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.