Weekly Update

Int'l Money Transfer: CBN Warns Banks on Exclusivity Clause

By Moses Obajemu, 11.23.2008

Banking

The Central Bank of Nigeria (CBN) has directed all deposit money banks in the country to review and expunge all exclusivity clauses in the agreements that they signed with international money transfer operators. Besides, the apex bank said, in a circular entitled: " Exclusivity Clauses in the Agreements Signed by Nigerian Banks with International Money Transfer Operators" dated November 20, 2008, that it would no longer approve any money transfer agreements between international money transfer operators and agent banks that contain exclusivity clauses.

The CBN circular, which was signed by its acting Director of Banking Supervision, D.A.N. Eke, said the intervention became necessary because of the ill feelings the development has caused.

"Such exclusivity clauses aimed at protecting the interest of the international money transfer operators, constitute a restraint on competition and unnecessarily increase the cost of money transfer services to users.

"In the light of the above, all deposit money banks are hereby notified that the CBN, henceforth, will no longer approve any money transfer agreements between international money transfer operators and agent banks that contain exclusivity clauses", the CBN warned.

The bank further directed the deposit money banks to ensure that exclusivity clauses are no longer included in agreements between them and international money transfer operators.

"These directives take immediate effect and all banks offering international money transfer services are required to bring this to the notice of their respective international money transfer partners, and ensure strict compliance", the CBN said.

The latest move by the CBN is seen by financial analysts as trying to make the international money transfer operators to bear the risks associated with money transfer as against passing the entire risks to their Nigerian agent banks. Only recently, the apex bank also made some additional information requirements and directives on Western Union Money Transfer as a way of enthroning transparency and safety in its operations.

In a separate recent circular, the apex bank said funds transferred shall only be collected in the designated town for payment and nowhere else. It said this became necessary because of the absence of a fool-proof means of personal identification and the need to protect the system.

This development, according to analysts, is a further proof that the CBN is trying to reduce the risks that Nigerian banks are exposed to in their relationship with international money transfer operators.

Leon Isaacs, Managing Director of IAMTN, commented 'These actions reflect the growing recognition of the importance of remittances to the Nigerian Government. Just recently the Nigerian authorities advised that the amount of inward remittances into Nigeria was $18billion per year which is a dramatic increase on the previous official measure of $4 billion. It remains to be seen whether these changes will lead to any short term alterations in the competitive market situation in Africa's largest receive market.

M2 Global buys money transfer oufit iKobo's assets

M2 Global (BSX:M2G), a leader in online electronic payment systems, today announced that it has acquired all assets of iKobo, an international person-to-person remittance firm.

iKobo's money transfer service is card-based and uses a Visa Prepaid Card issued by Visa international's member bank, Global Bank of Commerce, which enables recipients to get cash from over 1,000,000 ATMs worldwide and use their card wherever Visa debit cards are accepted. The acquisition fits perfectly into M2 Global's strategy to offer the most secure and flexible financial transactions available.

M2 Global's proven e-business infrastructure will quickly integrate iKobo's customers to provide a secure and smooth transition for cardholders. iKobo's Visa Prepaid Debit Card program has been a proven transfer service for over 5 years, and the business provides an ideal addition to M2 Global's payment solutions.

"Our ability to efficiently integrate iKobo's technology into our existing platform will greatly reduce the operating costs of iKobo's remittance business, resulting in higher margins and profitability," said M2 Global's CEO, Mike Muscato. "This is an ideal business acquisition for us and we are excited about our ability to serve iKobo customers and grow this business." iKobo customers who were issued cards from various banks will now be supported by GBC, M2's international banking partner. A hotline and other customer support actions are underway to ensure iKobo customers can soon resume sending and receiving money worldwide.

The iKobo Visa Prepaid Debit Card product with be added to M2's portfolio of prepaid debit card products that include GlobeWallet, and will managed with M2 Global's established technology platform.

TimesofMoney enters a strategic tie up with Axis bank

TimesofMoney, India's leading non-bank e-payments service provider has entered a strategic partnership with Axis Bank, India's leading private sector bank, with a substantial NRI customer base, to launch AxisRemit, the Bank's own branded online remittance service. With AxisRemit the Bank will provide high-speed online money transfer services for NRIs in the major sending countries USA, UK, Eurozone, Canada, Australia, Singapore, Hong Kong and UAE using TimesofMoney's white-labeled state of the art remittance platform & know-how.

TimesofMoney's white-labeled 'hosted on demand' solutions will provide the technology platform for AxisRemit. The back-office functions relating to remittances would also be handled by TimesofMoney. This alliance integrates Axis Bank's core strengths in NRI Banking and service delivery with TimesofMoney's domain knowledge and technical expertise in cross border remittances, creating a smooth and satisfying remittance experience to NRIs situated across the globe.

Speaking on the initiative, Avijit Nanda, President, TimesofMoney, said, "We are proud to partner with Axis Bank to launch this very significant service for NRIs and be an enabler of the cross border flows that make India the world's largest destination of inward remittances. With the extension of our white labeled solutions, our partners will be able to conduct their business with a high level of security and more convenience."

Speaking on the launch, Mr. Hemant Kaul, Executive Director for Retail Banking, Axis Bank said, "AxisRemit is the new online Remittance service from Axis Bank, representing a significant entry of the Bank into the fast growing remittance business. Under this service, NRI customers in USA, UK, Europe, Australia, Singapore, Hong Kong and UAE would be able to use AxisRemit to transfer money online from their local bank account to the receiver's account anywhere in India. In recent years there has been a large-scale migration of NRIs to online remittance channels from traditional remittance routes and we intend to be a major player in this arena. The key strengths of AxisRemitwill be our transparent pricing policy, superior customer service and faster Turn-Around-Time."

For further details contact: smitac@timesofmoney.com