Purchases, withdrawals and transfers conducted through debit and credit cards increased in 2020, signaling a shift towards electronic transactions, according to Bank of Uganda.
In its annual report, for the period ended December 2020, the Central Bank indicated that the campaign by banks and government to promote use of electronic payments to control the spread of Covid -19 had pushed up both volume and value debit and credit cards transactions.
During the period, the Central Bank noted the volume of credit and debit cards transactions grew by 2.7 per cent to 10.5 million while value rose by 11.8 per cent to Shs.34 trillion.
The growth comes at a time when the Central Bank is seeking to achieve a cashless economy support by plastic money card payments, online banking and mobile money.
In 2017, the Central Bank had indicated that Uganda will, by 2022, achieve a cashless economy. However, this seems to be an overly ambitious target given that at least 90 per cent of transactions in Uganda are currently cash-based slightly less than a year to the target year.
The Central Bank also indicated a significant drop in the volume and value of cheques payments, which during the period, volumes declined by 25.1 per cent to just 1.06m while value decreased by 20.9 per cent to Shs.6.2 trillion.
During the period, the report noted, an equivalent of Shs38.6 trillion worth of transactions or 101,974 transactions, were settled in foreign currencies with the most dominant currency being the dollar.
Transactions in United States dollars (USD) registered the highest activity in terms of both value and volumes settled in the period in review.
Other foreign transactional currencies during the period included the British Pound, Euro, Kenyan shilling, Tanzanian shilling and Rwandan Francs.
The value of foreign currency cheques cleared through the Automatic Clearing House declined significantly by 24.1 per cent from $221m to $167.7m.
Uganda, unlike some countries, accepts transactions in foreign currencies, especially in high end purchase such in hotels, commercial rent, retailing such as in supermarkets, aviation and tourism, among others. Majority of these are paid in dollars.
The Uganda National Interbank and Settlement Systems, which a real gross settlement system that allows real time settlement for high value and time critical payments, during 2020, the Central Bank reported, experienced some disruptions although these did not exceed the recommended two hour maximum downtime.
Plastic money card payments are an integral part in the acheivement of the cashless economy.