Supporting instant low-value remittance settlement systems in Southern Africa

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Supporting instant low-value remittance settlement systems in Southern Africa

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Project Goal

Promote competition among remittance service providers (RSPs) by scaling up Transactions Cleared on an Immediate Basis (TCIB). TCIB is a regional and interoperable payment scheme that promotes more affordable low-value, cross-border payments in the Southern African Development Community (SADC) region, while enlarging access to pay out access points for rural recipients

Implementing Partner

BankservAfrica is a leading payment processing organization across African markets operating from South Africa since 1972, supporting interbank and interoperable payment systems in various African countries and at the regional level in SADC.

Geographic Target

South Africa and its remittance corridors with Mozambique and Zimbabwe.

Project Objectives

Cost Reduction

Contribute to reducing international remittance transfer costs by increasing competition in the SADC region

Formalization

Expand formal channels and access to international remittances. Through TCIB, the project will eliminate the use of bilateral relationships between RSPs, enabling the termination of remittances using a wider range of channels and financial service providers.

Project Description

IFAD is partnering with BankservAfrica under the PRIME Africa initiative to promote competition among a diversity of RSPs through a regional and interoperable clearing and settlement system, TCIB, that promotes more affordable low-value cross-border payments in the SADC region. TCIB seeks to improve the cross-border payment process, standardize compliance requirements, remove the need for complex bilateral cross-border arrangements, and create more competition in the formal financial system. Payments can be routed directly to a central processing hub, or through intermediaries participating in the scheme, including: sponsor banks, integrators, or local automated clearing houses that transmit the payment on the sender’s behalf. This provides multiple entry points for RSPs to deliver cross-border payments services leveraging on other participants in the TCIB scheme. For remittance families, interoperability offered by TCIB provides efficiency gains through lower remittance costs applied by any RSPs and various payment instruments (cash and digital), enabling enhanced access to rural-based RSPs. On the supply side, interoperable systems encourage competition among RSPs by removing barriers, especially for new entrants and smaller providers.1 TCIB is an important step in addressing uncompetitive market structures that are driven by bilateral and commercially exclusive relationships, which hinder access to markets for competing players. TCIB also caters to multicurrency settlement, which helps manage foreign exchange risk for RSPs.

Project Activities

 BankservAfrica will carry out a stakeholder mapping relevant to the TCIB scheme in the Mozambique and Zimbabwe corridors. This leads to designing a country engagement strategy based on the identified needs. Activities will complement BankservAfrica’s already completed mapping and strategy for South Africa.

A practical implementation of the country engagement strategies (one per country) will focus on building awareness about TCIB benefits, and identification of business and integration conditions among the targeted stakeholders in each of the three countries.

The project will provide interested RSPs with technical support so that they satisfy the TCIB membership requirements. This will involve guiding the RSPs in obtaining regulatory approval for TCIB integration, and testing the RSP systems in terms of technical readiness for the TCIB integration process.

The project will promote market wide interoperability across the PRIME Africa corridors and will develop a case study documenting the key learnings from the project that will enhance scaling up within and outside of the SADC region. The case study will also highlight the potential benefits for end-customers, including rural dwellers.

Expected Results

Supporting Sustainable Development Goals

Supporting Sustainable Development Goals