Instant Bank Transfers - it's happening!

It's been a while since it has been announced but now the MMA has confirmed that the planned upgrade to the Payment System will take place this year.

Let's address the elephant(s) in the room and get it out of the way.

Will this resolve our PayPal worries? No.

Will this fix our USD shortage? No.

But will this make your life easier? Heck yes.

The one good thing perhaps to come out of this pandemic is that the Maldives have embraced digital banking services far more than we ever have before. We were used to paying everything in cash and then along came the debit cards. While fancy tap-to-pay functions are now becoming the norm, more and more businesses are accepting bank transfers - especially for online purchases.

The only catch is, that you need to use your BML account in most instances. That is, until now.

How does it work NOW?

Let's assume you have a BML account:

If you have a BML account and the business (or your friend) has one too, you can transfer money instantly. But you already know that (I hope).

What if you want to transfer money to an account in another Bank?

Then the payment is called an RTGS.

To simplify how it works:

1. You transfer the money from your account (eg BML)

2. MMA does some magic

3. The receiver from another Bank (eg MIB) gets the money

Simple enough - but this process is NOT instantaneous.

While transfers between different banks are not instantaneous, what makes it worse is that with the current system, it is also usually received later during the day (assuming you did it before the daily deadline) AND this does not work over the weekend or other Bank holidays.

This is all about to change.

How is it going to work AFTER?

Again, quite simply, the process is going to be straightforward - regardless of whatever Bank you use, and whatever Bank you want to send the money to, this will go through IMMEDIATELY; just like how BML to BML transfers are working.

So, apart from the time saved, what is the big deal?

Easier and more flexible transactions

To repeat, if you were to visit a shop to buy something and had to transfer funds, 99% of the time, they would request for it to be done via BML.

BML recently updated their app so now if you want to verify the name of the account holder or if you don't want to go through the pesky process of sending them the slip via Viber after saving their contact info, now you can do that a little bit easier now. Although, QR code functionality would have been a smarter idea. Come on, BML.

With the change in this payment system, businesses can now offer you payment via other banks because they will get the money immediately instead of on the next working day.

That said, keep in mind that BML card machines held the monopoly for a significant amount of time until the general public was able to use MIB machines. Now, even MCB is on the scene with fancy touchscreen POS machines at some outlets. The point is, even if this payment system is arranged by the MMA, it will take some time for businesses to feel comfortable offering alternative bank payment solutions to you and the general public will also need sometime to become more familiar, perhaps more aware of all this.

Quicker salary payments

If you're working at a private company, chances are that your employer may be using another bank for their daily requirements. This is quite often the case for large corporations and resorts as they would prefer the services of a commercial bank rather than using one of the mainstream bankers such as BML or MIB where we generally keep our personal accounts.

When salary transfers are processed, account holders of that bank will receive the money almost immediately whereas if you have an account at another bank, you would most likely get it on the next working day. For example, if your employer works with BOC, then BOC account holders will receive their salary first while CBM account holders will receive the money later.

With this change, salary payments are expected to occur instantly between all the banks.

This can help you get your salary on time, especially right before long holiday periods such as Eid.

Bonus points for the fact that employers cannot use this excuse anymore for delaying your salary...

Enjoy special features and products at other banks

Now that you no longer need to be tied to a single BML account:

• Did you know that CBM offers one of the best savings accounts?

• Did you know that MIB has the highest average rate for a Fixed Deposit?

• Did you know that SBI also has USD ATMs?

• Did you know that MCB is known for their personal service and customer care?

You don't need to be a mahujan to open accounts at other banks.

For example, you could continue to use BML as your primary account, while using MIB for long-term savings while using a third Banker to take advantage of their special products/services.

And whenever you find yourself short on money, you can instantly transfer money between banks.

Also, how nice would it be to beat the queue at the ATM and head into another Bank to get some cash when you have limited time?

So, will this actually work?

Predicting the future is difficult, but let's give it a shot.

• I would forecast that first of all, MMA will not meet their targeted completion for 2021. This is a huge task and getting everything in order, in the middle of a pandemic no less, will not be easy. I would assume that we'll see this some time in 2022.

• There may be big changes coming to POS machines. On average, Banks would charge 2.5% to the business whenever you use your card for a payment. This is why they keep pushing for online transfers. If several banks are able to offer them instant transfers with no charge, they would definitely reconsider the use of POS to an extent.

• What about Payment Gateways? Chances are, you settle your utility bills online and you have the option of paying via BML or MIB (there are MobilePay options offered by Telecoms). Again, this requires the use of your Debit/Credit Card which would cost the business additional fees. Plus, the process takes a while too. I would predict that we being Maldivians, we'd pick the easier route and try to find an instant bank transfer option once this new system is in place. On a separate note, please be aware that Payment Gateways are more secure and you have a less chance of scams & frauds - plus, you're much likely to get your money back if you get into trouble.

Disclaimer: it remains to be seen how exactly this change will be implemented by the MMA as the finer details are still outside the public domain. One can only hope that their new system will allow us to make our banking lives easier.