Cameroon’s Payment Rails & How They Work – CEMAC, Mobile Money & Interoperable Transfers

The payment system in Cameroon is evolving very quickly because of new rules, regional integration, and the fast expansion of mobile money. Cameroon is part of the Economic and Monetary Community of Central Africa (CEMAC), which means it has a common financial system. But it also has problems making sure that payment systems perform the same way for both domestic and foreign transactions.

Cameroon's CEMAC Payment Systems

The Bank of Central African States (BEAC) runs the system that lets CEMAC payments work in Cameroon. There are two primary pieces to this system:

Places where people can pay a lot of money in little amounts
Current accounts for paying off big debts in the BEAC area

Even though the BEAC uses the SWIFT network to move money all over the world, there are still issues. Banks sometimes employ different methods to transmit money to and from correspondent accounts, and it is typical for things to take longer than expected.

People still utilise Western Union and other non-bank services because official procedures are slow and hard to understand. The system has a lot of problems, like value dates that aren't fulfilled, bounced checks, and delays, especially when it comes to clearing minor payments. It also takes a long time to process big payments at BEAC's headquarters in Yaoundé, which makes it hard for trade and capital markets to work. It can take up to five days for a settlement to happen.

It is considerably tougher to make payments outside of the CEMAC zone because of exchange controls. This makes it harder for Cameroon to do business.

The Growth of Mobile Money in Cameroon

The mobile money revolution has transformed the way people in Cameroon and the rest of the CEMAC area pay for things online. Mobile money accounts represented almost 98% of all new payment accounts in CEMAC as of 2022. In the area, Cameroon had the most transactions and the most money.

In 2022, there were 2.4 billion transactions that came up to more than CFA 107,126 billion.
Cameroon obtained 55% of the overall value (CFA 59,003 billion) and 71% of the transactions (1.7 billion).
Orange Money and MTN Mobile Money are the top companies.

More and more people in Cameroon are using mobile banking. From 2017 to 2022, the percentage of adults 15 and over who use it grew from 29.9% to 42.7%. Mobile money currently accounts for more than 5% of the country's GDP since it makes it easier to send and receive money, pay bills, merchants, and even taxes.

The COVID-19 outbreak made people in Cameroon use digital wallets more quickly. This was because more people started using contactless payments, and carriers cut transaction prices. But it is still hard for penetration to materialise because of inequalities between men and women, exorbitant fees, and gaps in coverage in rural regions.

Also read: Guinea’s Payment Rails & How They Work – GIM-UEMOA, Mobile Money & Cross-Border Transfers

The GIMACPAY Initiative for Transfers that Work Together

Mobile money needs to be able to work with different providers so that more people in Cameroon may use it to get financial services. The GIMACPAY system links banks, mobile money services, microfinance groups, and other PSPs throughout the CEMAC area. It is the job of the Groupement Interbancaire et Monétique de l'Afrique Centrale (GIMAC).

GIMACPAY seeks to make it easier to send money both inside and outside of the country by making basic electronic banking better and lowering the cost of transactions. This has helped cross-border payments expand in Cameroon, notably through collaborations with international networks like TerraPay. TerraPay reports that more than 90% of its inflows from the ECCAS region come from Cameroon.

But Cameroon still doesn't have full mobile money compatibility. Complicated restrictions, inconsistent licensing policies, and the need to convert money (typically through the USD or EUR) all make things harder and more expensive. There are a multitude of unofficial ways to send money, which are thought to account for 35–75% of registered flows. This makes the official system even less effective.

TransFi: An excellent tool for making digital payments across borders

In a world where interoperability is still getting better, systems like TransFi are a useful link. TransFi's uniform API for global payouts lets fintechs, banks, and PSPs reach new African corridors, like Cameroon. They can do this and yet follow the rules and save money. Its solutions are ready to be integrated and can help fix a lot of the difficulties with settlement delays and interoperability that the CEMAC payment rails still have.

Cameroon's Fintech and Digital Payments Regulatory Environment:

BEAC and CEMAC-wide policies are what make regulation happen in Cameroon. The 2018 CEMAC Regulation on Payment Services made it easier for fintech companies to come up with innovative ideas in Cameroon by allowing non-bank e-money issuers to enter the market.

Here are some key rules and laws:

COBAC R-2019/01 Regulation: PSP operational requirements, following AML/CFT rules, and keeping IT safe
The 2016 CEMAC AML/CFT Regulation says that KYC, keeping an eye on transactions, and reporting transactions that seem suspicious are all needed.
2018 CEMAC FX Law: Rules for moving money home, limits on foreign exchange, and prohibitions on having money in offshore accounts
The "Crypto Ban" is CEMAC's rule against trading cryptocurrencies.

These rules keep the system stable and safeguard customers, but they also make it impossible for new enterprises to start up. If you get more than XAF 5,000,000 from exports, you have to transform it into local currency within 150 days. A lot of paperwork is needed for any money that goes out that is more than XAF 1,000,000.

The more people in Cameroon use digital payments, the harder it is to keep their data safe. Partnerships with well-known payment infrastructure providers are becoming more and more significant because smaller PSPs typically don't have the money to meet all of the compliance criteria.

Also read: Case Study: Replacing SWIFT Payments with USDT — A Logistics Firm's Story with TransFi

How Mobile Money Works in Cameroon

You need to register your SIM card and go through KYC verification to start an account with a mobile provider in Cameroon.
Putting money into the wallet through bank transfers, agent deposits, or money supplied from other countries.
Transactions include sending, receiving, withdrawing, or paying merchants with QR codes, mobile apps, or USSD.
Cash-out: through local agents or ATMs that work with mobile money apps
Other services include paying bills, getting microloans, and making government payments.

Conclusion

Cameroon is at the confluence of digital and traditional finance. Mobile money has made it possible for more people in Cameroon to use digital payments, but the full potential of these payments is still constrained by convoluted restrictions and payment systems that don't perform properly in CEMAC.

TransFi and GIMACPAY are two examples of advanced cross-border payment systems and interoperability projects that could help fill these gaps. They might make it easier for millions of individuals to acquire financial services, cut the cost of transactions, and speed up settlements.

Connecting systems in the region, building up its digital infrastructure, and making sure that innovation and stringent rules can function together are all important for the future of Cameroon's payment rails.

FAQs:

1. What are the most common ways to pay in Cameroon?

Some of the ways to pay in Cameroon are large-value settlement accounts, BEAC-run clearing centres, and mobile money systems that are increasing swiftly.

2. What are the finest mobile money services in Cameroon?

Millions of people in cities and rural areas utilise Orange Money and MTN Mobile Money, which are the most popular mobile money services.

3. Is it possible to utilise mobile money in Cameroon?

Partly. GIMACPAY makes it easier for multiple platforms and countries to work together; however, there are still challenges with currency conversion and rules for transfers between platforms and countries.

4. What do constraints on foreign exchange mean for payments between nations in Cameroon?

It is tougher for PSPs and fintechs to meet the rules when transfers are over XAF 1,000,000 and export revenues need to be transformed into local currency.

5. Are fintechs allowed to offer cryptocurrency services in Cameroon?

No, CEMAC guidelines specify that you can't use cryptocurrencies and that all electronic money must be supported by a registered institution.

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