Electronic-money (e-money) refers to monetary value measured in currency units stored in electronic

form on an electronic device in the consumer’s possession. This electronic value can be purchased by the
consumer and held on the device and is reduced as and when the consumer uses the device to make
purchases. This contrasts with traditional electronic payment transactions such as those with debit or
credit cards which typically require on-line authorisation and involve the debiting of the consumer’s
bank account after the transaction. There are two different types of electronic devices; namely prepaid
cards and prepaid software products. With prepaid cards, the electronic value is stored on a computer
chip (or integrated circuit) embedded in the card and value is typically transferred by inserting the card
in a card reader. With software products, the electronic value is stored on the hard disk of a computer
and is transferred over communication networks such as the Internet when payments are made.

Although e-money is still in its infancy in Mauritius, two big corporates, viz the Mauritius Telecoms and
Shell Mauritius Limited are issuing single-purpose prepaid cards which are used to pay for telephone
calls and fuel.

Over the past years, two types of electronic banking services have emerged in the banking sector; they
are phone banking and Internet banking. Three banks have already launched their websites in Mauritius
and others are likely to follow suit soon.

Services through the Internet allow customers to effect banking transactions round the clock from
anywhere around the world. Internet banking systems are well secured to prevent unauthorised access
and safeguard the integrity of the data.

The services which are actually being provided through Internet banking include overview of and
inquiring of accounts, making inter-account transfers, effecting payments to third party accounts,
ordering cheque books and opening of accounts. In addition to these facilities, application for loans can
be made through the Internet.

Although banks stand to derive benefits from involvement in electronic banking transactions, they are
also exposed to some significant new risks. Some of these risks are strategic; i.e. banks may be unable to
adapt successfully to changes in the business environment created by electronic banking. Others are
operational-including conditions in which the computers and network technology that support electronic
banking could malfunction. In relation to banking on the Internet, there is also the increased risk of
unauthorised access to and alteration of information. Risks may be heightened where a bank does not
adequately educate its customers about security precautions. Further, in the event of lack of visible
evidence to support any transactions entered into by a customer, the latter may repudiate certain
transactions thus inflicting severe financial losses on banks.

As a bank regulator, the primary concern of the Bank of Mauritius is to ensure that banks have in place
adequate systems to measure, identify and control the various types of risk to which they are exposed.
This issue has been the subject of a separate guideline to be issued to banks. Bank auditors are also
under a duty to report to the Bank of Mauritius on the status, inter alia, of controls put in place by banks
for creating a safe and secure environment free of operational risk. The aim is to continuously ascertain
the adequacy of the controls in the light of evolving technology.

Given the rapid pace of innovation in technology, the Bank has an interest in anticipating the likely
policy implications of these developments. The Bank has specific objectives to protect consumers and
other users of the payment system against financial or other types of risks with a view to enhancing
confidence of consumers of electronic money services. In this connexion, the Bank is in the process of
issuing a specific guideline to banks on the appropriate framework for establishing their electronic
banking and electronic money business.