Fintech regulation remains limited in Morocco

Morocco’s promise as a destination for fintech investments is largely supported by favorable demographics and a mature mobile market, says the international rating agency in a recent study entitled: “Fintech Morocco: Financial Inclusion Boosts Regulation, mistrust hampers l ‘adoption”.

“The government is trying to regulate the sector, but structural challenges weigh heavily on its efforts. So far, fintech regulation in the country remains limited, “said the same source, noting that” efforts to regulate the sector are driven by the government’s desire to improve financial inclusion and position Morocco as Africa’s financial hub ” .

According to Fitch Solution, Morocco’s fintech environment is regulated by two entities: Bank Al-Maghrib and the Moroccan Capital Markets Authority (AMMC). BAM is responsible for banking activities such as digital payments, mobile banking, insurance and loans. “The Central Bank of Morocco has positioned itself as a promoter of fintech adoption and encourages the country’s well-structured financial system to invest in digital adoption,” notes the rating agency.

And to continue that strengthening financial inclusion is one of the pillars of the central bank’s national strategy. This, the agency adds, predicts that mobile wallet users will grow to 6 million by 2024, with a total number of 1.3 billion transactions. BAM also aims for the value of transactions to reach 50 billion dirhams by 2023.

“These initiatives demonstrate the government and central bank’s commitment to improving financial inclusion and encouraging the transition to a cashless society. However, their efforts are probably best exemplified by the creation of M-Wallet, a mobile payment platform jointly launched by BAM and ANRT in 2018. M-wallet is designed to be interoperable between payment service providers and, at the same time of its release, the central bank awarded eleven digital payments licenses, ”Fitch Solution said.

Essential regulation for mobile money

He also points out that Morocco was one of the first players in the field of digital payments, introducing “payment institutions” in the Banking Law of 2014. Prior to this date, traditional banks and credit institutions were the only entities authorized to provide cards. bank or prepaid with digital payment capabilities and therefore users had to have a bank account with a traditional financial institution.

This update of the banking law was, according to Fitch Solution, essential to stimulate the adoption of mobile money in Morocco. Prior to the introduction of the banking law, mobile money platforms supported by telecom operators (namely MobiCash from Maroc Telecom and Meditel Cash from Meditel) failed to catch on as regulation at the time forced mobile wallets to focus on banks and therefore required the possession of an account, which is unfavorable in the financially under-penetrated Moroccan market.

“Comme l’exige la réglementation, les deux plateformes ont été lancées en partnership avec les deux banques traditionnelles du pays, empêchant les opérateurs d’exploiter directement le marché et d’obtenir des rendements suffisants pour justifier l’vestissement”, explique-t -She.

Mobile money adoption is still low

Despite the promotion of the digital payments ecosystem and the efforts of telecom operators, Fitch Solution believes mobile money adoption in Morocco has remained low. Ditto for the adoption of digital payments, which also remained weak. In support of World Bank data, only 6% of Moroccans over the age of 15 had a mobile money account in 2021, up from 1% in 2017, and only 30% made or received a digital payment in 2021 compared to 17% in 2017.

Fitch Solution attributes this poor performance mainly to two reasons. First, the current legislation remains restrictive for non-bank entities given the strict guidelines that place heavy restrictions on having a mobile account. Secondly, Moroccans are wary of cashless means of payment and new technologies.

Stimulate the emergence of BNPL

As digital payments have yet to take off in Morocco, Fitch Solution believes there is potential for the emergence of new players. However, he believes the low penetration of contactless POS / QR code devices needs to be addressed.

This is where, according to the agency, the greatest opportunities lie. “The costs of installing point-of-sale terminals have limited their use, but the emergence of a low-cost player – perhaps similar to Yoco in South Africa – could support the large-scale implementation of infrastructures to take off. digital payments. Banks and traditional operators could exploit this opportunity by collaborating with the market players who offer this service. The high penetration rate of smartphones in Morocco, around 80% of the total number of mobile subscribers in 2021, will support the emergence of this vertical “, explains Fitch Solution.

He also believes that the widespread use of digital payments and the use of the mobile wallet will allow e-commerce – and by extension Buy Now Pay Later (BNPL) – to emerge in Morocco. According to Mastercard’s New Payments Index 2022, the same source continues, only 10% of Moroccans have used a BNPL payment plan, giving players the opportunity to take advantage of the market.

Likewise, Fitch Solution believes that “offering cross-border payments to Morocco, the second largest remittance market in the MENA region in 2020, is a huge opportunity for mobile money operators.” During the pandemic, workers foreigners turned to online channels for cross-border payments when restrictions on movement were imposed. The transition to digital has continued and Moroccan telecom operators have worked hard to introduce international payment capabilities on their platforms… “, the agency stresses. .

Currently, the relatively low usage of mobile money platforms will limit the use of digital payments. That said, the actors struggled to gain ground due, among other things, to a sense of distrust among the population.

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