The Financial Technology portal reports that Absa one of South Afric’a “big four” has taken a client to court over a matter of online fraud.
The full report, which you can access at http://www.financialtechnologyafrica.com/Online_Fraud_Absa_Drags_FoneWorx_to_Court.htm , reads:
‘Johannesburg, South Africa: Big four bank Absa has denied any liability in a fraud case that saw R3 million illegally moved from FoneWorx's accounts. FoneWorx says just over R3 million of its money had been fraudulently moved out of its eight Absa accounts into 183 unknown, and unauthorised, Absa accounts, in February.
It has since recouped R1.56 million of the stolen funds, and now wants the rest paid back to it. CEO Mark Smith says the balance of the missing money was transferred into the company's attorney's trust account, but then again removed by Absa.
The bank claimed the money had been wrongfully transferred and was actually a duplicate payment, he says. But Absa's head of media relations, Patrick Wadula, insists this is a duplicate payment, which FoneWorx has “refused to repay to Absa”. He says the bank has instituted legal action against Foneworx and its legal representatives, Martini-Patlansky Attorneys, for the return of the duplicate payment.
The bank also denies liability for the money having been illegitimately transferred in the first place. Wadula says Absa “at no time had access to Foneworx's cash focus system”. He says the system is operated and managed by the client's system manager, and Absa has no right of access to or control.
“The only way to gain access to the cash focus system and, in turn, to transfer funds on the system is by way of passwords held by the client or its employees and agents. Absa has no knowledge of these passwords,” says Wadula. He adds that the bank is not liable for the wrongfully transferred money.
However, Wadula says, there have been similar, though minimal, incidents previously. “Absa constantly warns its clients to protect user identities and passwords and that security measures must be put in place to ensure that such information is safeguarded.”
Advocate Clive Pillay, the ombudsman for Banking Services, says he is not aware of this matter. However, he says: “In terms of the Code of Banking Practice, banks undertake to provide reliable banking and payment systems services and to take reasonable care to make these services safe and secure.” '
Friday, 9 October 2009
Money Transfers in Uganda
allAfrica.com: Uganda: Telecom Money Transfer Tilts Market
This article from AllAfrica.com provides an intersting insite into the current state of payments in Uganda. It is well worth a read. To access the original please click on the title post.
Kampala — Six months since the introduction of mobile money transfer, MTN and Zain have registered about 250,000 clients onto the mobile money transfer service moving over sh40b in transactions.
The two telecom companies' officials confirm that only the transactional limitation of sh1m seems to be standing in the way of the service which has tilted the market away from the traditional service providers.
Although figures are scanty about the actual market command of each player, there is ample evidence that MTN mobile money and Zain's Zap have eaten into the market share of traditional money transfer services of Western Union and MoneyGram as well as banks. MTN alone moves an average of sh6b monthly, according to Richard Mwami, MTN general manager, public access.
While Zain offers a diverse platform in which customers are able to merchandise, top up airtime and transfer money.
"The next phase which will soon be unveiled will see customers able to synchronise their mobile phone banking platform with their bank accounts with ZAP, " said George Buza, Zain's head of marketing.
The emerging dominance of the two products illustrates the thirst the market has for innovative products that make life easy.
Services like MoneyGram and Western Union have limited agents across the country.
Western Union, for instance, only has seven agent banks - Barclays, Ecobank, Centenary, Diamond Trust, Post, KCB and Crane Bank and a few sub agents.
On the other hand, there are hundreds of mobile money agents in all street corners across the country.
According to Juma Walusimbi, the communications director of Bank of Uganda, Western Union and MoneyGram were given a go ahead to operate under the financial institutions act because they are operating under licensed financial institutions.
"They presented their accounting and operational systems which ensured that they have audit trails and are safe," said Walusimbi.
But Walusimbi feels exclusivity rights on the two companies constrains the financial institutions that want to work with others.
"For instance, if bank A is working with Western Union, they cannot be allowed to work with MoneyGram," said Walusimbi.
Pride microfinance, for instance, falls under Crane bank which limits the amount of money Pride microfinance can collect as a full agent. Yet the microfinance firm is one of the most active branches, according to sources.
MoneyGram and Western Union international are reportedly reluctant in licensing new agents because of the added workload like supervision, training and hiring added workforce.
There are now six registered and operating telecom companies, two of who are offering the money transfer service. The benefits of the service have been boosted by the failure of commercial banks now numbering 21 to translate their services into everyday benefits to the common man.
Interest rates on savings are in point decimals while borrowing rates in Uganda are among the highest in the region. Also, inflation, both in the past (single digit) and present (at 14.5% in September) is way above the interest rates offered by banks for deposits. This means your meager savings in the bank's are simply wiped off by the high inflation.
"People do not save because there are no benefits to saving," said an expatriate working in Uganda.
Banks have remained largely urban based capturing just about 15% of the entire population.
The electronic funds transfer (EFT) and the real time gross settlement (RTGS) offered by banks are expensive, lengthy and uncompetitive. EFTs charges range from sh2,500 to sh10, 000 and take about two days, while RTGS charge upto sh15, 000.
"These two need to lower costs. But there is still business for everyone," cautioned Walusimbi.
In Kenya, the central bank said nearly half (47%) of all money transfers in Kenya are taking place through the mobile phones.
Although a major revolution in the money transfer business, mobile money has shortfalls. There are reports that agents sometimes run out of cash which creates lapses in the smooth running of the service. Also operators decry the lack of a harmonised identification system in Uganda like it is in Kenya and Tanzania.
"Keeping in consideration the sensitivity around money in Uganda, the slow pace at which people have embraced the use of this service in their day-to-day lives and the lack of a national/formal identification that restricts the acquisition of even more subscribers onto the mobile money service," said Mwami.
Leaving the responsibility of settling all claims by agents with little deposits in the rural areas are a burden and have limited growth of the service.
Will telecoms provide money storage as the banks do?
Isaac Nsereko, MTN chief marketing officer, says in the foreseeable future, it is very unlikely that telecom firms will undertake full banking roles like accepting deposits and extending credit.
"What I see more is collaboration on transfer and payment with the banks," said Nsereko.
In this arrangement, the mobile phone will continue to offer the infrastructure.
MoneyGram and Western Union have remained competitive by mainly exploiting strong brand presence and a public that has for long understood their modus operandi.
The mobile money service has clearly redrawn the competition lines with the traditional players.
This article from AllAfrica.com provides an intersting insite into the current state of payments in Uganda. It is well worth a read. To access the original please click on the title post.
Kampala — Six months since the introduction of mobile money transfer, MTN and Zain have registered about 250,000 clients onto the mobile money transfer service moving over sh40b in transactions.
The two telecom companies' officials confirm that only the transactional limitation of sh1m seems to be standing in the way of the service which has tilted the market away from the traditional service providers.
Although figures are scanty about the actual market command of each player, there is ample evidence that MTN mobile money and Zain's Zap have eaten into the market share of traditional money transfer services of Western Union and MoneyGram as well as banks. MTN alone moves an average of sh6b monthly, according to Richard Mwami, MTN general manager, public access.
While Zain offers a diverse platform in which customers are able to merchandise, top up airtime and transfer money.
"The next phase which will soon be unveiled will see customers able to synchronise their mobile phone banking platform with their bank accounts with ZAP, " said George Buza, Zain's head of marketing.
The emerging dominance of the two products illustrates the thirst the market has for innovative products that make life easy.
Services like MoneyGram and Western Union have limited agents across the country.
Western Union, for instance, only has seven agent banks - Barclays, Ecobank, Centenary, Diamond Trust, Post, KCB and Crane Bank and a few sub agents.
On the other hand, there are hundreds of mobile money agents in all street corners across the country.
According to Juma Walusimbi, the communications director of Bank of Uganda, Western Union and MoneyGram were given a go ahead to operate under the financial institutions act because they are operating under licensed financial institutions.
"They presented their accounting and operational systems which ensured that they have audit trails and are safe," said Walusimbi.
But Walusimbi feels exclusivity rights on the two companies constrains the financial institutions that want to work with others.
"For instance, if bank A is working with Western Union, they cannot be allowed to work with MoneyGram," said Walusimbi.
Pride microfinance, for instance, falls under Crane bank which limits the amount of money Pride microfinance can collect as a full agent. Yet the microfinance firm is one of the most active branches, according to sources.
MoneyGram and Western Union international are reportedly reluctant in licensing new agents because of the added workload like supervision, training and hiring added workforce.
There are now six registered and operating telecom companies, two of who are offering the money transfer service. The benefits of the service have been boosted by the failure of commercial banks now numbering 21 to translate their services into everyday benefits to the common man.
Interest rates on savings are in point decimals while borrowing rates in Uganda are among the highest in the region. Also, inflation, both in the past (single digit) and present (at 14.5% in September) is way above the interest rates offered by banks for deposits. This means your meager savings in the bank's are simply wiped off by the high inflation.
"People do not save because there are no benefits to saving," said an expatriate working in Uganda.
Banks have remained largely urban based capturing just about 15% of the entire population.
The electronic funds transfer (EFT) and the real time gross settlement (RTGS) offered by banks are expensive, lengthy and uncompetitive. EFTs charges range from sh2,500 to sh10, 000 and take about two days, while RTGS charge upto sh15, 000.
"These two need to lower costs. But there is still business for everyone," cautioned Walusimbi.
In Kenya, the central bank said nearly half (47%) of all money transfers in Kenya are taking place through the mobile phones.
Although a major revolution in the money transfer business, mobile money has shortfalls. There are reports that agents sometimes run out of cash which creates lapses in the smooth running of the service. Also operators decry the lack of a harmonised identification system in Uganda like it is in Kenya and Tanzania.
"Keeping in consideration the sensitivity around money in Uganda, the slow pace at which people have embraced the use of this service in their day-to-day lives and the lack of a national/formal identification that restricts the acquisition of even more subscribers onto the mobile money service," said Mwami.
Leaving the responsibility of settling all claims by agents with little deposits in the rural areas are a burden and have limited growth of the service.
Will telecoms provide money storage as the banks do?
Isaac Nsereko, MTN chief marketing officer, says in the foreseeable future, it is very unlikely that telecom firms will undertake full banking roles like accepting deposits and extending credit.
"What I see more is collaboration on transfer and payment with the banks," said Nsereko.
In this arrangement, the mobile phone will continue to offer the infrastructure.
MoneyGram and Western Union have remained competitive by mainly exploiting strong brand presence and a public that has for long understood their modus operandi.
The mobile money service has clearly redrawn the competition lines with the traditional players.
Thursday, 8 October 2009
Business Continuity & Payment Systems
Although many of us bank operations professionals are intimately involved in the day-to-day operations and functioning op payment systems, we tend to loose the true magnitude of what we are dealing with in the "system" with its "technology only" connotation. This is often compounded by an "on-us" view of our bank and our operations.
This view can cloud our thinking when planning for such critical issues as disaster recovery and business continuity. What is often overlooked is the big picture and how it all hangs together.
The events and aftermath of 9/11 clearly illustrated the problem. This is the subject of this short presentation are the events of that day, its impact on the financial system generally (and payment systems more specifically), the lessons learned and what we should be taking forward in our approach to Business Continuity Planning as regards Payment Systems.
The presentation was originally made by Stanley Epstein, one of our Principal Associates, to the Financial Services Technology Consortium in New York on 18 December 2008.
This view can cloud our thinking when planning for such critical issues as disaster recovery and business continuity. What is often overlooked is the big picture and how it all hangs together.
The events and aftermath of 9/11 clearly illustrated the problem. This is the subject of this short presentation are the events of that day, its impact on the financial system generally (and payment systems more specifically), the lessons learned and what we should be taking forward in our approach to Business Continuity Planning as regards Payment Systems.
The presentation was originally made by Stanley Epstein, one of our Principal Associates, to the Financial Services Technology Consortium in New York on 18 December 2008.
Wednesday, 7 October 2009
Migrant Worker Remittances - Issues & Opportunities
CITADEL ADVANTAGE are presenting a 2-day intensive training course on Remittance Payments and the Business Opportunities that they create in Johannesburg, South Africa on the 25 & 26 January 2010.
International migration, the movement of people across international boundaries, has enormous implications for growth and welfare in both origin and destination countries. According to the World Bank nearly 200 million people live outside their country of birth. Although Remittances to developing countries are forecast to fall from an estimated $305 billion in 2008 to $290 billion in 2009, they will still outstrip private capital flows and official development aid.
For banks and payment service providers, migrant remittances are the single biggest untapped source of potential revenues. But to benefit from this vast sea of payments, banks and financial institutions need to gain a clear understanding of:
• What remittances are and how they work,
• The nature of the market,
• The market’s geographical spread,
• The customers for remittance services,
• The difficulties that both migrants and their beneficiaries face in the sending and the receiving of these funds, and
• How new initiatives and technology are changing the remittance landscape.
For numerous countries Remittance flows also represent the largest source of foreign exchange. In some developing countries they can account for as much as a 33% of GDP. International research reveals that the flow of remittances appears to be significantly more stable than that of other forms of external finance. This "resiliency" is because many migrants are unlikely to leave their adopted countries and will continue to send money home.
For senders and recipients the process is often times traumatic, and the difficulties associated with them have been increasingly recognized in recent years.
For banks and financial institutions remittances represent a huge opportunity – an opportunity to expand market share in a powerful, worldwide emerging market segment.
The rapid diffusion of technology into the payments world through devices such as the mobile phone heralds the promise of bringing modern real-time banking to even the remotest of villages.
This intensive interactive 2-day course will introduce partctipants to the biggest payment phenomenon of the 21st century. It will open your eyes to rapidly expanding market critically waiting for solutions to its needs.
This course is designed to assist banks, financial institutions and payment service providers who want to improve their understanding of this important market as well as develop the many business opportunities that present themselves.
Join us as we explore the world of Remittances and its many Business Opportunities.
For a fully detailed Brochure for this event please send a blank e-mail to courses@citadeladvantage.com (Please enter Remit -Jo'burg in the subject line)
Tuesday, 6 October 2009
European Commission Moves Closer to Enforcing SEPA End-Game
The European Commission is in talks with member states about setting a deadline for the migration of national payment schemes to the new Single Euro Payments Area (SEPA) after a public consultation exercise showed widespread support for the move.
The EC initiated consultation with key stakeholders in June on whether and how deadlines should be set for the migration of existing national credit transfers and direct debits to the new SEPA-compliant payment instruments.
The results showed that "a large majority" of respondents support the idea of enforcing dates for the use of legacy payment instruments, says the EC, although users expressed concerns about quality issues relating to direct debits and the need for enough time to become acquainted with the new products.
In July, a coalition of payments systems users published a highly critical report on the SEPA project and the lack of consultation with end-users, warning that the setting of an arbitrary end-date could destabilize the entire scheme.
One option under consideration by the Commission is to set separate deadlines for SEPA credit transfers and direct debits, since both schemes were not launched at the same time and do not have the same level of maturity.
Internal market and services commissioner Charlie McCreevy says: "Setting clear deadlines for the migration to SEPA would send a strong signal that SEPA is an irreversible process. It would provide certainty and predictability and act as a strong incentive for both industry and users to speed up migration."
The EC initiated consultation with key stakeholders in June on whether and how deadlines should be set for the migration of existing national credit transfers and direct debits to the new SEPA-compliant payment instruments.
The results showed that "a large majority" of respondents support the idea of enforcing dates for the use of legacy payment instruments, says the EC, although users expressed concerns about quality issues relating to direct debits and the need for enough time to become acquainted with the new products.
In July, a coalition of payments systems users published a highly critical report on the SEPA project and the lack of consultation with end-users, warning that the setting of an arbitrary end-date could destabilize the entire scheme.
One option under consideration by the Commission is to set separate deadlines for SEPA credit transfers and direct debits, since both schemes were not launched at the same time and do not have the same level of maturity.
Internal market and services commissioner Charlie McCreevy says: "Setting clear deadlines for the migration to SEPA would send a strong signal that SEPA is an irreversible process. It would provide certainty and predictability and act as a strong incentive for both industry and users to speed up migration."
Monday, 5 October 2009
Sins of the Risk Managers
Have risk managers really been doing their jobs properly? According to many they certainly have not. I came across this interesting item on the sum2llc Blog. It is certainly worth a read.
Click on the post title or the link below.
http://sum2llc.wordpress.com/2009/09/28/day-of-atonement-al-chet-for-risk-managers/
Click on the post title or the link below.
http://sum2llc.wordpress.com/2009/09/28/day-of-atonement-al-chet-for-risk-managers/
Sunday, 4 October 2009
The Bank of England and Payment System Oversight
Central banks’ involvement in the oversight of payment systems arises from their core role as the systems’ settlement bank, providing the ultimate settlement asset, central bank money. This gives central banks a very direct interest in any potential systemic risks inherent in such systems. More broadly, payment systems are crucial to the functioning of the UK banking system and thus the wider financial system and economy, and it is therefore important that they operate in a way that contains risks to the system as a whole to an acceptable level. If payment systems are operated only in the narrow self-interest of their member participants, they may tend to underinvest in the mitigation of those risks. This can be countered by ensuring a broader risk perspective through central bank oversight.
This was recognized in the framework set out in the Memorandum of Understanding (MoU) with HM Treasury and the Financial Services Authority (FSA) in 1997.(1) The Banking Act 2009(2) puts the Bank of England’s oversight of payment systems onto a statutory footing.
On a recently published paper the Bank of England provides a brief overview of the relevant provisions of the Act and describes how the Bank intends to reflect these provisions in its approach to oversight. It also invites comments in relation to the draft Principles the Bank is intending to apply to recognized payment systems once the new framework is in place.
The full Bank of England paper may be downloaded at;
http://www.bankofengland.co.uk/publications/other/financialstability/oips/oips090928.pdf
This was recognized in the framework set out in the Memorandum of Understanding (MoU) with HM Treasury and the Financial Services Authority (FSA) in 1997.(1) The Banking Act 2009(2) puts the Bank of England’s oversight of payment systems onto a statutory footing.
On a recently published paper the Bank of England provides a brief overview of the relevant provisions of the Act and describes how the Bank intends to reflect these provisions in its approach to oversight. It also invites comments in relation to the draft Principles the Bank is intending to apply to recognized payment systems once the new framework is in place.
The full Bank of England paper may be downloaded at;
http://www.bankofengland.co.uk/publications/other/financialstability/oips/oips090928.pdf
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