Straddling sectors: The micro level regulation of electronic payment systems in Zambia

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Samui, Grace
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The Zambian Government has been engaged in enhancing the payment systems financial subsector as a means of expanding formal financial inclusion. Payment systems are seen as especially advantageous for citizens unable to access ‘brick and mortar’ banks. This is due to the systems’ utilisation of electronic communications, which enable remote access to financial services. Payment systems also increase the efficiency of anti-money laundering controls in the economy through improved record keeping of financial transactions. Moreover, payment systems present a convenient alternative to cash that carries benefits over distance (in terms of money transfer) and benefits over time (savings, credit and insurance). Benefits over distance are immediate and process or transactional in nature. Conversely, benefits over time include an informational element that instead focuses on financial status. Market players have responded to the Government’s efforts with a number of innovative multidimensional products as the requisite electronic communications infrastructure continues to improve. However, the supply of payment systems products does not appear to have contributed significantly to demand among the populace. One possible reason for this disconnect is the mistrust of non-cash and impersonal / automated methods of transacting by potential users of payment systems in an economy that is predominantly cash-based. Such mistrust is traditionally addressed through simple, clear and comprehensive regulation that directly addresses consumer concerns. This study examined the extent to which the micro level regulation of payment systems in Zambia provides such clarity. A principally qualitative socio-legal methodology was utilised in the study in order to determine the current regulatory framework. The study used a ‘trust paradigm’ of privacy, security and consumer protection as the framework of analysis. It assessed whether Zambia’s payment system regulations adequately address the modern trend towards the ‘electronification’ of payment systems, in part through whether both the transactional and informational dimensions of payment systems are addressed. It was concluded that there is a distinct gap in the micro level regulation of payment systems in Zambia. The regulation focuses on the transactional aspect with little consideration for the informational. Additionally, provisions aimed specifically at enhancing consumer trust in electronic payment systems were found lacking. The study therefore recommended some improvements to micro level regulation to provide the much-needed simplicity, clarity and comprehensiveness of regulation that may boost the Government’s efforts at formal financial inclusion.
Electronic Commerce-Zambia , Internet-Zambia