May 05, 2018 News
In an effort to address the challenges affecting Guyana’s remittance market, Central Bank has disclosed that it intends to phase out the use of exclusivity agreements among remittance agents.
It made this, among other measures known, in a special report that will chart the way for Guyana to modernize its National Payment System (NPS).
Central Bank officials explained that in Guyana, exclusivity agreements bind agents to one super-agent, and each super-agent to one international Money Transfer Organization (MTO).
Given the limited number of potential agents, particularly in less populated areas, Central Bank officials noted that the agreements severely limit the ability of the Remittance Service Providers (RSP) to expand their agent networks and their incentive to do so.
Bank of Guyana said that it also makes it extremely difficult for new Remittance Service Providers to enter the market.
In its report, the Bank of Guyana said that globally, the elimination of the use of exclusivity agreements has been instrumental to efforts to lower the cost of remittances and enhance the quality of remittance services.
Bank of Guyana said that a plan will be developed to phase out the use of exclusivity agreements in Guyana over the next two to three years.
In addition, Central Bank noted that it will take steps to enable and foster the use of electronic means to send and receive remittances.
It stated, “Money Transfer Organizations and domestic Remittance Service Providers will be allowed and encouraged to work with the commercial banks and authorized non-bank Payment Service Providers to enable remittance customers to use their bank and/or e-money accounts to send and receive remittances.”
Bank of Guyana continued, “Just as is the case for cash remittances, appropriate anti-money laundering and counter financing of terrorist measures (AML/CFT) measures will be required for electronic remittance services.”
Central Bank also noted that it will make efforts to enable the processing of remittance flows in the nation’s interoperable retail payments platform, if such a platform is built.
In the context of efforts to strengthen interoperability in the retail payments market, Bank of Guyana said that it will work with payment system stakeholders to explore means to integrate the remittance market with the broader retail payment industry.
It said that doing so will help advance the development and use of electronic payments for conducting all retail payments, including remittance transaction.
Central Bank noted that the aforementioned measures are necessary since the remittance industry falls short of meeting the needs of customers in a cost-effective manner and, given the industry’s isolation from the rest of the financial sector; it currently offers limited potential to serve as a gateway to financial inclusion or the use of transaction accounts.
Bank of Guyana officials noted that the factors contributing to this situation are deep-seated and hard to address. It said that key among these is the lack of competition in the remittance industry.
Others include the lack of interoperability across remittance services, the lack of innovative and electronic payment options, and, for domestic remittances, the absence of a legal and regulatory framework to govern the industry.
Even without these constraints, Central Bank said that the relatively low level of development of Guyana’s broader retail payments industry creates a drag on the remittance market.
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