The National Payment Systems Act, 2020 ("NPS
Act") was passed by parliament on 29 July 2020 but to
date, has not been gazetted.
The NPS Act was prompted by an increase in the use of digital
and electronic financial services by private entities in Uganda
offering various electronic payment products. In addition,
financial institutions were favoring electronic payments and
adopting branchless banking systems and had introduced the
automated clearing house for clearing cheques and high-volume
electronic funds transfers.
In addition, there remained a lack of regulation and supervision
of payment service providers by the Central Bank posing safety
risks to customers' funds and creating uncertainty. The
Financial Institutions Act, 2004 posed limitations as it applied
only to deposit taking institutions The payment service providers
would pick and choose how they would wish to be regulated because
of the vacuum in regulation. With further technological
developments in
