IBS Journal February 2015
‘Swift has worked with us on a daily basis with everything. Even if we don’t need it, they just stand by to give support and expertise. Although we didn’t ask for such consultancy service, they offered it.’
Maha Bahou, Central Bank of Jordan
as opposed to smartphones, and those without bank accounts – could benefit from the switch as well. The proportion of unbanked adults in Jordan is over 70 per cent. This is despite the fact that the country has more than 20 banks, ‘all of which make a profit’, serving a population of less than seven million. ‘We want to stimulate demand for banking, and not only focus on supply,’ Bahou notes. In terms of the switch, it means making sure that remittance providers like Western Union, and any other payment schemes, can use it. This way people who don’t have a bank account can still store value on the network with a mobile wallet. To catalyse these types of offerings, the
CBJ will try to keep the regulation of mo- bile payments as relaxed as possible. ‘We’re very keen to create a level playing field so the market will be open to all interested parties,’ Bahou states. Anyone will be able to access the switch so long as they register with the central bank as a financial insti- tution so the CBJ can supervise them, and registering is supposed to be a straight- forward process. As for the category of feature phone users which still make up close to half of the population, the CBJ has placed an obligation on service providers to make sure that they support USSD, or Unstructured Supplementary Service Data. This allows feature phones to access services that smartphones can access over mobile internet. The mobile switch has been designed to manage these, and the router for USSD is still being finished. When this is complete, ‘all users will have unified menus’, says Bahou. There is a third category to mention
also: refugees. As well as a new influx from Syria and Iraq, there are millions from Palestine, and the switch is designed to recognise not only Jordanian ID numbers but also foreign passport numbers, and
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unique ID numbers issued to refugees by the UN. ‘That was one of the first issues to be considered,’ says Bahou. The security of the system had to take all of these factors into account. ‘Because it’s targeted at poor and unbanked people who are very sensitive to losing any small amount of money, security was critical. So we really took our time to get this right,’ Bahou states. One component of this is Fin- inform, a tool from Swift to help keep track of money flows in and out of the country. The mobile switch, known as Jomopay,
was approved by the CBJ at the end of 2013, and was provided free of charge by ProgressSoft. Two banks are currently live on it, with others undergoing testing. Another company which underwent the same testing is Emerging Market Payments (EMP), which is not currently using it but has instead stepped back to build a consortium of five banks plus a telco. EMP will also be able to incorporate its network of ATMs and points of sale in the country. The latter opens up the option of NFC payments, which the CBJ is working to provide a standard workflow for. ‘Now they have telcos and banks on board, we expect their offering to be strong,’ says Bahou. Also being integrated to the mobile
switch and the other systems is a new electronic bill presentment gateway. This is already in existence, having been built with EMP and a local company, Madfoo3atCom. It was launched as eFawateerCom in May last year. The presentment system is more like a notification platform than a payment switch, but once they are integrated it should allow unbanked people to pay their bills through their mobiles.
Next
There are a few other technology projects which the CBJ has got out the way as well.
© IBS Intelligence 2015
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It has implemented IBAN numbers and is working on IBAN validation through Swift at present. There is also an upgrade of the electronic cheque clearing system. However, most of the technology
replacement is finished, or will be shortly. The focus will then be able to move to product innovation, making use of a bank- ing infrastructure made up of new RTGS, ACH and mobile payment switches, using new messaging standards, which are fully integrated and all work in real-time. The bank continues its work to bring unbanked people, particularly women, into the payments network and eventually the banking sector. ‘We are trying to reach every person in Jordan for financial servic- es,’ says Bahou. In the bank’s vision, this ex- tends beyond mere payment services into the realm of savings and credit products. While it’s not the CBJ’s job to actually offer the products, it has approached banks that offer loans and savings accounts which rely on mobile payments. ‘We are co-operating with Islamic banks about this as well,’ says Bahou. It will also encourage individuals to use the new infrastructure for receiving payments for their own business. Similarly, it hopes that microfinance institutions – which have only recently been added to the regulatory remit of the CBJ – will also make use of the system and the new ACH, to disburse loans and to receive instal- ments back from individuals. Meanwhile, the government intends
to use the mobile payments and mobile wallet functionality to disburse its own sub- sidies and benefit payments. And there will also be integration with the credit bureau system, meaning people will start to build a credit footprint, often for the first time. The payments landscape in Jordan
will look completely different in just a few months’ time, when the revolution is completed.
analysis: jordan’s payments infrastructure
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