BANK Of ZAMBIA SADC PAYMENT SYSTEMS PROJECT ZAMBIA PROGRESS REPORT FOR THE PERIOD APRIL 2009 TO MARCH 2010

Transcription

1 BANK Of ZAMBIA SADC PAYMENT SYSTEMS PROJECT ZAMBIA PROGRESS REPORT FOR THE PERIOD APRIL 2009 TO MARCH 2010

2 1 INTRODUCTION This report reviews the developments that took place in the Zambian National Payment Systems between April 2009 and March During the period under review, the Bank of Zambia continued to implement some initiatives intended to enhance effectiveness, efficiency, safety and soundness of the payment systems. In undertaking these programmes, the Bank involved a wide spectrum of stakeholders. 2 OPERATIONAL ISSUES During the year under review, three new banks were designated as participants on the Zambia Inter-bank Payment and Settlement System (ZIPSS) bringing the total number of participants to seventeen (17). The operations of the ZIPSS improved with system availability rising to 99.7% at end of 2009 from 96.42% at end of This was as a result of fewer disruptions on the telecommunication link, which resulted in little or no effect on the overall ZIPSS/RTGS processing as they were quickly mitigated through the use of the back-up dial up link. The volume of transactions processed increased by 9% to 153,354 transactions (2008/09: 140,305) with the transaction volumes peaking in July The total value of transactions processed on the other hand, declined by 17% to K196,727 billion (2008/09: K235,668 billion). Chart 1 VOLUMES Month 2007/ / /2010 % Change (2008/09 vs. 2009/10) VALUES 2007/ / /2010 % Change (2008/09 vs. 2009/10) Apr 6,474 11,015 11,083 1% 16,414 14,344 15,812 10% May 7,581 11,227 10,950-2% 17,696 16,912 15,100-11% Jun 7,064 11,013 11,603 5% 11,360 20,014 17,670-12% Jul 7,105 12,645 15,616 23% 13,862 18,908 18,248-3% Aug 7,687 11,020 12,028 9% 13,524 20,518 17,678-14% Sep 7,734 11,316 13,088 16% 12,001 20,160 18,711-7% Oct 9,997 13,043 13,620 4% 12,679 26,926 17,188-36% Nov 10,246 12,118 12,736 5% 13,426 21,855 14,143-35% Dec 9,767 13,133 14,542 11% 14,705 19,323 17,812-8% January 10,624 12,974 12,077-7% 18,281 21,532 14,191-34% February 9,877 10,103 12,682 26% 17,158 17, % March 9,689 10,698 13,329 25% 14,214 17, % Totals 103, , ,354 9% 175, , ,727-17%

3 The increase in the volume of transactions is attributed to an increase in the volume of Interbank transactions and foreign exchange transactions. ZIPSS values, however, registered a decline mainly due to a reduction in the value of interbank loans and interbank transactions. 3 SETTLEMENT SYSTEM DEVELOPMENTS AND PROJECTS 3.1 LINKING OF LUSAKA STOCK EXCHANGE TO ZIPSS/RTGS During the period under review, little progress was made in moving settlement of the Lusaka Stock Exchange (LuSE) trades onto the Zambia Interbank Payment and Settlement System/Real Time Gross Settlement System (ZIPSS/RTGS). One bank out of the three sponsor banks did not provide confirmation to thebank of Zambia that they would settle the cash leg of trades for the brokers that it was nominated to sponsor. It is however expected that the project will be finalised by the end of The project is motivated by a desire to implement international best practices in settling security trade transactions by eliminating settlement risk. A further benefit that would arise from the project is achievement of delivery versus payment in securities settlement. 3.2 COMESA REGIONAL PAYMENT AND SETTLEMENT SYSTEM During the period under review, there was little progress made on the COMESA Regional Payment and Settlement System (REPSS) project. REPSS is a project initiated by COMESA member countries to allow consumers and businesses in member countries to pay for goods and services purchased in other member countries using the system. The major milestone achieved in the year was Central Banks of various member countries signing Memoranda of Understanding with the COMESA Clearing House and the Bank of Mauritius, who will act as Settlement Agent. 3.3 ZAMBIA REVENUE AUTHORITY-BANK OF ZAMBIA RTGS INTERFACE PROJECT Some progress was made in the procurement and implementation of the requisite software that would enable the automatic of tax settlement figures from the ZIPSS at Bank of Zambia to the Zambia Revenue Authority (ZRA) back office system. However, testing of the software slowed down as ZRA were engaged in the implementation of an electronic payment system at all commercial banks which should enable commercial banks capture tax transactions in line with the ZRA required format. It is however expected that the project will be finalised by the end of RETAIL SYSTEM DEVELOPMENTS AND PROJECTS 4.1 NATIONAL SWITCH PROJECT The National Switch which was expected to be finalised by the second quarter of 2009 did not materialise. The Switch is meant to be implemented in fulfilment of one of the strategies

4 under the National Payment Systems Vision and Strategy The switch will provide a gateway that will link consumers and merchants by means of e-payment products regardless of the bank they hold an account with. The switch will allow extension of payment services through convenient electronic payments and it is therefore expected to extend banking and payment services to the unbanked. The process is currently being re-started with a view to implementing the solution in CHEQUE TRUNCATION PROJECT The project to implement Cheque Truncation which was planned to be in place by end of 2009 did not materialise. The Payment Systems Vision and Strategy identified Cheque Truncation as a strategy to streamline cheque processing in Zambia. It is envisaged that this will be achieved through resulting improvements in service delivery and reduction in costs and payment system risks. The Bankers Association of Zambia is considering upgrading the current Clearing System that is used by the Zambia Electronic Clearing House and all the participant banks to a truncation-ready version. It is expected that agreement will be reached and implementation finalised by the end of OVERSIGHT DEVELOPMENT INITIATIVES 5.1 DIRECTIVES ON E-MONEY ISSUANCE The Bank of Zambia has drafted directives to guide the issuance of electronic money. The directives apply to all issuers of e-money including mobile payment solutions providers and stored value card issuers. These may be banks or non-bank financial institutions. 5.2 DIRECTIVES ON UNPAID CHEQUES AND DDACC INSTRUCTIONS The Bank of Zambia issued Directives on unpaid cheques and Direct Debits returned unpaid on account of insufficient funds. The Directives are aimed at safeguarding the confidence of consumers in the two payment streams by providing administrative procedures that will ensure that consumers have no incentive for issuing payment instructions when they do not have sufficient funds in their accounts. The Directives, among other things, sets out a penalty for each cheques returned unpaid on account of an insufficiently funded account, allows banks to withdraw chequing facilities from customers who issue cheques that are returned unpaid on account of an insufficiently funded account on more than three occasions, and allows banks to report persons who issue cheques that are subsequetly returned unpaid on account of an insufficiently funded account to the Credit Reference Bureau. 5.3 REGULATIONS FOR THE CONDUCT OF PAYMENT SYSTEM BUSINESSES The Bank of Zambia has drafted regulations to operationalise the National Payment Systems Act No.1 of 2007 in respect to the operations of payment system businesses. The regulations provide clarity on the requirements to be provided to the Bank of Zambia to be designated as a payment system business and also provides the minimum requirements for an organisation

5 to operate as a payment system business. The regulations also provide for capital requirements for payment system businesses of different sizes.

6 5.4 DESIGNATION OF PAYMENT SYSTEMS, PARTICIPANTS AND BUSINESSES The Bank of Zambia successfully designated three (3) additional Payment Systems Participants, and sixteen (16) Payment Systems Businesses bring the total designated entities to four (4) payment systems, seventeen (17) payment system participants and thirty (30) payment system businesses. Below is a table showing the payment systems, businesses and participants that have been designated so far. 1. DESIGNATED PAYMENT SYSTEMS AS AT MAY 2010 Operator Institution Payment system(s) When designated 1 Zambia Electronic Clearing PIC and DDACC April 2008 House Ltd 2. Zamlink e-switch Postilion April Bank of Zambia ZIPSS/RTGS April DESIGNATED PAYMENT SYSTEM PARTICIPANTS AS AT MAY 2010 Name of Designated Payment System Participant Payment systems designated to participate on When Designated 1. Access Bank PIC, DDACC and ZIPSS/RTGS October African Banking PIC, DDACC and ZIPSS/RTGS April 2008 Cooperation 3. Bank of china PIC, DDACC and ZIPSS/RTGS April Barclays Bank PIC, DDACC and ZIPSS/RTGS April Cavmont Capital PIC, DDACC and ZIPSS/RTGS April Citibank PIC, DDACC and ZIPSS/RTGS April Ecobank PIC, DDACC and ZIPSS/RTGS 8. Finance Bank PIC, DDACC and ZIPSS/RTGS April First Alliance Bank PIC, DDACC and ZIPSS/RTGS April First National Bank PIC, DDACC and ZIPSS/RTGS June, Indo Zambia Bank PIC, DDACC and ZIPSS/RTGS April Intermarket Banking Corp. PIC, DDACC and ZIPSS/RTGS April Investrust Bank PIC, DDACC and ZIPSS/RTGS April Stanbic Bank PIC, DDACC and ZIPSS/RTGS April Standard Chartered Bank PIC, DDACC and ZIPSS/RTGS April United Bank for Africa PIC, DDACC and ZIPSS/RTGS March ZANACO PIC, DDACC and ZIPSS/RTGS April 2008

7 3. DESIGNATED PAYMENT SYSTEM BUSINESS IN ZAMBIA AS AT MAY 2010 Name of Designated Payment System Business Type of business designated to operate When Designated A. MOBILE PAYMENT SYSTEMS 1 Celpay Zambia Proprietary Mobile Payments May Mobile Payment Proprietary Mobile Payments July 2009 Solutions 3 ZMP Proprietary Mobile Payments April Mobile Transactions Proprietary Mobile Payments October 2009 Zambia Ltd B. MONEY TRANSFER SERVICES 5. Mobile Transactions Proprietary Local Money Transfers October 2009 Zambia Ltd 6. Celpay Zambia Proprietary Local Money Transfers December National Savings Proprietary Local Money Transfer July 2009 and Credit Bank 8. Money Express Cash4Africa Local Money October Zampost Cash4Africa Local Money Transfer December NECOR Transtech Cash4Africa Local Money Transfer July Runnymede Coinster International Money September 2008 Money Transfer 12. Bayport Mobile Payments Solutions (MPS) December 2009 Local Money Transfer 13. United Bank for Money Gram International Money December 2009 Africa 14. Finance Bank Money Gram International Money September 2008 Zambia 15. Stanbic bank Money Gram International Money January ZANACO Money Gram International Money September Investrust bank Money Gram International Money July CFB Money Transfer Money Gram International Money December Money Link Zambia MoneyLineUK International Money December Ecobank Western Union International December 2009 Money 21. PostDotNet Western Union International October 2009 Money 22. Fredex Western Union International December 2009 Money 23. Cactus Financial Western Union International September 2008

8 Services Money 24. Zampost Western Union International Money 25. Standard Chartered Western Union International Bank Money 26. Access Bank Western Union International Money 27. Brookfield World Link International Money T/A Genesis Global Finance C. CARD BASED SOLUTIONS September 2008 October 2008 July 2009 October FX Africa Bureau de Change Pre-paid Payment Card October Calltrol/Pan African Building Society Debit card transaction switching December 2008 D. ELECTRONIC VALUE DISTRIBUTION 30. Zamswitch Zambia Electronic Value Distribution July 2009