Steven Odeu
22 April 2004
Kampala — THE introduction of the interbank switch system will set a platform for financial deepening and forge a shift from a cash society to the use of monetary plastic cards.
The switch will be the latest technological innovation in the banking industry.
It will allow customers access to modern banking services and develop a culture of settling transactions electronically.
The 'Anycard' service will also enable all ATM cardholders of banks participating in the network, or Bankom's own ATM network access and use any ATM throughout the country.
It will be provided by Bankom, a subsidiary of Euronet Services, an international switch operator.
"It represents one of the fundamental pillars to deepening the financial sector in Uganda. We will be moving away from being a cash society to a cashless society and therefore having all the benefits in line with developed economies," Michael Kagawa, the Bankom managing director, said last week.
Industry experts say the central switch system will help Ugandans develop a card culture quickly.
"We have seen the ATM cards, Visa cards, Advantage cards, but there are lots of credit cards which we have not seen here. Approaching it slowly, I think we are headed for that culture," an executive of a major bank in Kampala who declined to be named said.
The Bank of Uganda (BOU) has already blessed the project by allowing Bankom to reach agreements with commercial banks to operate the interbank switch. When the regulatory framework is ready, Bankom will be required to sign an appropriate agreement with the central bank.
Commercial banks have unanimously agreed that an interbank switch was a national concern and was a welcome financial product in the industry.
Decisions to join the switch will, however, be left to individual banks.
"It is an essential issue that if banks sign up to the switch, it will ease our payment system," Samwiri Njuki, the chairman of Uganda Bankers Association, said.
"We are now exploring other services basing on the introduction of this technology," he said.
For Ugandans who still think e-commerce is for the most sophisticated countries, the Bankom Switch will enable people pay fees, clear electricity, water, and any other utility bills at their own comfort.
The coming in of Bankom was in line with every developing country's financial deepening initiatives, officials said.
With the central switch on, banking will be simplified.
Regionally, Kenya and Rwanda already have the switches, while Tanzania was said to be putting one soon.
Elsewhere, South Africa, Botswana and Zimbabwe have the system.
With the central switch on, banking will be simplified.
Uganda is now developing a very fast point of sales (POS) programme which will enable customers pay for goods and services using bank issued cards. It will accept all cards issued by all banks in Uganda.
Banks like Orient, Nile and Standard Chartered have POS terminals in the market. But this is not yet a culture Ugandans are used to compared to their Kenyan neighbours and South Africans or Europeans.
Bankom is signing memoranda of understanding with several institutions to get the switch running
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