Mehdi Manaa, CEO of Buna, a multi-currency payment platform for the Arab region, on revolutionising the way financial institutions send and receive cross-border payments.

Buna_Mehdi Manaa2

Mehdi Manaa, CEO, Buna

Q: What was the rationale behind the Arab Monetary Fund (AMF) launching Buna in February 2020? What issues is the payment platform trying to solve?

A: The rationale originated from the Council of Arab Central Banks and Monetary Authorities Governors, which recognised the importance of an efficient payment system in supporting economic growth and development. Therefore, Buna’s overarching objective is to further empower the Arab economies and increase integration between them.

To achieve this objective, the council and the AMF conducted different studies. They assessed the existing payment solutions, in particular for cross-border payments, and were not fully satisfied. They began asking the big questions, such as what is needed? Is it to improve the existing domestic infrastructure, or is it to have a new system dedicated to cross-border payments? What could be the solution? 

They landed on the concept of Buna, which is a centralised payment infrastructure that can resolve cross-border issues, and the AMF was mandated with its execution.

Q: What were the main deficiencies in the payment infrastructure that existed before the Buna project was launched?

A: The current infrastructure, like in other regions, was built for domestic payments. So cross-border payment processing has relied on complex, costly, slow and inefficient networks between banks. Payments between two Arab countries could take days, which clearly hampers integration and economic collaboration between countries. Payments are the rails of the economy, and it is difficult to support a dynamic regional economy without an efficient payment solution. So Buna addresses two critical issues: cost and speed.

Q: Did you take inspiration from other real-time payment systems when designing the Buna platform?

A: Absolutely, for example with regards to the technology being deployed in other solutions. But Buna is unique in its positioning, as there are only a handful that are cross-border solutions. In many cases, these have certain limitations in terms of payment instruments and currency types, and most are focused on regional currencies. The Buna concept is more ambitious, aiming to combine Arab currencies with major international currencies.

Q: How does the platform deal with different national regulatory environments?

A: As mentioned, our target is to reduce cost while increasing efficiency and speed. We thought that the best way of achieving these objectives was to keep the system as simple as possible. One specificity, however, was the position that we took regarding compliance.

From a strict obligation perspective, payment systems are not required to screen transactions to comply with anti-money laundering or combating the financing of terrorism regulations. That responsibility lies with the participant, not the system operator. In Buna, we also kept that set-up but decided to include an additional layer of compliance in the system.

This was needed because Buna is cross-border, multi-currency and multi-jurisdiction, combining regional currencies with external currencies. We faced a patchwork of legislation and compliance levels across different jurisdictions. Hence, we wanted to set our own high standards to bake trust into this central system. This is the reason why we made this unique decision, and it increasingly appears that it was the right choice.

Q: How do the regulators interface with that layer within the system? Is it a common approach for them?

A: Compliance is customised currency by currency. For each currency included in Buna, we talk with the central bank and respective regulators to ensure that their requirements are addressed. When it comes to sanction screening, for example, we use international lists, such as the UN Sanctions List, and add the specific lists of each country. For example, for the UAE dirham we use the Central Bank of the UAE list, for US dollar we use the Office of Foreign Assets Control list.

Q: Are commercial banks acting as settlement banks for the different currencies in the Buna payment system?

A: In most cases, whenever it’s possible, we work with the central bank directly in each country, not the commercial banks. There are a few exceptions, such as the National Commercial Bank (NCB) for the Saudi riyal and JPMorgan for the US dollar, in agreement with the Saudi Central Bank and the Federal Reserve, respectively. But in the UAE, for example, the settlement bank is the central bank.

Q: Who is participating in Buna currently?

A: When speaking about participation, we have two streams. The first is the currencies and today we have three Arab currencies — the UAE dirham, Egyptian pound and Saudi riyal — in addition to the US dollar. In the pipeline are currencies expected to be operational in the first half of this year, including the Jordanian dinar, euro and one or two Asian currencies. Of course, we expect other Arab currencies to join it at a later stage and possibly more international ones.

Cross-border payment processing has relied on complex, costly, slow and inefficient networks between banks

The second participation avenue is the banks. We are currently in contact with more than 140 banks and about 90 have started the onboarding process, which takes four to eight weeks, depending on the bank’s readiness.

Over the past year, the focus was on building the foundation and making it available. This is the year of onboarding. With the support of the central banks, which are encouraging their communities to join Buna, we are confident that we’ll have a significant network in place by the end of the year.

Q: Buna is not confined to the Arab world — why is this important?

A: We can’t think about cross-border payments and limit them to the region — the solution has to be global. Improving the efficiency in the region immediately results in increasing the region’s integration with the rest of the world. Buna is a central point of access to any counterparty for payments. Instead of having multiple connections, country by country, Buna offers access to the whole region. This is in line with the G20 roadmap and the Financial Stability Board’s work to enhance cross-border payments across the globe.

Q: Will Buna expand to other transactions beyond payments?

A: We have a phased approach. The first phase is focused on bank-to-bank payments and remittances. But we are moving quickly to activate instant payments, and are already in discussion with partners to extend Buna into other areas, such as trade finance, securities settlement and ATM/point-of-sale processing. Importantly, Buna is built as an open concept.

Q: Will it be expanded to the wider financial services sector, such as Western Union, STC Pay and new digital payment providers?

A: We want to be open from that perspective as well. But we are also cautious because we don’t want to create a backdoor that will circumvent local regulation. This is the level of comfort that we owe to the central banks that are supporting Buna. I’m confident that we will find the right balance of making space for everyone and keeping the system secure.

Q: What cross-border corridors will be particularly significant for Buna?

A: In Buna, we cover all corridors. In the initial phase, the main corridors will remain the ones that are popular today. For example, we know that for remittances the main corridors are between the Gulf Co-operation Council countries and Egypt or Jordan. But Buna’s ambition is not to just replicate what exists today, but create a potential for new opportunities. Some corridors are not very active today simply because there is no solution to connect them.

With Buna, all corridors will be managed with the same affordability and efficiency, and this will create new potential. That applies also to the use of Arab currencies. Today, 55% of cross-border payments are based in US dollars, and that will not change overnight. But Buna is opening up a space for Arab currencies as well. And these Arab currencies will be treated with the same solution, same efficiencies and with no extra cost, or maybe even lower cost, to process them. So little by little, that will create additional potential as well.

Q: Have you started discussions with the big card players, such as Mastercard and Visa?

A: There are obvious benefits in connecting the major card networks with Buna. Mastercard, Visa and UnionPay participated in a recent workshop we held, where we elaborated on the potential that could result from interconnecting their solutions with Buna.


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