Key Facts for Maldives
- Primary real-time rails: Favara, Maldives Real Time Gross Settlement (MRTGS).
- Typical settlement times: Inter-bank fund transfers are instantaneous.
- Common limits: The per-transaction limit is MVR 50,000; daily aggregate limits vary by institution.
What “real-time payments” means in Maldives
In the Maldives, real-time payments are known as “Instant Payments,” delivered through the Favara system. This allows for immediate inter-bank fund transfers, 24/7, for all residents and businesses across the archipelago, regardless of their banking provider. The scope is nationwide, aiming to connect the unbanked and support everything from peer-to-peer transfers to bill payments. While the National Payment System Act provides the governing framework, a specific legal definition is not published; such definitions typically focus on the immediate and irrevocable nature of transaction settlement (industry norm).
The Maldives Monetary Authority (MMA) is the lead regulator and central operator of the nation’s payment systems, including the Favara instant payment system. The MMA operates the central infrastructure directly, with no subsidiary clearing houses involved in its real-time operations. For its modern real-time rail, Favara complies with the international ISO 20022 standard, which facilitates interoperability among participating financial institutions. The older Automated Clearing House (ACH) for batch payments is also run by the MMA.
While still building adoption, the Maldives’ use of modern, open standards positions its payment infrastructure to align with global best practices.
Payment Rail Overview
Favara
Launched in August 2023, Favara is the Maldives' modern Instant Payment System (IPS) built for 24/7, real-time fund transfers between banks. It operates on the ISO 20022 standard, which provides a common language for payment data across different financial institutions. The system allows individuals and businesses to send and receive money instantly using simple aliases like a phone number or email address.
- Favara ID: This feature allows users to link an alias, such as a phone number or National ID, to their bank account, removing the need to share complex account numbers for transactions.
- Favara Request: Businesses and individuals can send payment requests directly to others, who can then approve the transaction for immediate processing.
- Favara Recall: A built-in process for reporting and resolving mistaken or fraudulent transactions, which helps build user confidence in the system.
- Open Architecture: The system is designed with open APIs to connect all banks and payment service providers, fostering a competitive and innovative payment environment.
Pros
- Instantaneous, 24/7 availability eliminates settlement delays and operates outside traditional banking hours.
- Alias-based payments (Favara ID) offer a more intuitive user experience.
- Open API design creates possibilities for future integrations and LN-friendly routing.
Cons
- Adoption is still growing, as not all of the country's banks were connected at launch.
- An initial transaction limit of MVR 50,000 may be restrictive for some use cases.
Maldives Real Time Gross Settlement (MRTGS)
The Maldives Real Time Gross Settlement (MRTGS) system is the country's legacy rail for processing urgent, high-value inter-bank payments. It operates on the global SWIFT messaging standard to securely settle large transactions between financial institutions in real time. While its introduction date is not publicly specified, it serves as the backbone for major fund movements within the banking sector.
- High-Value Settlement: Its primary function is the real-time gross settlement of large-sum payments, minimizing credit risk between banks.
- SWIFT Integration: The system uses the established SWIFT messaging network, aligning it with international standards for financial communication.
- Central Bank Operation: It is operated directly by the Maldives Monetary Authority, providing central oversight for systemic transactions.
Pros
- Provides a secure and proven mechanism for settling high-value inter-bank transfers.
- Operates on a globally recognized financial messaging standard.
Cons
- Access is generally restricted to banking hours and limited to participating banks.
- Lacks full integration with some banks' core systems, creating potential for manual processing and delays.
- Does not support direct access for newer fintech companies or non-bank payment providers.
Limits, Fees, and SLAs
- Limits: Favara launched with a per-transaction limit of MVR 50,000. Information on daily caps or distinct corporate tiers is not publicly available.
- Operating Hours: The Favara instant payment system operates 24/7, providing services around the clock. Legacy systems like MRTGS are typically restricted to banking hours.
- Failures & Returns: The Favara Recall service offers a direct path for reporting and resolving erroneous or fraudulent transactions through the system.
Compliance and Risk
KYC/KYB & AML
The Maldives' Prevention of Money Laundering and Financing of Terrorism Act mandates strict compliance. Financial institutions must perform customer due diligence, including identity verification and confirming the source of funds. Suspicious activities must be reported to the Financial Intelligence Unit (FIU).
Fraud Controls
The Favara system includes built-in controls like account verification and a recall function for erroneous payments. Financial institutions are also expected to use transaction screening against blacklists and report suspicious activity to the FIU to combat financial crime and investment fraud.
Lightning Network Integration as a Solution
The Lightning Network is a second-layer protocol built on Bitcoin that processes transactions off-chain through a network of payment channels. This structure allows for faster and cheaper payments. It can complement local RTP rails, like Favara, by providing a global settlement layer for cross-border payments. This extends the reach of domestic systems beyond national borders, offering an alternative for international transactions where local rails may not be interoperable or cost-effective.
While domestic rails offer instant settlement, the Lightning Network matches this speed with significantly lower costs, often fractions of a cent per transaction. This cost efficiency makes micropayments practical. The primary distinction is reach; where local systems are confined by national borders, the Lightning Network provides a truly global payment infrastructure. It connects users worldwide, removing the typical barriers and high fees associated with international currency conversion and remittances.
- Cross-Border Complexity: The Lightning Network bypasses the intermediaries and delays common in international transfers. It offers a direct path for global payments, reducing costs and settlement times from days to seconds.
- Transaction Costs and Scalability: By moving transactions off-chain, the network supports millions of transactions per second with minimal fees. This overcomes the high costs and low throughput that make micropayments impractical on many other systems.
- System Interoperability and Access: Unlike national payment systems that operate within set hours and geographic boundaries, the Lightning Network is a single, global network that runs 24/7. It provides open access, connecting different regions and services without requiring separate integrations for each.
Integrating with the Lightning Network offers a direct route to participating in a borderless, real-time economy.
B2B Enterprise Use Cases
- Supplier Payments – Businesses can instantly pay invoices to suppliers globally, settling accounts in real-time without waiting for bank processing.
Business value: Immediate settlement strengthens supplier relationships and opens access to early payment discounts. - Merchant Settlement – Customer payments are settled directly to the merchant's account in seconds, bypassing card network delays.
Business value: Drastically improves cash flow by providing immediate access to sales revenue. - Treasury Optimization – Companies can move funds between international accounts or digital wallets instantly, 24/7, to manage liquidity.
Business value: Provides real-time control over global cash positions and reduces foreign exchange risk. - Global Payroll – International contractors or remote workers receive their salaries instantly without typical cross-border transfer delays.
Business value: Delivers on-demand payroll, improving satisfaction for a global workforce. - B2B Micropayments – Businesses can programmatically pay for API calls or data streams per use, creating new pay-as-you-go models.
Business value: Introduces new revenue possibilities through automated, low-cost, high-volume transactions.
Cross-Border Transactions and Remittances to Maldives
Cross-border real-time payments are complex because they require connecting separate national systems. This “rail bridging” between different payment infrastructures is often inefficient, and transactions must navigate costly foreign exchange (FX) paths. For an island nation like the Maldives, these issues are compounded by regulatory hurdles and strict compliance checks on international transfers. These factors create significant friction, leading to delays and higher costs for businesses and individuals sending money across its borders.
- India: As a major trade partner, transactions on this corridor face heightened scrutiny due to the Maldives' undefined crypto laws and strict anti-money laundering rules. Remittances often experience delays and increased compliance overhead.
- Sri Lanka: Given its proximity, this corridor supports frequent trade and personal fund transfers. Transactions typically rely on correspondent banking relationships, which can involve multiple intermediaries and settlement delays.
- United Arab Emirates: This is a primary corridor for expatriate remittances back to the Maldives. Workers sending funds home often face high fees and unfavorable exchange rates through traditional money transfer operators.
The Lightning Network offers a direct alternative, bypassing the correspondent banking system. By using Bitcoin as a settlement asset, it provides a universal payment rail for instant, low-cost global transactions, reducing settlement times from days to seconds and fees to near zero.
How Lightspark Makes Integration Easy
Lightspark helps fintechs, digital banks, wallets, and exchanges connect to the Lightning Network. We manage the operational complexities of liquidity, routing, and compliance, so you can focus on your core product. Our comprehensive developer tooling and APIs are designed for quick integration, allowing you to offer your customers sub-second settlement globally for cross-border payments and remittances. By building on our platform, you can expand your services to a worldwide payment network without the high costs of traditional systems. This gives you a direct path to new markets and revenue opportunities. To learn how you can integrate global, real-time payments, Talk to our team.
Sources and Further Reading
- https://www.afi-global.org/opinion/favara-instant-payment-system-propelling-the-maldives-towards-a-financially-inclusive-future/ – Favara system for financial inclusion.
- https://www.lightspark.com/contact – Contact the Lightspark sales team.
- https://www.lightspark.com/knowledge/is-crypto-legal-in-maldives – Maldives' legal stance on cryptocurrency.
- https://www.lightspark.com/news/insights/what-are-lightning-payments – Explains what Lightning payments are.
