Malawi national switch centre live in 2014

The country’s 11 commercial banks will contribute a combined 10 percent out of $3 million (K1 billion) required to implement the national switch, a shared switch platform, expected to go live by March 2014, an official has said.

As such, each bank will part with K105 million (about $262 500) since the switch will operate under the shared payment services arrangement in which each of the members of the Bankers Association of the Malawi (BAM) has a stake, according to the chairperson of the national switch steering committee William Kaunda.

“Being a shared service, the components will carry public good elements. Such being the case, Reserve Bank of Malawi’s [RBM] participation will focus on ensuring that the institutional setting for such arrangements continues to promote efficiency, competition and innovation,” he said on Thursday in Blantyre.

Currently, Malawi does not have a national switch, and it is only four banks, National Bank of Malawi (NBM), NBS Bank, FMB and Standard Bank, that are interconnected through Visa net controlled in the US.

The national switch, largely funded by the World Bank through part of a five-year loan amounting to $28.2 million (K9.8 billion) under the Financial Sector Technical Assistance Project (Fstap), will interconnect banking operations and financial transactions through automated teller machines (ATMs), point of sale (POS) devices, mobile banking, e-banking transactions, Visa and MasterCard gateway and other over-the-counter transactions.

Kaunda said the national switch will provide ease in banking, a move that could potentially attract the unbanked population to start using the banking system.

The Finscope Survey of 2008 showed that a paltry 19 percent of the country’s population is banked, but BAM executive director Lyness Nkungula said Thursday the situation has improved since then.

Kaunda said with the national switch in place, it will no longer be necessary for each bank to have so many ATMs/POS devices to achieve convenience that customers often look for when choosing a banking service.

In August, Malawi Switch Centre (Malswitch), a one-time baby of the RBM, which is an integrated technologies business with core activities in e-payment and information technology infrastructure, complained that the national switch will threaten its survival.

Documents show that Malswitch, which could also connect to the national switch, gets 64 percent of its revenue stream from banks through switching services, and with the national switch 75 percent of jobs could be cut.

Malswitch was delinked from the RBM in 2006 and is now an independent company.