Mobile Money in Jamaica

8/12/2019 Mobile Money in Jamaica

1/35

Summer Research Paper

Student : Frances Poole


2/35

2

Abstract

This research paper will focus on the risks associated with mobile money services in Jamaica and

the existin reulations and leislation that monitor the financial sector!

"y investiatin previous research# my aim is to study mobile money implemented in other

$urisdictions and examine the risk factors faced by those countries! %n doin so# determine if any

leal precedence relatin to mobile money has been established that would be beneficial to

Jamaica as it implements this new financial service!

Additionally# this paper will examine Jamaica&s leal system to determine if the currentreulations and leislation as it relates to the financial sector are ade'uate to manae the risks

that will be faced by the financial institutions# mobile money providers and consumers!

Frances Poole Summer Research Paper ID# 0904687


3/35

3

Acknowledements

% would like to acknowlede the followin persons:

Philip Armstron ( )anain *irector of Saicor "ank Jamaica +td!# for his

assistance in helpin me to decide on the topic for this paper and for his continued

support!

)iss Patricia Jackson# my sponsor for her valuable uidance and entle persuasionkeepin me focused on the purpose of the paper!

,dmundo Jene- ( )anain *irector# J,TS +td!.Jamaica ,lectronic Transaction

Systems/ for his willinness to share his manitude of knowlede on the sub$ect

matter!

Adrian 0eys 1 2onsultant to Tanscel +td! for his uidance and encourain

assistance!

Tony Poole 1 my husband for his critical eye# patience and unyieldin support!

3 % thank you all3



4/35

4

Table of 2ontents

24APT,R % Pae

1.1 Abstract 55555555555555555555555555!! 61.2 Background to Jamaicas Financial Sector... 7

1.3 Introduction to the Scope o the !aper. 8

1." #hesis Statement 8

1.$ %esearch &uestions.. 9

1.' %esearch (ethodolog)... 9

1.* !urpose o the Stud) 9

1.+ !ro,ect !roposal.. 9

24APT,R %%

2.1 -iterature %eie/..

24APT,R %%%

3.1 #he %apid 0ro/th o (obile (one) in Arica.. ;

4.1 Indenti)ing e) %isks in Jamaica.. 6;

".2 4ontrolling (obile (one) %isks........ 6=

24APT,R >$.1 Jamaican -egislation and %egulations. 67

24APT,R >%



5/35

5

'.1 4onclusion and %ecommendations. ?;

APP,@*%2,S 555555555555555555555555555!! ?6

R,F,R,@2,S555555555555555555555555555! ?=

24APT,R ;

;!; "ackround of Jamaica&s Financial Sector



6/35

6

There are three main entities that reulate the financial industry in Jamaica! These are the "ank

of Jamaica# the Financial Services 2ommission and the Financial %nvestiation *epartment

throuh the )inistry of Finance!

The supervisory authority and responsibility of these institutions are established by the virtue of

a number of Primary and Secondary +eislative Acts of Parliament that provide the leal policy

parameters for the licensin and supervision of financial institutions!

The "ank of Jamaica ."J/ reulates deposit takin entities such as commercial banks# merchant

banks and buildin societies throuh the "ankin Act .;6# amended 6BB6/# the Financial

%nstitutions Act# .;6# amended 6BB6/ and the "uildin Societies Act .;7=# amended 6BB6/!

2ambios and remittance companies# which are in the cateory of money service businesses# are

reulated by the "ank of Jamaica throuh the "ank of Jamaica Act! 2redit Cnions are reulated

by the 2o(operative Society Act!

@on(deposit takin institutions such as insurance companies# securities dealers and unit trusts are

reulated by the Financial Services 2ommission .FS2/!The FS2 oversees these entities by

administerin a number of statutes and accompanyin reulations! The relevant statutes are the

FS2 Act# the Pension Act# the Securities Act# the Cnit Trusts Act and the %nsurance Act! ;

;!6 %ntroduction

)obile money is a payment service operated under financial reulation and performed from a

mobile device such as a phone# a smart phone or a palmtop computer# .P*A/ for point of sale

transactions! %t can also be used for financial transactions undertaken usin a mobile phone

1See Appendix D;



7/35

7

aainst a bank account accessible from that phone!)obile )oney Transfers provide the ability

to move store of value from one account to anotherE this enables domestic remittances as well as

international remittance usin a mobile device!

2urrently in Jamaica a person can receive phone credit for their cellular phone electronically

from a point of sale or from another phone! This is technically a mobile payment which has been

in operation in Jamaica for a number of years now! 2onse'uently many persons are actually

usin a mode of mobile money in order to utilise their cellular phones! That bein said# with the

new thrust of the mode service bein implemented it will provide an avenue to widen the scope

of its utility!

The manain of the risk of mobile money may prove challenin for the financial institutions

and customers and all those involved# especially the risk of fraud! The financial sector is

reulated inter alia by the "ankin Act# the Financial %nstitutions Act and the "uildin Societies

Act! These will form the basis of the research to examine and compare the reulations of other

$urisdictions to determinin their effectiveness!

;!? Thesis Statement

)obile money is an electronic retail payment service accessed via mobile phones which is about

to be introduced to Jamaica! %t is arued that this method of payment may potentially propel the

country into an unprecedented mode of commerce that may prove hihly beneficial to vendors#

consumers# service providers and financial institutions alike!

;!< Research uestions

;/ Ghat are the risks that )obile )oney imposesH

6/ %s Jamaica ade'uately prepared to implement and introduce mobile money into its financial

system and what leal monitorin systems are in place to safeuard usersH

;!= Research )ethodoloy



8/35

8

%n meetin the ob$ectives of this paper# % intend to examine and compare the policies and

procedures adopted by users in other countries such as Gestern 0enya# the Cnited States# 4aiti#

and 2olumbia and evaluate the existin leislation and proposed reulations in Jamaica as it

relates to electronic retail payment services with a view to the leal preparedness to combat theft

and money launderin!

;!7 Purpose of Research

This research paper is submitted in partial fulfilment for the "achelor of +aws deree at the

Cniversity of Technoloy# Jamaica!

;!8 Pro$ect Proposal

The purpose of this paper is to determine whether Jamaica has the necessary leislation and

uidelines sufficient to launch mobile money services into the financial sector!

24APT,R %%

6!; +iterature Review

The introduction of mobile money to Jamaica is likely to create enthusiasm in the financialsector similar to that of cellular phones in the communication industry in the ;B&s! The product

is likely to create new opportunities for emerin entrepreneurs# retailers# vendors# banks# service

providers and consumers alike!



9/35

9

The relevance of this review is to provide an overview of the type of material that will be used to

present the perspectives of persons in the field of mobile money as well as those in the field of

academia# for my research paper and to set in motion the symposium on mobile money in

Jamaica!

%t has been predicted that mobile money services will find a ready market in Jamaica because of

the scarcity of user(friendly financial services on the island! A survey conducted by *r *awn

,lliott found that only a fraction of the Jamaican population has access to financial services#

which limits their participation in the economy!6

Trancel +imited has developed the technoloy for the *evelopment "ank of Jamaica&s .*"J/#

commercial pilot! The pilot will test loan disbursements over mobile networks over the next

year or two! The pilot has been named )? and will focus on the microfinance sector!

Transcel +imited&s 2hief ,xecutive fficer# 4uo *aley said that financial transactions are ;BB

times cheaper usin mobile money durin his presentation at the *"J mobile money launch in

February 6B;?! 4is company is positionin itself to be a ma$or service provider as well as

manae the micro accounts!?

I%n terms of our core transaction framework# it is a web services interation network which is

specifically desined to connect very 'uickly to networks!

IThe consumer will need to be increasinly aware of the risks associated to usin a mobile phone

for payments# realisin that now the real value of the phone increases as it uses these enriched

services and becomes a more valuable commodity to fraudsters and hackers! ?6

The bank of Jamaica# want to reulate the activity locally in order to ensure that the up to one

million unbanked Jamaicans are somewhat formalised and served by banks rather than proxy

start(ups!??

IThere are some who say ?= to 7= per cent of the population is unbanked# yet penetration for the

mobile phones is at over ;BB per cent# so there are opportunities there! 4owever# the unbanked

can only be served by the banks!?

Documents

Mobile Money in Jamaica