Oman’s upgraded payments system to operate 24×7: CBO

CONRAD PRABHU

MUSCAT: The Central Bank of Oman (CBO) says it is modernising the country’s payments settlement system to enable round-the-clock operations, among other benefits.

The apex bank noted in its Financial Stability Report 2021, issued here last week, that the initiative is part of an array of measures being adopted to ensure smoother, faster, efficient and safe electronic transactions, seamlessly integrated with the payment systems of the GCC and wider Arab regions.

“Central Bank of Oman (CBO) is planning to implement a state-of-the-art RTGS system to function on a 24×7 basis with advanced features, including allowing banks to monitor settlements with CBO around the clock and to ensure reduced settlement and credit risks,” it said.

Formally known as the Real-Time Gross Settlement system, the RTGS is a critical component of the country’s national payments infrastructure, providing an electronic fund transfer mechanism between the numerous participants of the settlement system.

At the same time, the Central Bank is upgrading its payment and settlement systems infrastructure to support interface between the RTGS system and the cross-border payment systems of the Gulf Cooperation Council (GCC), as well as the rest of the Arab region – moves designed to enable seamless cross-border payments.

According to the report, the integration of Oman’s RTGS with that of the GCC — known as Arabian Gulf System for Financial Automated Quick Payment Transfer (AFAQ) — is currently in the pilot phase with three banks taking part in this phase.

“AFAQ enables banks and other customers across the region to transfer funds faster and securely, yet still maintain cost-efficiency,” the Central Bank noted.

Also under way is the integration of Oman’s payment system with the Arab regional payment system, known as BUNA.

The move “will enable central banks and financial institutions across the Arab region to send and receive payments in their local currencies at lower transaction costs”, the apex report stated.

In other developments, the Central Bank has announced it is evaluating applications from a number of businesses seeking licenses to operate as Payments Service Providers (PSPs) in the Sultanate of Oman. The first PSP licence was awarded to Thawani Technologies in 2020.

Another success of the past year, the Central Bank noted, was the mandating of salary payments of government and public sector staff to be made through the Automated Clearing House (ACH) system for payments.

“These measures focused primarily on removing market distortions and strengthening market incentives to promote the adoption of cost-effective payment services,” the bank stated.

More recently, the CBO set up a task force to study the introduction of Central Bank Digital Currencies (CBDCs) to help “keep pace with accelerating developments in the field of payments”, the apex bank added in its report.