Muscat: The Central Bank of Oman (CBO) is spearheading the establishment of a dedicated agency to manage the country’s national payment systems – part of a broader effort to spur the nation’s transformation into a cashless society.
On the cards is a National Payment Company (NPC), privately owned by a consortium of commercial banks, which will have the mandate to, among other things, manage the country’s payment systems, print cheque books and plastic cards for customers, and operate a customer call centre as well.
Assisting with the fast-track establishment of the National Payment Company is the Implementation Support & Follow-up Unit (ISFU) of the Diwan of Royal Court, which is tasked with securing speedy approvals for projects and initiatives that can accelerate Oman’s economic diversification.
“In line with global trends, and in response to the recommendation of the World Bank to separate the operator from payment systems, the Central Bank of Oman (CBO) is currently privatising services related to national payment systems through the establishment of a private payment company owned by a group of banks in Oman,” said ISFU in a recent update on its facilitation efforts.
As the banking and financial sector regulator, the Central Bank oversees the operation of a number of national payment systems, notably Oman Net and the Automated Clearing House (ACH). It also regulates these systems to ensure they are in line with the country’s laws and statutes, among other regional and international conventions that the Sultanate has ratified.
Electronic payment systems ensure better results than transactions involving the use of bank notes, according to ISFU. “This is considered a significant project as it will reduce tax evasion and alleviate the risk associated with the use of banknotes. It will also enhance the level of transparency and reduce the potential for corruption,” it stated.
Importantly, the national payments company project will also bode well for Oman’s efforts to promote itself as a regional hub for disaster recovery services. The promulgation of a proposed Data Protection Law, anticipated before the end of this year, is expected to accelerate the implementation of this initiative.
Significantly, Oman is also working alongside fellow member states of the Gulf Cooperation Council (GCC) in the establishment of a regional payments company in conjunction with the roll-out of a GCC Payment Systems Connection System (Afaq).
The Constituent Assembly of GCC Payments Company (GPC), comprising the governors of GCC monetary authorities and central banks, met last month to review progress in the formation of the entity. Tahir bin Salim al Amri, Executive President of the Central Bank of Oman, represented the Sultanate at the virtual forum
The GCC Payment Systems Connection System (Afaq) is currently being piloted in a number of phases. Plans for a Gulf-wide payments company were adopted during the 37th GCC Supreme Council which approved the establishment and buildup of a setup to link cross-border GCC payment systems. It also authorised GCC monetary authorities and central banks to own, manage and finance the project by establishing an independent company.
GPC will oversee the operation of the Afaq system for remittances and settlement of financial payments among GCC monetary authorities and central banks. Afaq will enable the speedy flow of remittances between the Gulf states in an efficient and cost-effective manner. GPC will be headquartered in Riyadh with a branch in Abu Dhabi.