BANK Of ZAMBIA REQUIREMENTS FOR DESIGNATING A PAYMENT SYSTEM

BANK Of ZAMBIA REQUIREMENTS FOR DESIGNATING A PAYMENT SYSTEM

REQUIREMENTS FOR DESIGNATING A PAYMENT SYSTEM IN ZAMBIA The National Payment System Act 2007 defines a Payment System as a clearing and settlement system operating under clearing house rules All participants of existing payment system as defined above shall apply to the Bank of Zambia for designation within one hundred and eighty (180) days of the commencement of the National Payment System Act 2007. All persons wishing to operate a new payment system shall apply to the Bank of Zambia for designation. Further, the Bank of Zambia may require a payment system whose representatives may not have voluntarily applied for designation, to be designated where the Bank considers it necessary as provided for under Section 5 (2) of the National Payment System Act 2007. Application forms for designation of payment systems shall be obtained from the Banking, Currency and Payment Systems Department of the Bank of Zambia. 1.0 Application requirements To facilitate the process of designating a payment system, the following supporting documents shall be submitted by the applicant to the Bank of Zambia together with the duly filled in application form obtained from the Bank of Zambia: (a) (b) (c) (d) (e) Brief details of the payment system including the types of services being/to be offered; Where the director applying for the designation of a payment system is a foreigner, he will be required to provide certified copies of their immigration, non resident and work permits where applicable; Board resolution authorising the operation of a payment system and appointing two representatives to sign on behalf of the institution; For those applicants that are licensed under the Banking and Financial Services Act (BFSA) kindly provide the licence number of the licence obtained from the Bank of Zambia; For those applicants that are not licensed under the Banking and Financial Services Act (BFSA) the following additional supporting documents will be required: i. Certified photocopies of the directors National Registration Cards or certified photocopies of the first four pages of the directors passports;

ii. iii. iv. Directors questionnaires for all the directors of the company operating the payment system to be obtained from the Banking, Currency and Payment Systems Department of the Bank of Zambia; Detailed curriculum viteas of the Directors; Certified copy of the Articles of Association; v. Certified copy of the Certificate of incorporation; vi. vii. For a new payments system, a business plan with three year projected financial statements; and Where the applicant is an established business, audited financial statements for the previous two years at the most. 2.0 Technical Requirements 2.1 The applicant shall also be required to provide evidence of fulfilment of the minimum requirements for setting up a payment system as outlined below. Where the foresaid are met, the Bank of Zambia will further conduct an inspection of the applicant s operations to confirm compliance. 2.2 The following are the minimum requirements for setting up a payment system: a) The payment system to be introduced shall be effective, efficient, competitive and safe; b) The payment system shall ensure that there is finality and irrevocability is achieved for payments and settlements; c) The payment system shall have clear and adequate risk- sharing, management and control mechanisms in place; d) The payment system shall have adequate mechanisms in place to address operational, financial soundness as well as other matters pertaining to systemic risk management; and e) The payment system shall have in place adequate failure to settle arrangements which shall be approved by the Bank of Zambia. f) Rules and procedures for the payment system business These shall be provided to the Bank of Zambia in a documented format to demonstrate the meeting of the stated requirements. 2

3.0 Processing of applications 3.1 The Bank of Zambia shall determine an application for designation of a payment system within a period of ninety (90) days from the date of receipt of the duly completed application. 3.2 An application is considered to be complete when all the necessary requirements, as listed above, have been submitted. 3.3 The Bank of Zambia shall, therefore, start counting the 90 days when a complete application is received. 3.4 In this regard, the Bank of Zambia shall inform the applicant in writing that a complete application has been received and that it will commence processing the application which process will be completed within the specified time. 3.5 When the Bank of Zambia is satisfied that the applicant has complied with the requirements for designation, the Bank shall, on the payment of a fee as prescribed below, register the applicant and grant a certificate of designation for a payment system. 4.0 Fees The following fees shall apply: Certificate Category K Million Certificate application fee 1.5 Annual certificate fee 1.0 The application and certificate fees may be paid by either cheque, DDACC, RTGS or any other such methods as may be prescribed by the Bank of Zambia from time to time. 5.0 Validity of participant certificate The certificate of designation of the payment system issued by the Bank of Zambia shall be valid from the date of issue and shall remain valid until the designation is revoked. 6.0 Appeal against decision not to designate a payment system Any person aggrieved by the Bank of Zambia s refusal to designate a payment system or revocation of any designation of a payment system may appeal accordingly depending on their role in the particular payment system in accordance with part IV section 40 of the National Payment Systems Act No. 1 of 2007. 3

7.0 Ongoing Requirements The following are some of the ongoing requirements that designated payment systems shall be expected of: 7.1 The designated payment system shall be subject to on-site and off-site oversight inspections; 7.2 Designated payment system shall submit such returns, relating to the operation of the payment system, as may be prescribed by the Bank of Zambia; 7.3 Any person that intends to cease operating a designated payment system shall give the Bank of Zambia 90 days notice in writing; 7.4 Designated payment system shall ensure that it complies with the National Payment Systems Act of 2007; and 7.5 Designated payment system shall ensure that it has a compliance officer who shall ensure that they have adequate internal policies, guidelines and training programmes for their personnel to ensure adherence to stipulated regulations. 8.0 Contact Details Further queries relating to requirements, application for and operation of a designated payment system should be addressed to The Director, Banking, Currency and Payment Systems Department, Bank of Zambia 1 st Floor, Executive building Bank square, Cairo Road P.O Box 30080 Lusaka, Zambia 10101 Telephone +260-21-1-237040 or +260-21-1228888 Fax +260-21-1-223637 Information on the requirements for designation of a payment system are also available on the Bank of Zambia website: www.boz.zm. 4