National Payment Systems Act, 2020
Act 15 of 2020
- Published in Uganda Gazette 51 on 4 September 2020
- Assented to on 29 July 2020
- Commenced on 4 September 2020
- [This is the version of this document from 4 September 2020.]
Part I – Preliminary
1. InterpretationIn this Act, unless the context otherwise requires—"aggregator" means a payment service provider who facilitates electronic receipt and payment for goods and services;"book entry" means a transaction which is effected by credit and debit entries;"book entry securities collateral" means a financial instrument provided under a financial collateral arrangement and for which proof of title is an entry in a register or account maintained by or on behalf of an intermediary;"cash" means money credited to an account in any currency or a similar claim for the repayment of money market deposits;"central bank" means the Bank of Uganda established under section 2 of the Bank of Uganda Act, Cap. 51;"clearing" means the process of transmitting, reconciling and confirming transfer orders prior to settlement and establishment of final positions for settlement;"clearing system" means a set of rules and procedures that participants must comply with in presenting and exchanging data or documents relating to transfer of funds or securities to other participants at a single location and includes a mechanism for calculating participants mutual positions, potentially on a net basis, with a view to facilitating the settlement of their obligations in a settlement system;"close-out netting provision" means a provision of a financial collateral arrangement or of an arrangement of which a financial collateral arrangement forms part, by which, on the occurrence of an enforcement event, whether through the operation of netting or set-off or otherwise—(a)the obligations of the parties are accelerated so as to be immediately due, and expressed as an obligation to pay an amount representing their estimated current value, or are terminated and replaced by an obligation to pay such an amount; or(b)an account is taken of what is due from each party to the other in respect of obligations to pay an amount representing their estimated current value, and a net sum equal to the balance of the amount is payable by the party from whom the larger amount is due to the other party;"collateral provider" means a person providing financial collateral under a title transfer arrangement or a security interest;"collateral taker" means a person provided with financial collateral under a title transfer arrangement or a security interest;"controlling interest" means any person who has the power to, directly or indirectly, influence the direction of the management of the licensee, whether through the ownership of shares or securities, voting, partnership or other ownership interests, agreement or otherwise;"currency point" has the meaning assigned to it in the Schedule;"delivery versus payment" means a security settlement mechanism which links a securities transfer and funds transfer in such a way to ensure delivery occurs only if the corresponding payment occurs;"electronic device" includes computer, card, mobile handset;"electronic money" means a monetary value represented by a claim on the issuer, which is—(a)stored on an electronic device;(b)issued upon receipt of funds in an amount not less in value than the monetary value received;(c)accepted as a means of payment by undertakings other than the issuer; and(d)prepaid or redeemable in cash."electronic money issuer" means a payment service provider who is licensed to issue electronic money under section 47 of this Act;"enforcement event" means an event of default or any similar event agreed upon by the parties, the occurrence of which entitles the collateral taker to realise a financial collateral arrangement or the occurrence of which bring into effect a close-out netting provision;"financial collateral" includes cash or a financial instrument;"financial collateral arrangement" means an arrangement of transfer of title or a security interest as financial collateral, whether or not the transfer of title or security of interest is covered by an agreement or general terms and conditions, applicable to a financial collateral;"financial institution" means a company licensed by the central bank to carry on or conduct financial institutions business in Uganda and includes a commercial bank, merchant bank, mortgage bank, post office savings bank, credit institution, a building society, an acceptance house, a discount house, a finance house, an islamic financial institution or any institution which is classified as a financial institution by the central bank;"financial instrument" includes domestic or foreign shares in companies, securities equivalent to shares in companies, bonds and other forms of debt instruments, including units in collective investment undertakings, money market instruments and related claims or rights which are negotiable on the capital market, and any other securities which are ordinarily dealt in and which give the right to acquire any such shares, bonds or other securities by subscription, purchase or exchange or which give rise to a cash settlement other than payment instruments;"insolvency proceedings" means any measure to wind up or reorganise an entity, or declare a person bankrupt where such measure involves suspending of, or imposing of limitations on transfers or payments in accordance with the Insolvency Act, 2011, Part XI of the Financial Institutions Act, 2004 or the law of insolvency of another country where the entity was incorporated;"interoperability" means a set of procedures or arrangements that allow participants in different payment systems to conduct and settle payments or securities transactions across those payment systems while continuing to operate only in their own payment systems;"licensee" means a person issued a licence under this Act;"Minister" means the minister responsible for finance;"netting" means offsetting of obligations between or among the participants in the netting arrangement to reduce the number and value of payments or deliverables needed to settle a number of transactions;"participant" means a member of a payment system as defined in the rules of that payment system;"payment instrument" means any device or set of procedures by which a payment instruction is issued for purposes of making payments or transferring money and includes cheques, bills of exchange, promissory notes, electronic money, credit transfers, direct debits, credit cards and debit cards or any other instrument through which a person may make payments, with the exception of banknotes and coins;"payment order" means an instruction sent by a payer or payee directing the execution of a payment transaction;"payment service provider" means a person who is licensed under section 9 of this Act to provide a payment service;"payment service" means—(a)services enabling cash deposits or withdrawals;(b)execution of payment transactions;(c)issuance and acquisition of payment instruments; or(d)any other service incidental to the transfer of funds;"payment system" means a system used to effect a transaction through the transfer of monetary value, and includes the institutions, payment instruments, person, rules, procedures, standards, and technologies that make such a transfer possible;"payment system operator" means an entity, alone or with other entities which is in charge of the operation of a payment system and may include a participant to the system, a settlement agent, a central counterparty or a clearing house;"portfolio" means an investment held by a person or an entity;"sandbox" means a temporary experiment of innovative financial products, services, business models or delivery mechanisms in the payment systems ecosystem;"security interest" means a legal or equitable interest or a right in security, other than a title transfer arrangement arising by way of security including a pledge, a mortgage, a fixed charge, a floating charge, a lien or any other similar security;"securities settlement system" means a formal arrangement amongst three or more participants, with common rules and standardised arrangements for the execution of securities transfer orders between the participants;"settlement account" means an account in the books of a settlement agent used to hold funds and financial instruments and to settle transfer orders between participants in a system;"settlement agent" means an entity providing to participants of a payment system, settlement accounts through which transfer orders within that payment system are settled and extend credit to those participants for settlement purposes;"systemic risk" means the risk that the inability of one or more participants to perform as expected shall cause other participants to be unable to meet their obligations when they become due;"title transfer arrangement" means an arrangement, under which a collateral provider transfers legal or beneficial ownership of financial collateral to a collateral taker for the purpose of securing or otherwise covering the performance of guaranteed obligations;"transfer order" means—(a)an instruction by a participant to place at the disposal of a recipient an amount of money by means of a book entry or electronic transfer on the accounts of a participant;(b)an instruction which results in the assumption or discharge of a payment obligation as defined by the rules of that payment system; or(c)an instruction by a participant to transfer the title to, or interest in a financial instrument by means of a book entry on a register, or otherwise.
2. Application of the Act
3. Objects of the ActThe objects of this Act are—
Part II – Regulation of payment systems
Functions of the central bank
4. Functions of the central bank
5. Payment systemsThe payment systems in Uganda are categorised as—
6. Prohibition to operate a payment system, issue a payment instrument and offer payment services
7. Application for a licence
8. Eligibility for licensing payment system
9. Grant of licence
10. Modification of license
11. Payment systems rules
12. Corrective actions
13. Revocation or suspension of licence
14. Effect of revocation or suspension of the licence
15. Annual fees
16. Establishment of a regulatory sandbox framework
17. Application for approval to operate a sandbox
18. Approval to operate a sand box
Oversight of payment systems
19. Oversight of the payment system
20. Powers of central bank
21. AuditsThe central bank may appoint an external auditor to examine a service provider, participant or operator of a payment system in respect of such matters as may be specified by the central bank.
22. Inspection of operators of payment systems
23. Information to be provided to the central bank
24. Payment systems operated by the central bankThe central bank shall, in operating its payment systems, comply with the same oversight norms and standards as are imposed on other payment service providers or payment system operators under this Act.
Part III – Protection of payment systems
25. Finality and irrevocability of payments
27. Protection of settlement accountsThe balances on settlement accounts with a payment system shall not be attached, assigned or transferred for the purposes of satisfying any debt or claim.
28. Effect of commencement of insolvency proceedings
29. Credit or debit of settlement account
30. Notification of insolvency proceeding to central bank
Securities settlement systems
31. Principles for securities settlement
32. Fungible book-entry securities
33. Co-ownership rights
34. Rights over book-entry securities against the central securities depository
35. Rights over book-entry securities against a financial intermediary
36. Right to reuse by collateral taker
37. Conflict of laws
38. Application of sections 38 to 46 of this ActSections 38 to 46 of this Act applies to all forms of financial collateral arrangements which secure all types of obligations whether present, future, actual, contingent or prospective owed to the collateral taker, or his or her principal, by the collateral provider or by any other person.
39. Financial collateral arrangement
40. Validity and enforceability of financial collateral arrangements
41. Enforcement of close-out netting provisionA close-out netting provision is valid, enforceable and binding on a third party, including the liquidator, and without prior notice or order of court, in accordance with the terms of that close-out netting provision notwithstanding—
42. Addition or substitution of collateral
43. Realisation of security interest on a financial collateral
44. Priority of rightsThe rights of the collateral taker over the financial collateral shall prevail over the rights of any other creditor of the collateral provider.
45. Non-retrospective effect of insolvency proceedingsThe provision of financial collateral may not be declared void or reversed on account of the commencement of insolvency proceedings, if the financial collateral was provided at the latest, on the day of the commencement of insolvency proceedings and at a time when the collateral taker was unaware of the commencement of insolvency proceedings.
46. Conflict of laws in regard to book entry collateral
Part IV – Electronic money and electronic transfer
47. Electronic money issuance and circulation
48. Establishment of a subsidiary legal entity
49. Trust accounts
50. Duties of the trusteesThe trustees referred to under section 49(5), shall—
51. Special accounts
52. Protection of trust and special accountThe balances of the trust account and the special account shall not be attached, assigned or transferred for the purposes of satisfying any debt or claim.
53. Duties of electronic money issuerAn electronic money issuer shall—
54. Permissible transactionsElectronic money may be used for—
55. Prohibited activities
56. Account types and transaction limitsThe central bank shall, by regulations prescribe different categories of electronic money accounts and the permissible transaction limits on each category of account.
57. Dormant account
58. Audit trailAn electronic money issuer shall install a system comprising inbuilt control mechanisms, as may be prescribed by the central bank for a complete audit trail.
59. Customer due diligence requirements
60. Liquid assets requirements
61. Prohibitions under this part
Part V – General
62. Submission of returns
63. Retention of payment system records
64. Protection of customer informationA licensee or the central bank shall protect the privacy of a participant and customer information and not disclose information of a participant or customer unless the disclosure is made in compliance with the law, an order of a court or with the express consent of the system participant or customer.
65. Consumer protection in payment system
66. Minimum capital requirements
67. Availability of payment system servicesA payment system operator shall ensure that services are available to the users of that payment system throughout the prescribed operational period.
68. Data centreAn electronic money issuer, shall establish and maintain its primary data center in relation to payment system services in Uganda.
69. Protection from liabilityAn officer of the central bank shall not be held personally liable in respect of any act done in good faith, and without negligence in the performance of the functions in this Act.
70. Cessation of business
71. Cooperation between regulators
72. Power to make regulations
73. Amendment of ScheduleThe Minister may, with the approval of Cabinet, by statutory instrument amend the Schedule to this Act.
74. Transitional provision
History of this document
04 September 2020 this version
29 July 2020
|National Payment Systems (Amendment) Regulations, 2022||Statutory Instrument 102 of 2022|
|National Payment Systems (Consumer Protection) Regulations, 2022||Statutory Instrument 103 of 2022|