The landscape of financial transactions in Uganda is rapidly evolving, with digital payment channels gaining significant traction among the population. The latest data from the Bank of Uganda (BoU) reveals a substantial increase in digital card payments, reaching a total of Shs532 billion.
Currently, Uganda boasts 27 payment service providers, with numerous applications awaiting licensing, signaling a growing interest and investment in digital financial services across the country.
Dr. Tumubweine Twinemanzi, the Executive Director of Supervision at the Bank of Uganda, shared insights during the third Bank of Uganda Financial Stability Symposium held at the Kampala Serena Hotel. He emphasized that all electronic money transactions are backed by funds held in trust accounts, ensuring the security and reliability of digital payment systems.
During the last quarter of 2023, debit card payments surged to Shs581 billion, marking a notable increase from Shs532 billion recorded in the previous quarter ending September 2023. Dr. Twinemanzi highlighted the significant growth in mobile banking transfers, with active users rising by 24.9 percent to 2.4 million in the quarter ending December 2023.
Moreover, the volume of mobile money transactions witnessed a 7.7 percent increase, totaling 1.7 billion transactions, while the transaction value rose by 2.9 percent to Shs62.2 trillion. This growth underscores the expanding role of mobile money platforms beyond person-to-person transfers, now serving as vital payment channels for businesses.
Dr. Twinemanzi emphasized the proactive measures taken by the Bank of Uganda to ensure the security and integrity of the digital payment ecosystem. Despite moderate risks identified, efforts are underway to address fraud and enhance cybersecurity measures in collaboration with payment service providers.
The implementation of the revised Interception of Communications Regulations, 2023 aims to curb fraudulent activities, including restrictions on the number of SIM cards an individual can own. Additionally, the Bank of Uganda remains committed to raising public awareness and educating the populace about the risks associated with digital payments.
James Bukuli, Deputy Director of Payment Systems at the Bank of Uganda, highlighted the role of fintech in aggregating and integrating digital financial services. While welcoming more players in the digital finance space, he acknowledged the challenge of high pricing for digital services, urging for greater affordability and accessibility.
Furthermore, commercial banks are now being licensed as payment service providers, expanding the scope of digital financial services to meet the evolving needs of Ugandan consumers and businesses.
