A draft law governing payment systems has proposed a new provision that allows the Central Bank to impose interoperability – a set of arrangements, procedures and standards that allow participants in different payment schemes to conduct and settle payments across systems.
Interoperable payment systems allow two or more proprietary platforms to interact seamlessly, enabling the exchange of payment transactions between and among payment service providers and users.
The provision in the bill comes at a time when it is not possible for subscribers of MTN Mobile Money and Airtel Money – the country’s only telcoms – to send or receive money across networks, a situation that has inconvenienced many.
And, when one has a digital payment channel in a given bank, they can use it only for transactions in that bank, according to the National Bank of Rwanda.
A virtual Plenary Sitting of the Chamber of Deputies held on June 8, approved the relevance of the new draft law. The next step it that the responsible parliamentary committee will scrutinize it, before being put to a vote into law by the Plenary.
MP Gamariel Mbonimana decried the issue of lack of interoperability between the local operators.
"Why is it possible to send money abroad, yet it is not possible to send it to a citizen within the country? You realise that this is a question of lack of will,” he said wondering whether the bill will help tackle such an issue.
Article 22 of the bill, which talks about interoperability of payment accounts, provides that the Central Bank may, by a regulation, direct a payment service provider to enter into an arrangement with the operator of the payment system to achieve interoperability of payment accounts with the payment system.
In considering whether to mandate interoperability of payment accounts, the Central Bank considers whether this is in the interest of the public, the bill proposes.
Other considerations include the interests of the current participants and operator of the payment system, the interests of persons who may be required to be a participant in the payment system; and other matters as the Central Bank may consider to be relevant.
Meanwhile, on November 19, 2020, while presenting the National Bank of Rwanda’s 2019/2020 annual report to both chambers of parliament, Central Bank Governor, John Rwangombwa said that the government was in negotiations with RSwitch to deliver the interoperability system. He said that the system would be operational in June 2021.
MP Veneranda Nyirahirwa said that Rwanda as a country that is set to be a financial service hub under the Kigali International Finance Centre, there are many actions it should be doing in line with improving ICT to get ready for that.
"There is still an issue of a limited amount of money that a person should transact per day. If we are going to be a financial service hub, the amount of money to transact will increase,” she said, asking whether the current issue will be addressed as there will be investors who would need higher amount transactions.
Also, she said, there is inadequate ICT infrastructure in some parts of the country, which can be a constraint to electronic payments such as through use of Visa cards in point of sale (POS) devices.
Regarding ICT infrastructure, Uzziel Ndagijimana, the Minister of Finance and Economic Planning said that 4G connectivity covers 95 percent [of the country’s territory], and efforts are being invested in the network expansion, setting up new networks as well as increasing internet speed.
Aside from financial transaction limits on mobile money in a bid to mitigate money losses based on the risk assessment made, other payment systems have no limited amount, the Minister indicated.
Other key provisions in the draft law
There are new provisions related to designation of systemically important payment system.
If the Central Bank is of the opinion that a clearing and settlement system could be operated in a manner that poses a systemic risk or payments system risk and that it is in the public interest to do so, Central Bank may, by a designation order in form of a directive specify a system as a designated payment system.
Also, specific rules and criteria will apply on systemically important payment system to ensure public interest is not undermined.
Other new changes proposed under the bill include new categories of payment service provider’s licenses were added to ensure the law facilitates new entrants (i.e fintech companies and start-ups) and promote competition, and the requirement of payment service provider to have registered office in Rwanda to ensure it serves its client effectively.