President ratifies amendment allowing MMA to establish national payment switch

President Dr Mohamed Muizzu on Sunday ratified an amendment to the Maldives Payment System Act giving the Maldives Monetary Authority (MMA) powers to establish a National Payment Switch.

The amendment, passed by Parliament last Monday, is intended to develop the country’s payment infrastructure and provide a system through which transactions between banks and payment service providers can be routed.

The bill was introduced on behalf of the government by PNC MP for Hulhudhoo Mohamed Shahid during the parliamentary sitting on 11 August.

Under the amended law, the MMA may designate a system within the national payment framework as the National Payment Switch.

The legislation also allows the central bank to require specified payment transactions conducted through banks and payment service providers to be processed through the switch. This can include transactions conducted within the Maldives as well as transactions involving overseas payment systems.

Introducing the bill in Parliament, Shahid said the changes were proposed to improve the governance and oversight of payment systems in the Maldives.

One of the objectives is to improve interoperability between banks and payment service providers. Under such a system, payment cards or digital wallets issued by one bank could be used through point-of-sale terminals or QR payment systems operated by another institution.

The government also expects a domestic payment switch to reduce dependence on overseas payment networks for transactions within the Maldives, which could reduce transaction costs.

Shahid said processing transactions through a system based in the Maldives would also provide the country with more control over its payment infrastructure.

The amendment also introduces changes governing the settlement of funds collected on behalf of businesses.

Following changes to Section 20 of the Act, entities collecting payments will be required to deposit customer funds into banks by the next business day.

Shahid said the provision is intended to ensure that businesses receive payments for goods and services within one day.

He said the change would also help small and medium-sized enterprises manage cash flow by reducing the time between receiving a customer payment and the funds being transferred to the business.