With the creation of an Electronic Funds Transfer (EFT) system, government stands to save in excess of $200 million annually by increasing the use of electronic payments, according to the National Payments System Development Plan (NPSDP).
A 2015 payments cost study conducted by the World Bank’s Payment Systems Development Group found that government could save up to GYD $266 million (0.04 % of Gross Domestic Product) annually by switching from paper-based payment mechanisms to electronic payments.
According to the NPSDP, which was which was published by the Bank of Guyana (BoG) in March, the Accountant General’s office, which operates the Integrated Financial Management and Accounting System (IFMAS), is very keen to move to fully-electronic payments from IFMAS but this is not currently possible due to there being no Automated Clearing House (ACH) function for electronic credit transfers.
As a result, the BoG has announced plans to introduce an EFT system in mid-2018 as an extension of the National Cheque Clearing House (NCCH) system which is currently in place.
“This will provide ACH functionality for clearing direct credit and direct debit transfers. Further, common risk mitigation practices, such as liquidity management tools and facilities, are not available to participants in the existing system,” the plan notes.
The plan identifies three objectives of the proposed National Payment System (NPS) which relate to electronic transactions: expanding the accessibility of electronic payment access networks; attracting higher rates of electronic payment acceptance by vendors, merchants and other providers of goods and services; and advancing the migration of government to electronic payments for both the collection and disbursement of funds.
In explaining the background of these objectives, the BoG explains that the current systems have significant gaps in their infrastructure.
“There are specific legal provisions for international remittance services [but] there are no statutory or regulatory provisions to govern a range of other payment services and payment mechanisms,” the plan notes, while explaining that there are no statutory provisions on electronic transactions, including the electronic processing of cheques and the use of truncated or electronic cheques.
“There are no provisions on credit transfers, either paper-based or electronic, or on electronic debit transfers. No secondary measures exist on cards, either credit or debit, or on e-money instruments,” it adds, before concluding that apart from the specific provisions on international remittances, the law is silent on whether non-banks are allowed to offer other payment services. In the absence of such provisions, the provision of domestic remittances and bill payment services by Money Transfer Agencies falls completely outside legal and regulatory framework, and thus, outside the reach of BoG oversight.
In order to achieve this objective the BoG will over the next four years put into place several aspects of missing infrastructure in the medium term (2018-2021) as part of nine specific actions to be taken to realise the set objectives.
The first of these actions requires the enactment of a robust NPS Act (NPSA) and a revision of the Bank of Guyana Act.
The proposed NPSA, which is before the National Assembly, will legalise the system and allow for the BoG to license institutions to operate electronic funds transfer services.