RBM moves to curb unlicensed payment service providers

The Reserve Bank of Malawi (RBM) has urged consumers to exercise caution and refrain from transacting with unlicensed or unauthorised payment service providers to safeguard their money.

In a statement signed by RBM Governor Wilson Banda, the central bank said engaging unregulated entities can expose consumers to risks and potential financial losses.

He has since urged payment service providers, Fintechs and financial service providers to seek authorisation for payment services as the regulatory requirement is essential to ensure the safety, soundness and reliability of the payments ecosystem in Malawi.

Said Banda: “Further, payment service providers, including companies in whatever form, development institutions and licensed financial institutions, are also called upon to desist from partnering or offering services to unlicensed parties.

“Collaboration with unauthorised entities not only violates regulatory requirements, but also exposes licensed institutions to risks that could harm their reputation and financial stability.”

In an interview yesterday, RBM spokesperson Mark Lungu said the statement follows the proliferation of a number of firms which are neither registered nor licensed by the central bank.

He said: “Leaving such space unregulated may have a negative impact on consumers, the reason we have Consumer Protection Act, which has to be enforced.

“RBM is not there to stop innovation, but there is need to ensure that innovation is regulated so that it does not introduce systemic risk.”

Consumers Association of Malawi executive director John Kapito said in an interview yesterday that there are many online platforms on the market and consumers need to be aware.

“The warning from RBM is genuine and timely. This is a serious matter that demands the central bank to be proactive and ensure that the consumers are given enough information,” he said.

Under the Payments Systems Act 2016 and the Reserve Bank Act 2018, it is a violation of the law for any individual or entity to establish or operate a payment, clearing and settlement system or service, remittance services, electronic money services, mobile payment services, or issue payment instruments without proper authorisation or a licence issued by RBM.