Etisalat has received approval to offer mobile money transfer services in the UAE from the Central Bank and the Telecommunications Regulatory Authority (TRA).

The telecom operator will now be able to roll out its previously announced mobile wallet account platform. The system lets customers use their mobile phones to make payments at outlets that accept such transactions. The user simply uploads digital cash to the mobile and swipes the phone at payment counters or ticketing machines.

Customers will use the system to pay utility bills and buy goods, and it will eventually become possible to transfer money abroad from a mobile phone.

"One of the challenges is the regulatory framework, as there are no regulations that govern mobile money," Rashed Majed Al Abbar, Director of Etisalat Mobile Commerce, told Emirates Business.

"Despite this, the Central Bank and the TRA have given their approval to etisalat. As a telecom company we abide by the TRA's regulations, but as a financial services provider it is essential to have approval from the Central Bank. Etisalat is the first telecom operator to receive this kind of approval in the region," he added.

The approval covers etisalat's banking partner in the scheme, which Al Abbar declined to name, though he said it was an international group.

"As of now we have partnered with one bank, but this doesn't stop us partnering with other banking partners as our platform is suitable for such an upgrade. We were looking for a bank that could meet our timelines and priorities, and most of all, be flexible. We have been talking to a few banks for a long time but there was no synergy.

"For etisalat it does not make sense to work as a financial house, as its not our core competency and, therefore, it is better to work with a bank."

Etisalat already offers a mobile payment scheme for parking fees through its Value SMS system. And it has a pilot scheme that enables customers make payments via mobiles using credit cards.

"Value SMS is being used for parking fees, buying digital content and Wasel credit. But it becomes prohibitive to offer a payment facility for physical goods and utility payments over Value SMS. The new service will start with payments for physical goods and the transfer facility will be added later."