Government has tabled the National Payments Systems Bill, 2019 that is aimed at regulating payment systems to provide for the safety and efficiency of payment systems.
The Bill was read for the first time by the Minister of State for Planning and Economic Development, David Bahati and was sent to the Parliament committee on Finance for perusal and report back to the house within a period of 45 days.
The Bill seeks to provide for the functions of the Central Bank in relation to payment systems, to prescribe the rules governing the oversight and protection of payment systems.
Furthermore, the law, if approved, will provide for financial collateral arrangements, regulate payment service providers and issuance of electronic money.
It will as well provide for the oversight of payment instruments and for other related matters.
According to the Ministry of Finance, currently there is no comprehensive payment systems law though Bank of Uganda has always relied on Article 1 62 ( 1) of the Constitution which provides that Bank of Uganda shall encourage and promote economic development through effective and efficient operations of the banking and credit system to develop the payment and securities settlement systems.
Such payment systems include the Real Time Cross Settlement System (RTCS) for interbank transfer, the Automated Clearing House (ACH) System for the clearance of cheques and the Electronic Funds Transfers (EITs).
The securities settlement systems, including the Central Securities Depository (CSD) systems operated by the Bank of Uganda and the Securities Central Depository System operated by Uganda Securities Exchange (USE), have also been implemented.
The Ministry noted that due to the absence of a national payment systems law, there is uncertainty in the market with regard to licensing of payment systems service providers who are not financial institutions.
“As such, there is limited regulation and oversight of payment systems and inadequate protection of payment and securities settlement systems,” the Bill reads in part.
The Bill seeks to regulate payment systems to ensure safety and efficiency of the National Payment Systems which will promote public confidence through increased certainty and transparency, financial stability and integrity, competition among players, consumer protection, innovation by establishing a regulatory sandbox frame work and financial inclusion.
The Bill also seeks to provide for roles and responsibilities of the various players in the payment systems namely the Central Bank, Service providers, systems operators, electronic money issuers and financial institutions among others.