommunications networks;
• Renewed regulatory scrutiny.