Catch Up Time: Reforming Electronic Money Transfers in Lebanon

Today, sending money to family and friends or transferring money to pay for products and services ought to be stress-free, fast, secure, and – above all – affordable. However, relative to most of the world, Lebanese banks and financial companies that provide electronic money transfer (EMT) services profit off consumers through transfer fees and hidden exchange rates that are nothing less than exploitative. Consumers continue to lack access to convenient and competitively priced EMT services, such as PayPal or TransferWise, despite these providers operating throughout West Asia and North Africa (WANA).

This state of affairs is largely due to Lebanon’s antiquated EMT regulatory framework, which acts as a market entry deterrent for global and local companies providing EMT services. Yet recently passed Law 81 – the first law to regulate EMTs since Law 133 in 1999 – has brought hope that the Lebanon will benefit from the same EMT services as much of the rest of the world. But while Law 81 does enact essential reforms such as recognizing electronic signatures, the law does not detail the regulations or standards required to introduce 21st century EMT services to the country. Instead, the law devolves power to the Banque du Liban (BDL), Lebanon’s central bank, which has yet to introduce modern EMT regulations.

At this critical juncture, this policy brief finds that Lebanese consumers have been paying the price for an expensive and outdated EMT system that benefits only a few banks and financial institutions. Seeking to champion Lebanese consumer welfare, the brief explores the potential factors that cause Lebanese citizens and residents to pay relatively exorbitant rates to transfer funds, prevent globally-recognized EMT service providers from entering Lebanon, stymie home-grown EMT providers from developing localised services, and prohibit Lebanese businesses from taking full advantage of global e-commerce and payment platforms. Instead of allowing the status quo to continue, this brief recommends that policy makers update key regulations for EMT service providers, banks reduce their fees to globally competitive rates, and civil society spearhead a campaign to ensure consumer welfare trumps narrow private interests.

Read the full paper.