On August 4, 2020, The E-Money Issuer Order, 2020 (‘EMI Order’) moved Trinidad and Tobago one step further along the path to achieving financial liberalisation and innovation, thereby making the country an active player in the Fourth Industrial Revolution. The Fourth Industrial Revolution involves the proliferation of technologies such as artificial intelligence and 3-D printing, which rework and blur the boundaries between the physical, digital and biological worlds.
The EMI Order allows persons other than banks and financial institutions licensed by the Central Bank of Trinidad and Tobago (CBTT) to issue e-money, subject to approval by CBTT. The categories of persons who can issue e-money other than licensed banks and licensed financial institutions are:
(a) Payment service providers, such as Bill Express, VIA, and SurePay, or payment service operators registered with CBTT;
(b) Money remitters, like MoneyGram and Western Union, registered with the Financial Intelligence Unit of Trinidad and Tobago (FIU);
(c) Mobile network operators authorised by the Telecommunications Authority of Trinidad and Tobago, such as bmobile (TSTT) and Digicel;
(d) Technology service providers which are persons who provide hardware and software that allows a payment service provider to offer payment services or instruments, as well as the clearing and settlement of instruments; and
(e) Other financial institutions, such as credit unions, insurance companies, and Trinidad and Tobago Unit Trust Corporation.
What is e-money?
E-money or electronic money is the monetary value represented by a claim on an issuer which is:
1. Stored on an electronic device;
2. Issued on receipt of funds of an amount not less in value than the monetary value issued; and
3. Accepted as a means of payment by persons other than the issuer.
In other words, e-money is cash stored in an electronic form. E-money can be card based in the form of pre-paid cards or smart cards also known as a “wallet”. Alternatively, e-money can be network or software based using mobile or internet networks and is referred to as “digital cash”. The dollar value of the e-money is held in consumer and EMIs accounts on servers that are accessible through the internet or a telecommunication system.
Requirements for e-money issuer applicants:
Requirements to be satisfied by e-money issuer applicants include the following:
(i) Application for registration as an e-money issuer and payment of the requisite fees.
(ii) Application for registration as a Payment Service Provider and payment of any applicable fees.
(iii) After grant of approval of registration or provisional registration as an e-money issuer, registration with the Financial Intelligence Unit.
(iv) Existence as a body corporate with a registered office in Trinidad and Tobago.
(v) The applicant, as well as all its directors, officers, acquirers, significant and controlling shareholders, must satisfy the Fit and Proper Guidelines of CBTT and the Second Schedule of the Financial Institutions Act.
(vi) The applicant’s business must be directed by a minimum of two persons, at least one of whom shall have the requisite experience and technical knowledge to direct the EMI’s business activities.
(vii) The Satisfaction of minimum capital requirements, for example, EMIs that service high value transactions (payments up to $10,000 per transaction) must maintain at least $1 million or 3 per cent of the outstanding balance of the e-float, whichever is the greater.
(viii) Maintenance of cash or cash equivalents (assets readily converted to cash) that amount to the outstanding e-money it has issued.
(ix) Must demonstrate effective risk management.
EMIs must conduct the following activities in Trinidad and Tobago dollars only:
(a) Issuance of e-money
(d) Provision of payment services; and money transfer of remittances.
Further, e-money accounts can only be issued against cash, debit cards, credit cards, or direct debits through the Automated Clearing House. It is also noteworthy that EMIs are restricted from buying, selling, or dealing in foreign currency. This seems to suggest that payments from overseas cannot be made to local e-money accounts thereby promoting a closed loop e-money system in Trinidad and Tobago.
In light of the foregoing, the introduction of the EMI Order should reduce the barriers to entry in this space. Neither do persons need to be licensed banks and financial institutions nor do they need to partner with licensed banks and financial institutions to become EMIs.
What does the advent of e-money mean for consumers?
Consumers can affect cashless transactions through the use of e-money which would make payments for goods and services far more convenient than typical modes of payment. Consumers can purchase goods and services easily using e-money over the internet, with smart cards or their smartphones. Consumers would be able to use e-money anytime day or night and anywhere provided merchants adopt the use of e-money as effective payment for goods and services. Consumers would pay merchants quickly as opposed to payment by cheque or bank draft. The use of e-money eliminates the risks associated with people carrying cash. In addition, transaction fees associated with e-money payments should be considerably lower than credit card fees or traditional remittance fees. Notwithstanding encryption measures for e-money, there are ever present risks from hackers as is the case with any virtual transaction.
A copy of the EMI Order can be found at https://www.central-bank.org.tt/sites/default/files/page-file-uploads/legal-notice-284-e-money-issuer-order-2020.pdf
The Trinidad and Tobago Chamber of Industry and Commerce thanks Carolyn Fifi, Partner, Johnson, Camacho & Singh, for contributing this article.