Botswana's National Payments Switch Act, which will enable the country to implement its own retail payments switch and reduce reliance on South African-based services, has been drafted and will now go through the requisite steps before being tabled before parliament.
This was revealed by the Bank of Botswana during a media briefing last week.
A payment switch is a software system that enables the routing of electronic payments between different payment methods and financial institutions. It acts as a hub, connecting various payment methods, such as credit cards, debit cards, and online wallets, with multiple banks or payment providers.
Botswana's switch will be designed to enable inclusive, low-cost, real-time retail transactions across platforms and institutions. It will also support the integration of fintechs via open APIs and ensure interoperability across banks, mobile money operators, and other payment service providers.
Botswana is also working on a national fintech strategy as it seeks to accelerate the modernisation of financial services in the country, with a view to positioning the country as a regional fintech hub, expanding digital financial services to underserved communities and small businesses, and supporting cross-border digital trade.
Implementation of Botswana's payments switch was initially announced in September 2023 in the finance ministry's Budget Strategy Paper.
"This landmark initiative aims to catalyze the adoption of digital payments, reducing reliance on cash transactions and stimulating a modernized economic system," government said then. "As we navigate the ever evolving fintech landscape, the government will diligently assess and adapt to emerging trends, ensuring that digital currencies and novel financial service providers are harnessed for the collective benefit."
Furthermore, BoB said it could not provide a timeline on when the Act will be tabled before parliament, as it needs to go through the Attorney General, Ministry of Finance and other state organs for further scrutiny before lawmakers can vote on it.
A lack of a sovereign payments witch has been identified as one of the hindrances in Botswana's fintech journey, with other challenges including a lack of an eID for online verification, a lack of interoperability between payment instruments, and low thresholds for mobile money wallets.
Bank of Botswana also added that the digitalisation of revenue collection, which was also announced in 2023, is nearing completion, pending integration with Botswana Unified Revenue Services and the Office of the Accountant General. When implemented, the system will allow real-time revenue collection to government coffers from points such as traffic fines.
