EFTs most used form of payment

Reduction. There has been an increase in Uganda’s power exports to Kenya due to a reduction in tariffs. FILE PHOTO

Ugandans transacted more money through Electronic Funds Transfer (EFT) compared to cheques and cash payments in the year ended June.

According to data contained in the annual report of Bank of Uganda 2019, at least Shs27.91 trillion was transacted through EFT compared to the same period last year where Shs21.3 trillion was recorded.

The transactions indicte a 31 per cent growth both in terms of value and growth in volumes.
Transaction volumes through the EFT payment system, grew from 8.6 million to 9.9 million in the period under review.

Cheque payments also increased, registering a 51.7 per cent growth in the period, according to the report.

At least cheques worth Shs7.98 trillion were cleared in the year ended June compared to Shs5.26 trillion that was cleared for the period ended June 2018.

About 1.45 million cheques were paid through the banking system in the period leading to June compared to 1.06 million that were paid in the same period last year.

The two platforms are the most popular mediums of payment in terms of value, according to the central bank report.

During the year to June, the value of local cash payments rose above the annual average of Shs423b to close at Shs544b.

The growth represented an increase of 20 per cent from Shs455b recorded for the year ended June 2018.

Cash payments, which for a longtime have been one of the most popular forms of payment in Uganda are still a popular choice but are reducing due to the growth of e-payment money transfer platforms, among them mobile money.

However, a number of Uganda continue to largely depend on cash payments for small medium end-to-end transactions.

Bank of Uganda has since 2017 been working on a National Payments Policy through which it seeks to regulate digital payments as well as reduce cash payments.

During the launch of an Instant Interbank Transfer system in Kampala in 2017, Mr Benedict Ssekabira, the then Central Bank executive director for commercial banking, said Bank of Uganda was working on a 2017-2022 strategic plan that will reduce the use of paper notes and cheques, among others.

“We have planned to enhance and enable e-payments within the next five years because we want to reduce paper payments,” he said.

The reduction of paper and cash payments, he said would heavily rely on e-payments, among them mobile money, credit and debit cards and internet transfers, among others.

During the same period, mobile money, a relatively new form of electronic money transfer platform, grew in volume but declined in value during the year to June 2019.

At least 2.51 billion transactions were recorded in the period up from 1.35 billion in the same time last year.

Transactional value decreased by 8.4 per cent from Shs73.08 trillion to Shs66.95 trillion during the period.

Mobile money subscribers also increased in the period by 12.4 per cent from 22.7 million to 25.8 million but only 15.5 million was registered as active.

Regulating e-payments
Last year, Bank of Uganda said it was working on a National Payments Policy that would regulate digital payments.

Mr Mackay Aumo, the then Central Bank National Payments Systems director, said the National Payments Policy was being fast tracked to enable efficient regulation.

“The draft is now ready. It has been circulated to stakeholders for input,” he said then.

The policy, he said would, for instance, separate and licence new businesses such that those that handle mobile money are separated from voice and data services.