National Switch to go live early 2015—RBM

The National Switch (Nat Switch), a shared switch platform to connect all the country’s commercial banks, will go live in early 2015, with preparations for the roll-out at an advanced stage, the Reserve Bank of Malawi (RBM) has confirmed.

The switch was already installed, tested, fully configured and the banks started to test connectivity and integration in a process known as system integration testing (SIT), according to the National Switch Steering Committee chairperson William Kaunda.

Two months ago, there was only one level to go and that is to fully test transactions from bank to bank and settlements with RBM.

SIT is a level where the switch at National Switch is integrated to switches at member banks, a critical stage that requires detailed testing and benchmarking, and at least five banks were integrated and conducted detailed testing which lasted up to the end of September.

In a monthly national payment system report for October 2014 released yesterday, RBM said the country’s existing payments system has been stable, allowing undisrupted flow of funds in the economy.

“The total volume of daily transactions passing through national payments system declined by 21.7 percent to 207 452 in September 2014 from 264 870 in August 2014,” said the report, attributing the decrease in payments activity to seasonal economic factors.

Nat Switch, largely funded by the World Bank through part of a five-year loan amounting to $28.2 million (K14.5 billion, at the current exchange rates) under the Financial Sector Technical Assistance Project (Fstap), will interconnect banking operations and financial transactions through automated teller machines (ATMs), point of sale (POS) devices, mobile banking, e-banking transactions, Visa and MasterCard gateway and other over-the-counter transactions.

Hitherto, Malawi did not have a National Switch and it was only four listed banks, National Bank of Malawi, NBS Bank, FMB and Standard Bank, which are interconnected through Visa net controlled in the US.

In the report, RBM said daily average volume for cross-border transactions jumped by 4.5 percent to 23 in October 2014 from 22 in September 2014.

“This is a reflection of the increasing confidence in cross-border payment systems amongst banks,” said the RBM report.

Initially, the Nat Switch was supposed to go live in March this year, but Kaunda said the delay was mainly on premises that are housing the National Switch which led the contractor to delay by three months, pushing all configuration activities further in the year. There was another delay on installation of data network connectivity between banks and the National Switch.