National Payment System (NPS) Policy Framework

The National Payment Systems Policy for Uganda was approved by Cabinet on the 22nd December 2017. The Policy aims to promote the safety and efficiency of payment systems in Uganda, with a view to fostering financial sector stability and economic growth.

The National Payment System (NPS) consists of the institutions, instruments, procedures and technology used to facilitate the circulation of money within the country and internationally. The NPS is an essential part of the financial infrastructure and is by its nature dynamic and fast changing. In particular, the use of electronic payment systems in Uganda has increased dramatically over the years, enabling more people to gain access to financial services. The ability to make payments easily and safely is important in ensuring the smooth and timely flow of goods and services throughout the economy. To that end, it is pertinent to ensure that payment systems operate in a secure and efficient manner.

A safe and efficient payment system helps to maintain financial stability by preventing or containing systemic risks. In view of this, payment systems are being placed in the central banks’ core functions so as to contribute to financial stability, support open market operations as a monetary policy transmission mechanism, and to maintain confidence in the national monetary unit – in terms of its value (monetary policy) and circulation (payment systems).

However, a number of safety and efficiency concerns have been raised regarding payment systems in Uganda. The concerns mainly relate to: the potential for fraud; system failures; consumer protection issues and lack of licensing criteria for those who intend to enter the payment systems arena among others. All these factors affect the realization of a safe and efficient national payment system in Uganda.

The National Payment Systems policy seeks to put in place a framework to: facilitate the enactment of a Payment System law; specify the roles and responsibilities of all the payment systems stakeholders; ensure safety of all payment systems in the country; foster consumer protection; enable increased access to electronic payment systems to reduce cash based payments; and promote innovations.

It is important to note that the formulation of this policy has been informed by and also benefited from the input of the key payment systems stakeholders and the IMF Technical Assistance missions.

In conclusion, I wish to appreciate the guidance received from His Excellency Yoweri Kaguta Museveni, President of the Republic of Uganda, and Cabinet, in the formulation of this Policy. I also wish to thank the Technical Team from the Ministry of Finance Planning and Economic Development and Bank of Uganda for spearheading the process of formulating this policy. I am equally grateful to the IMF for the Technical Assistance rendered towards the development of this Policy.

Matia Kasaija (MP)

MINISTER OF FINANCE PLANNING AND ECONOMIC DEVELOPMENT

Download: National Payment System (NPS) Policy Framework