REPORT ON PAYMENT SERVICES IN THE CEMAC REGION 2022

BANK OF THE STATES OF CENTRAL AFRICA

CENTRAL SERVICES

GENERAL DIRECTORATE OF OPERATIONS

DIRECTORATE OF PAYMENT SYSTEMS AND INSTRUMENTS --------------- DEPARTMENT OF STUDIES, REGULATION AND FINANCIAL STANDARDIZATION

EXECUTIVE SUMMARY ....................................................................................................................................3
INTRODUCTION...........................................................................................................................................6

KEY DEVELOPMENTS OF THE YEAR 2022.........................................................................................9
1.1. Overhaul of the payment service supervision framework .....................................................9
1.2. Standardization of the payment account and escrow account for mobile money.............9
1.3. Applications for Approval as Payment Institutions and Authorization for the provision of payment services..........................................................................................................10
1.4. Consolidation of full monetic interoperability in CEMAC with GIMACPAY.11
1.5. Confusion between FCFA currency and telephone units used as payment means equivalent to FCFA................................................................................................................11
1.6. Resumption of activities by the Regional Committee for Financial Standardization (CORENOFI)..............12
1.7. Cessation of YUP Cameroon activities by Société Générale Cameroun. ........................................12
1.8. The rise of crypto assets (cryptocurrencies).................................................................................13
REGULATORY DEVELOPMENTS................................................................................................14
ACTIVITIES ON PAYMENT INSTRUMENTS....................................................................................16
3.1. Cash withdrawals at counters...............................................................................................16
3.2. Commercial paper ................................................................................................................18
3.3. Checks......................................................................................................................................18
3.3.a. Check payments...........................................................................................................18
3.3.b. Interbank transactions by check......................................................................................19
3.4. Funds transmission services (payment mandates).............................................................19
3.4.a. Domestic fund transfers .....................................................................................................20
3.4.b. International fund transfers............................................................................................21
3.5. Card transactions .............................................................................................................21
3.5.a. Bank card withdrawals.....................................................................................................22
3.5.b. Card payments in CEMAC ............................................................................................23
3.6. Classic and instant transfers..............................................................................................23
3.6.a. Interbank transfers in CEMAC (SYSTAC)............................................................24
3.6.b. International transfers (Outside CEMAC)...........................................................................24
3.7. Electronic money ..............................................................................................................25
3.7.a. Activity evolution ................................................................................................................26
3.7.b. Evolution of accounts and subscribers to electronic money products.........................29
3.7.c. Typology of electronic money transactions .................................................................30
3.7.d. Payments by electronic money..........................................................................................31
3.7.e. Electronic money interoperability............................................................................32
CONCLUSION AND PROSPECTS .................................................................................................33
ANNEXES ....................................................................................................................................................34

EXECUTIVE SUMMARY

In 2022, the CEMAC comprised 498 payment service providers having opened more than 37 million accounts to community residents. 2.4 billion transactions were executed for an amount exceeding 107,126 billion CFA Francs.

By number, the most used payment instrument is instant electronic money transfer with over 96% of transactions (2.3 billion operations), followed by classic transfers and cards with 2% of transactions (48.3 million operations).

Figure 1: Distribution of payments by number in the CEMAC Source: DSMP, BEAC

By value, classic transfers come in first place with 44% of transactions amounting to 48,573 billion CFA Francs, followed by instant electronic money transfers used in 21% of transactions (23,332 billion CFA Francs). Transfers (all categories combined) represent 65% of the value of all transactions in the zone.

Figure 2: Distribution of payments by value in the CEMAC Source: DSMP, BEAC

Cameroon is the country where the majority of transactions are executed both by number (71%, i.e., 1.7 billion operations) and by value (55%, i.e., 59,003 billion CFA Francs). Congo ranks second by number (15%, i.e., 364 million transactions), while Gabon comes second by value (15%, i.e., 16,164 billion CFA Francs).

Figure 3: Distribution of payments by number and by CEMAC country Source: DSMP, BEAC

Figure 4: Distribution of payments by value and by CEMAC country Source: DSMP, BEAC

INTRODUCTION

The year 2022 was the true recovery year after the COVID-19 health crisis, which marked and slowed down banking and financial activities during 2020 and 2021. Financial institution clients returned to counters with a certain normality, using all payment means made available by payment service providers.

As of December 31, 2022, the CEMAC banking system comprised 52 active commercial banks with 738 branches/agencies. They were distributed as follows: Cameroon (15 banks, 384 agencies for 2,809,986 accounts), Central African Republic (4 banks, 19 counters for 153,331 accounts), Congo (10 banks, 112 counters for 588,701 accounts), Gabon (7 banks, 83 counters for 507,153 accounts), Equatorial Guinea (5 banks, 58 counters for 310,837 accounts), and Chad (10 banks, 82 counters for 314,850 accounts).

At the end of 2022, CEMAC had 9 financial institutions managing 87,333 accounts, including 7 in Cameroon (19 counters for 84,099 accounts) and 2 in Gabon (5 counters for 3,234 accounts).

As of end-2022, the microfinance sector in CEMAC comprised 431 licensed and active microfinance institutions (MFIs) managing 3,407,561 accounts, distributed between Cameroon (402 MFIs for 1,987,829 accounts) ¹, Congo (866,477 accounts), Gabon (234,819 accounts), Central African Republic (97,211 accounts), and Chad (221,255 accounts).

The first payment institutions in CEMAC have been licensed. By the end of 2022, there were 5, including 1 in Cameroon, 2 in Congo, 1 in Gabon, and 1 in Chad.

CEMAC had 87,516,780 bank and payment accounts at the end of 2022.

With the standardization of payment accounts to IBAN/RIB formats implemented in 2021, the gross banking rate (account not taking multibanking into account) of CEMAC stands at 145% (theoretical rate on total population. Number of accounts relative to total population).

Analysis of this rate should be corrected regarding, on the one hand, the population aged over 15 and, on the other hand, multibanking (it is highly likely that holders of bank and MFI accounts are also holders of electronic money accounts). The real banking rate could be approximated at +63% of the total population.

At the end of 2022, CEMAC had 45,135,744 (42,570,503 in 2021) accounts, including 7,754,708 (7,511,680 in 2021) bank accounts (held by commercial banks, microfinance institutions, and financial institutions) and 37,381,036 (35,058,823 in 2021) payment accounts (held by commercial banks issuing electronic money and payment institutions).

Payment instruments used include checks, bills of exchange, promissory notes, direct debits, payment cards, classic transfers, and electronic money (Mobile Money). Here, Mobile Money refers to the use of mobile telephony to carry out financial transactions via electronic money or instant transfers. The electronic wallet is an instrument containing computer memory (telephone, computer, token, etc.) allowing the storage of monetary value units and initiating transfer/payment orders debited from one account to another. This payment service is considered a true catalyst for financial inclusion, the development of digitalization/digitization of payments, and thereby African economic development. It is the predominant payment method responsible for opening 98% of payment accounts.

Indeed, the technology used (USSD on mobile phones) enables the deployment of service points with reduced investment and operating costs. These services benefit from the infrastructure established for telecommunications services.

A brief overview of mobile phone usage is warranted, as it is one of the most used vectors during mobile money payment transactions.

Table 1: Status of mobile phone usage in CEMAC Source: GSMA

Country	Mobile Phone Subscribers	- of which prepaid subscribers	Smartphones connected	Basic Phones	2G Subscribers	3G Subscribers	4G Subscribers	Annual connection growth
Cameroon	24,582,174	24,304,586	15,185,454	8,339,444	6,105,923	9,946,035	8,530,216	6.98%
Central African Republic	1,813,065	1,742,651	405,441	1,346,153	646,167	1,166,898	1,100,289	4.13%
Congo	5,489,017	5,298,632	3,233,656	1,926,713	2,022,916	2,365,812	490,454	-1.66%
Gabon	2,991,221	2,854,585	2,228,451	622,244	598,510	1,902,257	50,957	1.61%
Equatorial Guinea	848,002	812,219	315,999	490,029	439,894	357,151	1,385,807	2.77%
Chad	12,532,282	12,526,919	4,823,286	7,434,621	6,954,417	4,192,058	11,557,723	11.51%
TOTAL	48,255,761	47,539,592	26,192,287	20,159,204	16,767,827	19,930,211	11,557,723	~6.8%

"White" areas (not covered by mobile telephony or internet networks) are present in all CEMAC countries, and internet penetration remains a challenge for most of them. High mobile internet pricing in the zone does not allow democratization of access to digital services. According to the "Worldwide mobile data pricing 2022" ranking (mobile data prices worldwide in 2021) by cable.co.uk, out of 233 countries compared, the CEMAC zone counts three countries among the forty where internet is most expensive worldwide: Equatorial Guinea (220th with 6,250 CFA per gigabyte), Central African Republic (219th with 5,833 CFA per gigabyte), and Chad ranks (199th with 3,333 CFA per gigabyte).

The correlation between the telecommunications network and mobile money activity is established through the quality of actors offering these services (generally from the telecommunications sector) so that a mobile telephony company not providing this service (in partnership with a commercial bank or through a dedicated subsidiary) appears to evolve on the margins of development or, worse, may face sustainability issues. Indeed, payment of telecommunications bills or mobile credit top-ups via mobile money has been and remains one of the flagship products of these payment services.

The provision of payment services did not experience major incidents that could undermine public confidence in the financial sector in CEMAC. As elsewhere, digital payment services face cybersecurity challenges. They are stressed by scams, fraud attempts, and phishing that can cast doubt on the reliability of financial products and services.

Thanks to standardization and security work by the Central Bank teams and all actors in the payment service provision ecosystem, payment fraud remains controlled. Notable incidents in this regard have often been made possible by internal fraud through the collusion of employees at the institutions involved. This has always led to a reevaluation of internal control devices by COBAC teams, thus closing system gaps.

The major challenge remains cyberattacks or rather criminality/scams conducted using these services. Operators multiply awareness and education actions for the public on measures to secure accounts, notably through passwords.

This report, after a reminder of the applicable regulations and a presentation of key developments in payment service provision activity, will present an analysis of the key figures on the usage of different payment instruments used in CEMAC in 2022. It includes a succinct analysis of trends and the structuring of the payment ecosystem. Finally, it presents future prospects, major open projects that will impact activity in the coming months and years.

1. KEY DEVELOPMENTS OF THE YEAR 2022

1.1. Overhaul of the payment service supervision framework

A draft text governing the supervision function for payment services at the Central Bank was elaborated and presented to the CEMAC financial community for contribution and validation from August 8 to 12, 2022. The objective is to establish in CEMAC a unique, functional, and efficient framework for the supervision of payment systems and instruments, enabling BEAC to fulfill its statutory mission of guaranteeing and ensuring the proper functioning and security of payment systems and instruments.

1.2. Standardization of the payment account and escrow account for mobile money

Instruction No. 002/GR/2021, dated May 12, 2021, regarding the standardization and operation of payment accounts and escrow accounts, issued under Regulation No. 04/18/CEMAC/UMAC/COBAC of December 21, 2018, regarding payment services in CEMAC, which introduced the concepts of payment account and escrow account.

The payment account is an account held in the name of one or more clients, within the books of a payment service provider, for the execution of payment operations, excluding the issuance and management of electronic money and banking payment instruments such as checks, promissory notes, bills of exchange, and letters of credit.

The escrow account is a bank or payment account opened by an electronic money issuing supervised institution, within its own books or those of another supervised institution, allocated to the domiciliation of funds received from client holders, owners of electronic wallets in exchange for the issuance of electronic money, and which constitutes the guarantee for the reimbursement of units of electronic money issued by the supervised institution holding the escrow account.

With interoperability established for monetic operations by Instruction No. 001/GR/2018 of August 10, 2018, regarding the definition of the scope and interbanking extent of monetic payment systems in CEMAC, consecrated and generalized for all systems and instruments by Article 47 of Regulation No. 04/18/CEMAC/UMAC/COBAC of December 21, 2018, regarding payment services in the Economic and Monetary Community of Central Africa, it is important and imperative to standardize procedures, processes, and exchange formats between supervised institutions providing payment services to facilitate exchanges between payment service providers and secure holders of electronic wallets, but globally the entire CEMAC payment ecosystem.

Furthermore, this Instruction defines and standardizes the format that any payment account must have by equipping it with an IBAN of twenty-seven (27) alphanumeric characters, identical to that of classic bank accounts. During 2022, holders of payment (mobile money) accounts with payment service providers issuing electronic money were assigned an IBAN, notably Orange Money Cameroon and Mobile Money Corporation (Cameroon).

The objective of this harmonization of payment account and deposit account referencing is to give any holder of a payment account a genuine account allowing them to perform all operations (basic banking and financial, by using a payment service provider that is not a bank or credit institution, but a payment institution. In this way, the banking rate (understood as the ratio of persons over 15 years old having access to the banking and financial system via an account) will increase in CEMAC.

1.3. Applications for Approval as Payment Institutions and Authorization for the Provision of Payment Services.

Under Regulation No. 04/18/CEMAC/UMAC/COBAC of December 21, 2018, regarding payment services in CEMAC, subsidiaries of mobile telephony operators dedicated to electronic money financial services have submitted applications for approval as payment institutions to national monetary authorities.

During 2022, five (05) approvals as payment institutions were issued by national monetary authorities: Airtel Mobile Commerce Tchad S.A., Mobile Money Congo S.A. (subsidiary of the MTN group), Orange Money Cameroun S.A., Airtel Money S.A. (Gabon), and Mobile Commerce Congo S.A (subsidiary of the Airtel group).

Furthermore, BEAC received from COBAC, in accordance with Articles 25 and 33 of Regulation No. 04/18/CEMAC/UMAC/COBAC regarding payment services in CEMAC, nineteen (19) files for technical opinions. The processing of the files resulted in fifteen (15) technical opinions, including twelve (12) favorable and three (03) unfavorable. The favorable opinions are distributed as follows:

Six (06) prior authorization requests;
Three (03) prior information declarations;
Two (02) non-objection requests;
One (01) approval request as a payment institution.

Furthermore, it should be noted that Mobile Money Corporation (Cameroon), subsidiary of the MTN group, obtained its approval as a payment institution on May 11, 2023. This brings the number of payment institutions to six (06).

1.4. Consolidation of full monetic interoperability in CEMAC with GIMACPAY

The year 2022 marks the consolidation of full monetics with the effective production launch of all electronic money operators in the GIMACPAY ecosystem. As of December 31, 2022, the GIMACPAY network counted 89 participants, namely: 53 banking institutions, 10 microfinance institutions, 11 mobile money operators, 1 Public Treasury, and 14 aggregators. In total, over 10 million transactions were processed on the GIMACPAY platform for a cumulative amount exceeding 395 billion CFA Francs.

This performance was made possible by a main PCI-DSS certified platform in Yaoundé and its backup in Douala. GIMAC claims 32.5% of the 2,745,540 payment cards in circulation in CEMAC.

By number, during 2022, 73% of GIMAC transactions concerned Mobile Money. The remainder consisted of delegated cards (11%) and interconnected cards (16%). By value, these proportions rise to 55% for Mobile, 45% for cards.

Regarding merchant payment acceptance, the infrastructure installed in CEMAC included 3,038 Electronic Payment Terminals (EPTs), of which 2,470 accept GIMAC cards. Automated Teller Machines (ATMs) number 2,171, of which 1,784 accept GIMAC cards.

1.5. Confusion between FCFA currency and telephone units used as payment means equivalent to FCFA.

BEAC noted, with regret, that with mobile telephony, alternative payment means not recognized by BEAC have developed. This is the case of telephone credit units (Voice and data) used as currency or equivalent to FCFA (thus having legal tender status and general discharge power) by certain populations and organizations.

Faced with this situation, BEAC, in a correspondence addressed on October 29, 2020 to the Association of Concessionary Mobile Telephony Operators of Cameroon (AOCTMC) with distribution to all national telecommunications regulatory authorities in CEMAC, had recalled that communication credits are merchandise, a product, or a service used only for telephony services, and which, even if they have market value, are not payment means or currency. It therefore requested them to cease practices consisting of presenting, using, or exploiting telephone credit units in CFA Francs. This practice is likely to cause confusion with the legal currency in force in member states. Furthermore, remuneration of certain services with telecommunication credit should be prohibited.

During 2021, most mobile telephony operators replaced the "FCFA" acronym with

BEAC Report on Payment Services in the CEMAC Region 2022