Strategy to transform Oman into cashless society in the offing

MUSCAT, AUG 20 – Services linked to Oman’s National Payment Systems are proposed to be privatised as part of a strategy to support the development of a strong domestic financial technology (fintech) industry as well as accelerate the Sultanate’s transformation into a cashless society.
The initiative, which is being overseen by the Central Bank of Oman (CBO), is also a key component of a broader effort by the Omani government to ignite the growth of a vibrant Information & Communications Technology (ICT) industry in the Sultanate.
The National Payment Systems infrastructure, representing a critical backbone of the country’s banking and financial services machinery, encompasses, among other things, the Real Time Gross Settlement (RTGS), the Automated Clearing House (ACH) payment system, Electronic Cheque Clearing, mobile payment clearing and switching system (MPCSS), and ATM/POS Switch — including the ePayment Gateway. Developed over several decades, this infrastructure is also underpinned by the National Payment Systems Law enacted last year.
As part of its mandate as the nation’s apex bank, the CBO has issued, supervised and monitored laws and regulations governing the operation of these systems with the overarching goal of ensuring the security of financial transactions.
Having put in place all of the relevant physical infrastructure and their legal underpinnings, the Central Bank is now looking to privatise the services related to the National Payment Systems. Its vision and strategy in this regard was outlined during the ‘ICT & 4th Industrial Revolution Lab’ hosted by the Information Technology Authority (ITA) earlier this year in line with the government’s ambitions to diversify the country’s economic base.
The Lab, which was held during February – March, was supported by the Ministry of Transport and Communications and the Implementation Support & Follow-up Unit (ISFU) of the Diwan of Royal Court.
According to a recent report by ISFU on the Lab, the privatisation of services linked to the National Payment Systems essentially calls for the establishment of a private payments company set up by a consortium of banks operating in the Sultanate.
The report explained: “In line with the global developments in this sector and in response to the recommendation of the World Bank to separate the operator from payment systems, the Central Bank of Oman 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.”
The company, the ISFU report noted, will be involved in the management of payment systems, besides providing other public services such as printing check books and cards and providing a call centre, while the Central Bank will be responsible for issuing legislation, supervising and monitoring these systems.
Significantly, the apex bank is mounting a major national multimedia campaign championing a switch to electronic payment systems instead of banknotes. “The project is very important 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 corruption,” the report added.