";
Long-awaited by financial technology promoters in the West African Monetary Union (WAMU), the new Instruction n°001-01-2024 on payment services came into force on 23 January 2024 (the “Instruction“). Implementing the new uniform law on banking regulation in WAMU member states, the new Instruction aims to provide a framework for the provision of payment services in WAMU member states by payment service providers, i.e. banks, credit institutions, payment institutions, microfinance institutions and electronic money institutions. The Instruction regulates the activities of payment institutions, i.e. legal entities other than credit institutions, electronic money institutions, financial companies or microfinance institutions.
Under the Instruction, the following services are considered to be payment services:
a) Cash deposits and withdrawals and account management transactions;
b) Execution of the following payment transactions:
▪ Single or standing credit transfers and direct debits;
▪ Payment transactions made using a payment card or similar device;
c) Money transfer transactions;
d) Payment transactions made by any means of communication;
e) Issuing payment instruments;
f) Acquiring payment transactions;
g) payment initiation services; and
h) account aggregation or account information services.
Prior to the entry into force of this Instruction, payment service providers, with the exception of payment institutions, were authorised to provide certain payment services listed above, under the conditions and within the limits defined by their authorisation. Under the new text, payment institutions are now authorised to provide payment services exclusively on a professional basis, (i) subject to authorisation for the services set out in points a) to g), and (ii) subject to prior registration by the Central Bank of West African States (BCEAO) for the account aggregation activity referred to in point h).
In addition to payment services, payment institutions may provide operational and ancillary services considered to be related to their activities, such as custody, recording and data processing. However, certain operations remain prohibited for payment institutions, including in particular:
i) Credit transactions,
ii) Remuneration of payment accounts,
iii) payment transactions by way of exchange,
iv) The use of distributors to provide payment services,
v) The use of funds in an account to make investments other than:
a. Demand deposits with one or more banks or microfinance institutions, representing at all times at
least 30% of the funds in the payment accounts placed by the payment institution,
b. Term deposits with one or more banks or microfinance institutions, and
c. Securities issued by EU Member States with a residual maturity of up to one year, such investments
not to exceed 25% of the funds in the payment accounts placed by the payment institution.
The authorisation or registration of a payment institution is subject to certain preconditions, such as,
inter alia:
– incorporation of a company in the territory of a WAMU Member State, in the form of a public limited company, a limited liability company or a cooperative society, noting that the company may not take the form of a one-person company;
– Proof of a minimum share capital fully subscribed and paid up in cash and in CFA francs on the date of authorisation or registration, where applicable, for an amount set according to the nature of the payment service offered, ranging from ten to 100 million CFA francs, noting that the authorisation decision may set a higher minimum amount; or else
– the good repute, financial standing and competence of the members of the governing bodies.
The application for authorisation is sent to the Governor of the BCEAO, who grants it and notifies the
applicant in writing, specifying the payment service or services that the payment institution is
authorised to provide. In the case of registration as a payment aggregator, the decision is notified by
the BCEAO and recorded by entry on the list of account aggregators established and maintained by
the BCEAO.
Payment services are provided in accordance with all applicable legal and regulatory provisions, in
particular those relating to the fight against money laundering, the financing of terrorism and the
proliferation of weapons of mass destruction, the external financial relations of WAMU Member
States, consumer protection and personal data protection.
Payment institutions must also join Professional Association of Payment and Electronic Money
Institutions (Professional Association of Payment and Electronic Money Institutions) within one
month of being approved or registered, and are required to ensure compliance with the Association’s
articles of association and rules at all times.
Lastly, it should be noted that existing payment service providers now have six (6) months to comply
with the provisions of the Instruction and be approved or registered, where applicable.