H E Sultan bin Salim bin Said al Habsi, deputy chairman of the board of governors of the CBO, recently issued the decision No 1/2019 promulgating the executive regulation of the National Payment Systems Law, which is accordingly published in the Official Gazette on July 28 and entered into force on the day following the publication date.
The National Payment Systems Law was promulgated prior to this regulation in accordance with Royal Decree 8/2018.
‘The significance of this regulation is that it is detailed and a necessary complement to the legal framework of the payment systems, especially since this legal framework is the first-of-its-kind across the region and represents a major achievement of the sultanate,’ CBO said in a press statement.
Since 2013, the sultanate’s central bank has been developing a national strategy for payment systems by assessing the situation and studying the rapid developments in the payments and technology sectors.
As the legal framework is one of the main pillars for the establishment and operation of effective and safe payment systems, the CBO has sought to create the appropriate legislative tools for this environment, which necessitated the issuance of the National Payment Systems Law in 2018 followed now by its executive regulation in 2019.
According to the CBO, this new legal and regulatory framework will contribute in enhancing the work and operation of the infrastructure and systems established by the CBO for the sultanate’s payment systems to ensure high quality, safe and fast payment services for customers.
‘This framework provides a solid basis for keeping up with technological advancements and the attraction of innovators and customers in these fields in the financial and banking sectors, which will benefit the national economy,’ the CBO said.
The regulation includes 89 articles, divided into 11 chapters covering the following topics:
Licensing: The provisions of the regulation are detailing the requirements and conditions of the license and the approvals granted by the CBO to payment service providers, system operators, participants, settlement agents and all parties that form partnerships or act as agents of the licensees in line with the implementation of the policies of the payment systems targeted by the central bank.
Electronic money: The regulation provides all the necessary requirements for the issuance of electronic money as well as the rules for the regulation and supervision of it, and for CBO supervision/oversight of the use of the electronic money in the economy. Electronic money has become after the issuance of this regulation an important payment tool that can be utilised.
Direct debit: In order to keep abreast with technological developments and provide effective payment tools, this payment instrument has been created in the National Payment Systems Law. The regulation provides the necessary and detailed provisions for the use of this instrument. It is expected that the use of direct debit will exceed that of paper cheque, which shall help in achieving the policy of reducing the use of cash in the payment process. This, in turn, will have a positive effect on the banking system in various financial transactions such as financing and payment through installments.
The regulation also includes a chapter on the automation and electronic cheques clearing, which is currently managed and operated by the CBO.
It is worth mentioning that the National Payment Systems Law and its executive regulation support the domain of financial technology (Fintech) in the sultanate by licensing various non-banking institutions wishing to operate in this vital sector to provide electronic payment services.
The CBO added that it will continue to keep abreast of changes and technological developments in the banking sector, taking into account the safety, security and efficiency of financial transactions in the country.