Regulation on Payment Services

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The Regulation on Payment Services was published in the Government Gazette on 13 March 2022. The Regulation made pursuant to the National Payment System Act (the “Act”), details the regulatory framework for the licensing and operation of payment services laid down in the Act. The role and responsibilities of custodian banks has also been introduced in the Regulation.

General Requirements for Licensing

In accordance with the Act, the Regulation reiterates that licences for payment service providers will only be issued to companies registered under the Companies Act (Act Number 10/96). The Regulation now provides that such companies must be established for the purposes of providing payment services or engage in financial services.
Licences are to be issued to conduct licensed activities only from a business office based in Maldives. Section 9 of the Regulation details the conditions applicable to the licences.
The Regulation also requires the licensees to seek approval prior to establishing a branch or subsidiary in Maldives or abroad. Any party wishing to acquire shares which leads to the party acquiring majority shares or becoming the ultimate beneficial owner of a licensed payment service provider, must seek approval from MMA before initiating such a transaction.

Exemption to Electronic Money Issuance Services

  1. The Act requires all payment service providers to obtain a licence prior to providing payment services in Maldives. Exemptions are provided under the Act for in-house payment systems, and other additional systems as determined by the Maldives Monetary Authority (MMA).
  2. The Regulation provides an exemption to electronic money issuance service providers, where such services are provided for specific activities related to the electronic money issuer and provided that the electronic money is not redeemed. Further such services must fulfil any of the following conditions:
    • Electronic money is used only in the building or online platform of the issuer.
    • Electronic money is used in limited networks of the service providers and business agreements have been entered into by the parties or the parties belong to the same corporate structure or are affiliated by trademarks, trade names or logos.
    • Electronic money can be utilised to purchase only a limited variety of goods or services.
  3. The exempted parties are required to inform MMA of their status as a service provider. The Regulation stipulates reporting requirements which must be fulfilled by such exempted parties.

Maintenance of Custodian Accounts for Electronic Money Services

  1. The Regulation specifies additional conditions which must be fulfilled by electronic money issuance services. This includes requirements not to issue money in any other currency other than Maldivian Rufiyaa (unless authorised by the MMA), not to consider the electronic money in the accounts as deposits, and not to accrue interests or other gains for electronic money accounts.
  2. Service providers are required to maintain a separate electronic money account for each party holding electronic money.
  3. All funds received in return for electronic money are to be kept in a custodian account, maintained in a bank licensed under the Banking Act (Act Number 24/2010).
  4. Funds deposited to the custodian accounts may only be utilised to pay due sums to electronic money holders and cannot be used for making payments to any other party or used as collateral.
  5. The total amounts maintained in the custodian accounts must not be below the total value of electronic money issued at a given time.
  6. The Regulation further stipulates procedures for the management of the funds in the custodian accounts. The custodian banks are required to inform MMA prior to providing services and reporting requirements provided in the Regulation are applicable to the such banks.

Capital Requirements and Security Deposits

Schedule 2 of the Regulation provides the unimpaired capital which must be maintained by specific payment service providers. The MMA reserves the right to determine the capital amount to be maintained by a specific service provider.

Similarly, Schedule 3 of the Regulation specifies the security deposit to be kept at the MMA by the payment service providers. The security deposit is to be used to satisfy the obligations owed to the customers by the service providers. In certain circumstances, the Authority is empowered to use the security deposits to settle claims received from customers of the service provider.

Effective Date

The Regulation became effective on 13 March 2022.