President Dr Mohamed Muizzu has ratified the Second Amendment to the National Payment System Act, strengthening the legal framework governing the Maldives’ payment infrastructure and granting the Maldives Monetary Authority (MMA) the authority to designate a system as the country’s national payment switch. The amendment to Act No. 8/2021, which was passed by Parliament on Monday, August 17, introduces an important regulatory framework aimed at improving the integration, efficiency and reliability of payment services across the country as the Maldives continues to expand its digital financial ecosystem.
Under the amended legislation, the MMA is empowered to designate a system operating within the Maldivian National Payment System as the national payment switch. Banks and payment service providers operating both within the Maldives and overseas will be required to route transactions specified under MMA regulations through the designated national payment switch. The provision establishes a central framework through which eligible payment transactions can be processed, supporting greater interoperability between financial institutions and payment service providers while strengthening the overall architecture of the national payments network.
The amendment also requires banks and payment service providers to complete the necessary technical, operational and regulatory arrangements to participate in the national payment switch within a timeframe determined by the MMA. Recognising the importance of maintaining uninterrupted financial services during the transition, the law authorises the central bank to establish transitional arrangements while institutions complete their integration with the designated system. This is expected to support an orderly implementation process while safeguarding the continuity of existing payment services for individuals, businesses and other users.
The MMA will also be authorised to introduce regulations, principles and guidelines governing participation in the national payment switch. These may cover technical standards, reporting obligations, applicable fees, operational procedures and requirements relating to the development and operation of the system. Establishing common technical and operational standards is expected to further strengthen coordination among financial institutions and support the development of a more integrated, secure and efficient domestic payments environment.
Where the national payment switch is operated by an entity licensed by the MMA rather than directly by the authority, both the designated system and its operator will remain subject to the applicable requirements of the National Payment System Act. This provision ensures that national payment infrastructure remains within a clear regulatory and supervisory framework regardless of the operational model adopted for the designated switch.
The amendment additionally introduces new requirements for licensed payment service providers offering payment acquiring services, with particular emphasis on the timely handling and settlement of customer funds. Under the revised provisions, payment service providers must deposit customer funds into an account maintained with a licensed bank no later than the first business day following a transaction. The provider must subsequently arrange for the customer or beneficiary to receive the funds within one business day after the deposit is made.
These requirements are expected to strengthen consumer and merchant protections while promoting greater transparency and consistency in the settlement of payment transactions. Faster and more clearly regulated settlement processes can be particularly important for businesses that increasingly depend on digital payments for their daily operations, while also supporting public confidence in electronic payment services throughout the Maldives.
The amendment requires the Government to formulate and publish the regulations necessary to implement the revised provisions within 30 days of the law coming into force. The legislation takes effect after being passed by Parliament, ratified by the President and published in the Government Gazette.
The latest amendment builds on earlier reforms undertaken by the administration to modernise the country’s financial and payment infrastructure. President Muizzu ratified the First Amendment to the National Payment System Act last year, expanding the MMA’s authority to develop national payment infrastructure, including through partnerships and joint ventures. The earlier amendment also introduced requirements for MMA authorisation to operate payment systems covered by the Act and provided for financial penalties ranging from MVR 100,000 to MVR 10 million for violations.
Together, the reforms provide the Maldives with a stronger legal foundation for the continued development of modern payment infrastructure as digital transactions become increasingly important to households, businesses, financial institutions and the wider economy. The establishment of a regulatory mechanism for a national payment switch is expected to support the Government’s broader efforts to modernise public and financial infrastructure, promote digitalisation and create a more connected payment ecosystem capable of supporting the country’s future economic development.
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