Legal concepts and environment

and the regulation of mobile payments

Maria Chiara MalagutiAdvisor PSDG, World Bank

Payment by Fiduciary Money

Clearing

Bank A Bank B

Client B1merchant

Client B2Card holder

Client A

Correspondent banking

Man

date

topa

y

(underlying obligation)

Dep

osit

or w

ithdr

awal

s

M-banking

cheques

cards

Credit transfer

MNO

wallet

MOBILE NETWORK OPERATORS

and

REMITTANCE PROVIDERS

have changed the operational environment.

This has required also reform of

THE LEGAL ENVIRONMENT

«Retail» and payment services

Service provider

Service user

Payment instrument

TransparencyDuty of care Pricing

Duty of care(notification)

Infrastructure(safety)

Where isthe moneydeposited?

Service provider

• Bank• Financial institution• Commercial entity• Any person

Payment instrument

• Card• E-wallet• Digit-phone• Mobile• Internet

Service user

• Business• Consumer• Inter-group

Production versus transfer of money

• Money stored in a bank account• Money stored in a device• Money stored with the payment service

provider (omnibus)• Money (potentially) never stored

M-banking

Bank

customers

MNO A

B

CC account

B account

M-paymentBank

customersMNO

A

B

C

CustomersFundsstored

RemittancesBank

customersMoney transfer provider A

B

C

M-banking?

Bank

customers

MNO A

B

CC account

Poolingaccount

M-banking with agents

Bank

customers

MNO A

B

CC account

Poolingaccount

merchant

Legal environment

• (Financial) consumer protection• Out-of-court redress• AML• Safety of infrastructures• Competition and market access• Legal tools such as trust, regulation of

pooling of accounts, segregation

Regulatory environment

• Different (capital) requirements for different kinds of service providers

• Functional approach• Storage of money versus transmission of

money• Authorization versus registration• Transparency (pricing?)

International remittances

• Special rules for international transactions?

• Conflict of laws• Domestic regulatory measures also when

foreign legislation• Foreign exchange rules

Consumerprotection AML/CFT Deposit-taking E-commerce

Paymentsystems

Telcoregulation

competition Civil law(trust)