Bill seeks to empower MMA to establish national payment switch

A bill to amend the Maldives Payment System Act has been submitted to Parliament to give the Maldives Monetary Authority (MMA) the authority to establish a National Payment Switch for transactions involving banks and payment service providers.

The bill was introduced during Tuesday's parliamentary sitting by Hulhudhoo MP Mohamed Shahid. Parliament voted to accept the legislation and referred it to the Public Accounts Committee for review.

Under the proposed amendment, the MMA would be authorised to designate a system within the National Payment System to operate as the National Payment Switch.

Payment transactions specified by the MMA, including transactions processed domestically or internationally through banks and payment service providers, would be required to pass through the switch.

Introducing the bill, Shahid said the government proposed the amendment to strengthen the governance and oversight of payment systems in the Maldives.

The National Payment Switch would connect banks and payment service providers through a common network, allowing customers to make payments across different providers.

Under the proposed system, for example, a card or digital wallet issued by one bank could be used to make a payment through another bank's Point of Sale (POS) terminal or QR code.

Shahid said routing transactions through a domestic switch could reduce reliance on foreign payment networks and lower the fees associated with processing transactions through overseas systems.

He also said processing transactions through infrastructure established in the Maldives would strengthen the country's control over its payment infrastructure and reduce dependence on systems operated abroad.

The bill also proposes changes to Article 20 of the Maldives Payment System Act relating to the settlement of customer funds.

According to Shahid, entities collecting payments from customers would be required to deposit the funds into the relevant bank account by the next business day.

The amendment seeks to establish a framework under which businesses receiving payments can access their funds within one day.

Shahid said the requirement would be of particular benefit to small and medium-sized enterprises, where the time taken to receive payments can affect cash flow and day-to-day operations.

"Establishing statutory deadlines for financial transactions through this amendment will build greater user confidence in the overall system," Shahid said.

The legislation received support from MPs representing both the government and the opposition Maldivian Democratic Party (MDP).

Parliament voted to accept the bill with 61 members voting in favour. The Public Accounts Committee will now review the proposed amendments before the legislation is returned to the floor for further consideration.