COUNTRY PROGRESS REPORT ON PAYMENTS SYSTEM MODERNISATION FOR PERIOD APRIL 2011 TO MARCH 2012

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1 COUNTRY PROGRESS REPORT ON PAYMENTS SYSTEM MODERNISATION FOR PERIOD APRIL 211 TO MARCH 212 COUNTRY - BOTSWANA 1. INTRODUCTION 1.1 This report summarises progress made on the Botswana national payments system reform and modernisation programme for the period April 211 to March 212. The following are the significant developments in the country s National Payments System (NPS) programme. (a) National Payments System (NPS) Legislation Review 1.2 The process of reviewing the Bills of Exchange Act to cater for new developments in the retails systems is ongoing. With the envisaged Cheque Imaging and Truncation System project at an advanced stage, the revised draft Bills of Exchange Act caters for Duty of Care in the new CITS environment. Once complete, the draft bill will be passed on to the Attorney General s Chambers for legal drafting. 2. OPERATIONAL ISSUES 2.1 The two Systemically Important Payment Systems (SIPS), the Botswana Interbank Settlement System (BISS) and Electronic Clearing House (ECH) continued to operate smoothly and considered to be stable. An on-site oversight inspection of the ECH is planned to be undertaken during the second quarter of 212, in order to assess compliance to the ECH rules and the standards for FMI s.. 3. SETTLEMENT SYSTEM DEVELOPMENTS AND PROJECTS 3.1 The Bank of Botswana is working on a project to give access to Ministry of Finance and Development Planning (MFDP) and Botswana Unified Revenue Service (BURS)

2 on the Botswana Interbank Settlement System (BISS) as indirect participants. The two institutions will be able to view their statements and transact from their end without having to send payments to the Bank of Botswana for manual processing. This arrangement is expected to provide efficiency in the way the two institutions payments are handled. 4. RETAIL SYSTEM DEVELOPMENTS AND PROJECTS 4.1 The Cheque Imaging and Truncation System is planned to be implemented in the last quarter of 212. A lot of ground has been covered with the financing models and the budget having been approved. Two other mini task forces have been set up to address other pertinent issues regarding the project. These are the Business Processes Mapping Task Force and the Duty of Care Task Force. Their recommendations are being considered. 5. E-MONEY AND MOBILE BANKING INITIATIVES 5.1 With the advent of technology, non cash payments initiatives are continuing to gain momentum in Botswana. Banks are increasingly providing mobile payments and internet banking for selected banking services to their account holders. Two of the three mobile service providers have also partnered with banks to provide money transfer services. Indications are that the products have been widely accepted. The Bank encourages the Bank-led model. 6. TRENDS IN SELECTED PAYMENTS AND SETTLEMENT TRANSACTIONS 6.1 The Charts below present values and volumes of transactions processed by major payment systems during 211. Charts 2 and 3 highlight the predominance of the cheque as a payment instrument in terms of volumes and values, and as expected the Electronic Funds Transfer (EFT) payments are gaining momentum benefiting from speed of settlement and the maximum cheque cap. EFT payments, in terms of volume, 2

3 Volume (Number in 's) have surpassed the cheque payments. The trend is expected to continue as electronic payments increase. 6.2 Chart 1 presents the Botswana Interbank Settlement System (BISS) statistics for transactions processed during the past five years. Over the past 12 months the volumes and values of transactions settled in the BISS increased by 18.9 percent and 23.4 percent, respectively. Chart 1: Botswana Interbank Settlement System (BISS) Transactions (27-211) Volume (Number in 's) 6.3 Over the same period, cheque processing at the ECH decreased by 9.3 percent in volume and 2.7 percent in value as shown in Chart 2. 3

4 Volume (Number in 's) Chart 2: Electronic Clearing House: Cheque Processing (27-211) Volume (Number in 's) 6.4 Corresponding increases for Electronic Funds Transfers were 8.6 percent in volume and 16.1 percent in value. This indicated a significant shift towards the more secure electronic means of payment. The annual volumes and values have been increasing since 27 as shown in Chart 3. Chart 3: Electronic Clearing House: Electronic Funds Transfers (27-211) 4

5 Volume (Number in 's) Volume (Number in 's) 5

6 Table 1: Payments System: ATMs & Electronic Funds Transfer at Point of Sale (EFTPOS) EFTPOS ATM Number of Transactions Value (P Number of Transactions Value (P Period Outlets (' units) million) Outlets (' units) million) 211 Jan -Mar 3,68 2, ,456 2,897 Apr-Jun 3,691 2, ,872 2,978 Jul-Sep 3,725 2, ,957 3,172 Oct-Dec 3,718 2, ,156 3,624 Total 1,258 2,617 19,441 2, Jan -Mar 2,832 2, ,266 2,372 Apr-Jun 2,846 2, ,344 2,52 Jul-Sep 2,931 2, ,563 2,724 Oct-Dec 2,984 2, ,684 2,938 Total 8,658 3,146 17,857 1, Jan -Mar 2,844 2, ,783 2,493 Apr-Jun 2,881 2, ,682 2,514 Jul-Sep 2,884 2, ,987 2,657 Oct-Dec 2,854 2, ,943 2,681 Total 11,589 3,37 23,395 1, Jan -Mar 2,696 2, ,989 2,189 Apr-Jun 2,943 2, ,999 2,299 Jul-Sep 2,743 1, ,556 2,435 Oct-Dec 2,797 1, ,972 2,73 Total 7,988 2,925 21,516 9, Jan -Mar 2,391 1, ,338 1,353 Apr-Jun 2,429 1, ,563 1,69 Jul-Sep 2,481 1, ,33 1,83 Oct-Dec 2,58 2, ,82 2,182 Total 7,178 2,274 13,754 6,973 6