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Electronic-money (e-money) refers to monetary value measured in currency units stored in electronic form on an electronic device in the consumer’s
possession. This electronic value can be purchased by the consumer and held on the device and is reduced as and when the consumer uses the device to make purchases. This contrasts with traditional electronic payment
transactions such as those with debit or credit cards which typically require on-line authorisation and involve the debiting of the consumer’s bank account after the transaction. There are two different types of
electronic devices; namely prepaid cards and prepaid software products. With prepaid cards, the electronic value is stored on a computer chip (or integrated circuit) embedded in the card and value is typically
transferred by inserting the card in a card reader. With software products, the electronic value is stored on the hard disk of a computer and is transferred over communication networks such as the Internet when
payments are made.
Although e-money is still in its infancy in Mauritius, two big corporates, viz the Mauritius Telecoms and Shell Mauritius Limited are issuing
single-purpose prepaid cards which are used to pay for telephone calls and fuel.
Over the past years, two types of electronic banking services have emerged in the banking sector; they are phone banking and Internet banking. Three
banks have already launched their websites in Mauritius and others are likely to follow suit soon.
Services through the Internet allow customers to effect banking transactions round the clock from anywhere around the world. Internet banking systems are
well secured to prevent unauthorised access and safeguard the integrity of the data.
The services which are actually being provided through Internet banking include overview of and inquiring of accounts, making inter-account transfers,
effecting payments to third party accounts, ordering cheque books and opening of accounts. In addition to these facilities, application for loans can be made through the Internet.
Although banks stand to derive benefits from involvement in electronic banking transactions, they are also exposed to some significant new risks. Some of
these risks are strategic; i.e. banks may be unable to adapt successfully to changes in the business environment created by electronic banking. Others are operational-including conditions in which the computers and
network technology that support electronic banking could malfunction. In relation to banking on the Internet, there is also the increased risk of unauthorised access to and alteration of information. Risks may be
heightened where a bank does not adequately educate its customers about security precautions. Further, in the event of lack of visible evidence to support any transactions entered into by a customer, the latter may
repudiate certain transactions thus inflicting severe financial losses on banks.
As a bank regulator, the primary concern of the Bank of Mauritius is to ensure that banks have in place adequate systems to measure, identify and control
the various types of risk to which they are exposed. This issue has been the subject of a separate guideline to be issued to banks. Bank auditors are also under a duty to report to the Bank of Mauritius on the
status, inter alia, of controls put in place by banks for creating a safe and secure environment free of operational risk. The aim is to continuously ascertain the adequacy of the controls in the light of evolving
technology.
Given the rapid pace of innovation in technology, the Bank has an interest in anticipating the likely policy implications of these developments. The Bank
has specific objectives to protect consumers and other users of the payment system against financial or other types of risks with a view to enhancing confidence of consumers of electronic money services. In this
connexion, the Bank is in the process of issuing a specific guideline to banks on the appropriate framework for establishing their electronic banking and electronic money business.
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