The Maldives Monetary Authority (MMA), acting as the central bank, has introduced a proposed amendment that would levy a fine ranging from MVR 100,000 to MVR 10 million on entities providing payment system services without proper licensing from the MMA.
The MMA is tasked with the development of Favara, the national payment system of the Maldives.
The objective of the amendment to the 'National Payment System Act', initiated by PNC MP Adam Shafeeq on behalf of the government, is to empower the MMA to establish companies and other legal entities for the operation of payment systems and the provision of payment services. Furthermore, it seeks to introduce necessary legal amendments to prohibit the solicitation of payment services and to integrate regulations concerning the imposition of penalties.
The amendment outlines the following powers of the MMA:
Ownership, establishment, and operation of systems, or participation in their ownership and operation.
Opening and maintaining accounts for operators and participants for the clearing and settlement of transfers within these systems.
The placement of collateral by operators and participants.
The provision of intraday liquidity to participants, contingent upon the receipt of sufficient collateral.
Concurrently, a company or joint venture may be formed to operate a system and deliver payment services.
Specifically, the amendment to Section 50 of the Act clarifies that individuals exempted by the MMA are not permitted to offer payment services within the Maldives unless they possess a license or permission granted under the Act. Additionally, it stipulates that no payment service should be sought by an applicant or through any other entity, except for those explicitly exempted by the authority.
Solicitation is defined here as the offering of a payment service to the public, or the placement or invitation of such an advertisement.
As the provision currently stands, no person shall provide a payment service in the Maldives without obtaining a license or permission issued by the MMA.
Presently, the law does not mandate a license for the operation of the following systems:
Systems operated by the MMA.
Systems licensed under the Financial Securities Act of 2017 for securities clearance and settlement purposes.
In-house payment systems established by licensed banks under the Banking Act to provide banking services to their clients.
In-house systems operated solely by an entity for its administrative purposes, not utilized for transferring, clearing, or settling payments to third parties.
Other systems defined and announced by the Authority.
Under this amendment, a fine will be imposed as a penalty for contravening the law. The MMA has been granted the authority to impose fines ranging from MVR 100,000 to MVR 10,000,000.
The MMA has launched a separate entity, Payment Maldives, to accelerate the advancement of the Maldives' payment infrastructure. An agreement to connect Favara with India's Unified Payments Interface (UPI) was signed on July 25 of the current year, aiming to facilitate seamless and secure financial transactions between the Maldives and India.
The MMA is also actively engaged in establishing a national QR code standard as part of its ongoing efforts to bolster the payment industry in the Maldives. This standard seeks to ensure the interoperability of QR codes utilized by banks and all payment service providers.
This initiative is expected to pave the way for the introduction of user-friendly and innovative services. It will also contribute to an increase in payments made via Favara and facilitate international transactions between the two nations.