A Synoptic Analysis of the Regulation and Use of Mobile Money Services in South Africa
Keywords:
fintech; mobile money; the poor; regulation; financial inclusionAbstract
The use of innovative financial technology (fintech) products such as mobile money is increasing in South Africa post the corona virus (covid-19 pandemic). Telecommunications companies and other financial institutions are providing mobile money services to millions of people, especially the poor and low-income earners in South Africa. Mobile money is crucial in aiding financial inclusion for the poor and other economically marginalised persons in South Africa. Any person who has a mobile phone can open a mobile money account and be able to send and receive money. Mobile money allows individuals to, inter alia, pay for products and services in retail outlets, keep money in their mobile wallets and send value to other people using mobile phones. However, despite the numerous advantages of mobile money, it is currently inadequately regulated in South Africa. There is no legislation that expressly regulate mobile money products in South Africa. Consequently, there are concerns that mobile money could be a conduit for illicit financial flows, money laundering and/or terrorism financing purposes in South Africa. Notably, between 2020 and 2021, millions of rands were reportedly channeled out of South Africa through mobile money platforms to fund terrorist activities in some parts of the African continent. In light of this, this article discusses statutes such as the Financial Intelligence Centre Act (FICA) and the Regulation of Interception of Communication and Provision of Communication-related Information Act (RICA) to evaluate their strengths and weaknesses. It is submitted that the current South African financial regulatory framework is not robust enough to effectively regulate fintech products such as mobile money. It is further submitted that the policymakers should to enact a specific statute to effectively regulate and promote the lawful use of mobile money services in South Africa.
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*** Consumer Protection Act 68 of 2008.
*** Financial Intelligence Centre Act 38 of 2001 as amended.
*** Protection of Personal Information Act 4 of 2013.
*** Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002.
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