The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The government is mooting to regulate electronic payment services and products offered mainly under new Financial Technologies also referred to as Fintech.
Fintech refers to the integration of technology to allow companies provide digital financial solutions that ease transactions with just a tap of a button, through the use of smartphones for mobile banking and investment services, among and others. Fintechs have enabled new business models that offer expanded services to customers and continue to generate new revenue streams for financial service providers.
Examples of Fintech companies providing financial services include InterSwitch, Mobile Money services, Xente, Safe Boda, Fenix International, International Airtime Top Up, Future Link Technologies, Chap and Cellulant and others, which have all built technologies to provide financial services.
But although financial technology is flourishing, it is not comprehensively regulated. One of the challenges was that the government had failed to agree on the regulatory responsibility under which Fintechs lie since they intersect between financial services and telecommunications.
A team from the Central Bank told the Finance Committee of Parliament that the government is in the process of drafting the National Payment Systems Bill, 2019, to guarantee the regulation of the services brought about by the digital revolution.
Bisaso Kizito, an official from the Bank of Uganda (BoU) Payment Systems Department says that the financial technologies will be regulated under the regulatory sandbox framework which is applied allover world. He says that the regulatory framework was to prescribe the criteria and minimum requirements for operating a sandbox and the manner in which to conduct it.
“It allows Fintechs to come up with innovations and be able to test them and once they have been successful then move them into the normal regulatory environment,” he said.
The Bill requires a person who wishes to operate a sandbox to apply to the Central Bank for approval within the established regulatory sandbox framework. The application shall specify the location, whether physical or virtual, that is adequately accessible to the Central Bank from which experiments will be developed and performed and where all required records, documents and data will be maintained.
Bisaso’s explanation followed a question by Agago Woman MP, Judith Franca about the regulation of the several new financial technologies coming up. The MP also queried whether the new Bill proposed a tribunal where complainants will go for hearings.
Jacinta Anyinge, a Senior Principal Legal Officer in BoU said the Bill provides for no tribunal because they do not want to cause a conflict in the financial sector and given the existence of Courts of Law. She said that the consumer protection provision under the Bill is where complaints will be handled in a given mechanism.
Currently, Uganda has no comprehensive payment systems law and the Bank of Uganda has always relied on Article 162 (1) of the Constitution which provides for its existence and the function of encouraging and promoting economic development through effective and efficient operations of the banking and credit system.
The proposed National Payment Systems Bill, 2019 will also provide for electronic money issuance and circulation for example how the issuance of mobile money will be licensed, supervised and regulated, and provide for the protection of the payment and settlement systems against insolvency proceedings by providing for transfer orders finality, irrevocability and protection of collateral arrangements.
The Bill also provides on how to deal with dormant accounts held with electronic money issuers where after a period of 10 years, the funds on the dormant accounts will be transferred to the Consolidated Fund.
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