Being digitally smart

In line with Oman Vision 2040, digital transformation plays a key role as it supports the strategic and vital sectors of the national economy including payment systems in the Sultanate of Oman.

Digitalisation of payment systems will help provide affordable and accessible services that pave the way to achieve an inclusive financial system in the country.

A national programme for the country’s digital economy, which has already received the nod from the Council of Ministers, is expected to contribute to building and developing a prosperous digital economy that responds to the requirements of the future.

To take further the digitalisation of payment and settlement systems in the country, the Central Bank of Oman (CBO) is working on several payment systems-related initiatives.

“The Covid-19 pandemic has curtailed the physical contact between payer and payee, which has increased the adoption of digital payments by the public”, states the apex bank in its annual report.

It has issued various guidelines simplifying know your customer (KYC) norms and introducing e-KYC to encourage the adoption of electronic payments, and as a result, it recently issued a framework for small businesses use e-payment services.

“This is in addition to taking all necessary measures to facilitate the use of electronic transactions, like reducing or freeing the charges, increasing the limits etc during the pandemic period”, the report says.

Banks and payment service providers have also taken initiatives in line with the CBO’s efforts towards a less-cash dependent society.

The introduction of the direct debit instrument is being considered as an alternative secure payment option that will help in replacing the majority of the remaining cheque payments for loan EMI, bills and rent etc.

Banknet is an initiative that connects banks and other financial institutions to the national payment systems infrastructure and introduces a real-time gross settlement (RTGS) system in the country.

The apex bank also launched automated clearing house (ACH) in addition to introduction of electronic cheque clearing (ECC) system to do away with the need for physical cheque for settlement, implementation of national switch — OmanNet Switch — for ATM, POS and e-commerce payments, and creation of national payment gateway.

“CBO is in the midst of enhancing the RTGS system to operate 24X7, along with many other features like enhanced liquidity management and better gridlock resolution”, reveals the report, adding, “it will be connected for cross-border payments to GCC countries”.

To facilitate the affordable fund transfer round the clock between person-to-person or person-to-business, the ACH system (instant credit service) will be made operational 24X7.

The CBO is working on the introduction of International Bank Account No (IBAN) in the country during 2021 and 2022, to speed up electronic verification of bank accounts when making electronic payments and reduce the risk of errors in bank account numbers.

Some other initiatives being contemplated are the introduction of countrywide electronic bill presentment and payment platform; exploring the feasibility of hiving off the Finance and Leasing Companies Retail Payment Systems in 2020 operations of retail payment systems to a separate entity; and to interconnect various payment systems globally, to facilitate the cross-border remittances.