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Somalia has introduced a national instant payment system with various features tailored to the local ecosystem to enhance financial inclusion.
Dubbed the Somalia Payment Switch (SPS1), the payment system is the brainchild of the Central Bank of Somalia (CBS) with support from key technology firms. The latest offering will allow Somalians to make instant digital payments with safety guardrails.
The SPS1 initiative is set to transform the payment landscape in Somalia, ushering in a new era characterized by modernity and prioritizing financial inclusivity. A majority of Somalia’s financial transactions are cash-based, and less than 20% of adults have a bank account.
“This innovation brings speed and security to daily transactions, empowering businesses and individuals to embrace a cashless economy,” said CBS Governor Abdirahman Abdullahi.
SPS1 has several capabilities that make it suitable for the Somalian payment landscape. It leans on Swiss paytech BPC’s SmartVista platform for instant digital payments, broadening consumers’ possibilities.
The SmartVista platform offers interoperability between traditional banks and digital financial institutions and a portal for real-time transaction tracking. To prevent delays, the SPS1 features a dispute resolution portal and built-in fraud detection capabilities for user protection.
While the SPS1 rolled out on cloud infrastructure, there are plans to migrate to the local data center for increased security. With transactions guarded by PINs, one-time passwords (OTPs), and Public Key Infrastructure (PKI), CBS says Somalia is not compromising safety for instant transactions.
Adding QR code functionality for contactless payments is also a key factor in improving SPS1 adoption metrics.
Seven Somali banks have already connected with the payment system, and six more are looking to join the platform. Several mobile money operators are also considering participating in SPS1 ranks, with projected service providers tipped to surpass 15.
Several countries are rolling out their national instant payment platforms to keep up with the rapid pace of digitalization. While developing economies embrace real-time payment platforms, the United States is backing the FedNow service to improve its payments ecosystem.
However, some arguments pursuing instant payments may hinder the broader push for central bank digital currencies (CBDC). A report tips the global digital payment revenue to pass the $3 trillion mark before the decade’s end, underscoring the rising activity levels in the space.
Western Union dabbles with AI
Elsewhere, payment giant Western Union (WU) (NASDAQ: WU) has inked a deal with technology company HCLTech to use artificial intelligence (AI) to improve the state of global payment services.
The collaboration will see Western Union lean on HCLTech’s suite of AI solutions to transform itself into a “platform-centric operating model” for improved scalability and agility in processing transactions, according to the company.
The partnership will power new customer experiences for users with AI-based personalization perks at the top of the pile. HCLTech will provide Western Union with advanced data-based decision capabilities.
Perhaps the biggest impact of the partnership for Western Union is HCLTech’s wealth of experience in digital engineering. Western Union will leverage HCLTech’s experience for full-stack observability while improving efficiency metrics across the board using AI.
“This strategic partnership emphasizes our focus on empowering fintech companies through digital engineering-led transformation and creating exceptional value for their stakeholders,” said HCLTech CEO C Vijayakumar.
The partnership will see the establishment of an advanced technology center in India’s Hyderabad, setting up the stage for talent development in the region. Apart from potentially serving as a talent pipeline for both firms, the center will deepen the existing tech talent pool in the area.
Both parties say the partnership will not be limited to India or the Asia Pacific. According to the statement, a slew of AI-based improvements will be available to WU users worldwide.
“Our collaboration with HCLTech is a testament to our shared vision of delivering exceptional value to our customers,” said WU CEO Devin McGranahan. “HCLTech’s expertise will help us fulfill our mission to make world-class financial services accessible to people everywhere.”
Before the wholesale embrace of AI, WU had taken an interest in digital assets and the Web3 space by filing trademark applications in 2022.
Despite the push, WU will have to catch up with other sector players, including Visa (NASDAQ: V) and Mastercard (NASDAQ: MA). Despite its seemingly late entry, a base of nearly 200 million customers could see it leapfrog its peers in digital asset transactions.
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