Malawi banks defying Nat-Switch rules: Company eyes VISA and mobile money operators
The National Switch Limited (Nat-Switch) has bemoaned failure by some member banks in adhering to rules and standards set by the switch which connects bank systems to offer domestic interoperability of digital payment systems in Malawi.
The National Switch, commissioned in 2015, allows customers of various banks to make transactions on Auto teller Machines (ATMs) and Point-Of-Sale (PoS) devices regardless of which bank they belong to.
However, some member banks have started defying the rules and standards of operation set for the switch by restricting accessibility of their systems by customers of competing banks.
Complaints which Nyasa Times received and verified have unearthed that several commercial banks on the Nat-Switch grid apart from restricting their systems, they deliberately refuse or ignore calls to assist other banks’ customers affected by their systems.
In interview, Project Manager for National Switch Limited, Gertrude Kadumbo confirmed some member banks are failing to comply with the set rules as well as biding by standard dispute management procedures.
“While the performance of the switch has hugely improved, there are still some challenges consumers are experiencing such as member banks’ systems downtime as well as failed transactions due to problems with individual bank networks,” said Kadumbo.
Kadumbo said that some banks were also failing to comply with the rule of resolving customer complaints thereby creating dissatisfaction in some consumers despite the Nat-Switch proving to be the convenient way for consumers to access banking systems.
“We have standards that all banks have to comply with, and there are rules to discipline those operating on the switch. However some banks are breaching the rules especially on dispute management. Instead of complying with the rule of assisting affected customers of other banks using their systems within 3 days of complaint, they take months to do so.”
Kadumbo expressed hope that the situation will once the Reserve Bank of Malawi (RBM) formalizes regulations for the Nat-Switch. RBM regulates and provide oversight of the Nat-Switch.
She disclosed that currently they have courted mobile money service providers consisting of Telekom Networks Malawi Limited (TNM), Airtel Malawi Limited and Zoona for them to have their services on the Nat-Switch.
“Our goal is to have micro financial institutions including mobile money service providers to integrate into the switch. We are focusing on working with mobile money operators and also we are looking on how to offer gateway for VISA and MasterCard,” she added.
The Nat Switch, largely funded by the World Bank through a five-year loan under the Financial Sector Technical Assistance Project (Fstap), aims at interconnecting banking operations and financial transactions through automated teller machines (ATMs), point of sale (POS) devices, mobile banking, e-banking transactions, Visa and MasterCard gateway and other over-the-counter transactions.
All member banks of the Bankers Association of Malawi (BAM) contributed to the project through subscription of equal shares in National Switch Limited. The loan component of the World Bank funding will be repaid by the National Switch Limited.
In 2010, BAM in collaboration with RBM initiated the National Switch Project which among other objectives is to improve financial inclusion in the country as well as supporting cash-less economy initiatives.