Purchases, withdrawals and transfers by debit and credit cards increased in 2020, signaling a shift towards electronic transactions, according to the Bank of Uganda.
In its annual report, for the period ending December 2020, the Central Bank indicated that the campaign by banks and the government to promote the use of electronic payments to control the spread of Covid -19 had increased the times the volume and value of debit and credit card transactions.
During the period, the Central Bank noted that the volume of credit and debit card transactions increased 2.7 percent to 10.5 million, while the value increased 11.8 percent to 34,000. billion shillings.
The growth comes at a time when the central bank seeks to support the cashless economy through plastic-coated money card payments, online banking and mobile money.
In 2017, the Central Bank reported that Uganda will achieve a cashless economy by 2022. However, this seems like an overly ambitious target given that at least 90 percent of transactions in Uganda are currently in cash just under a year from the target year.
The Central Bank also indicated a significant drop in the volume and value of check payments, which during the period decreased by 25.1% to just 1.06 million while the value decreased by 20, 9% to 6,200 billion shillings.
During the period, the report noted, the equivalent of Shs 38.6 trillion in transactions or 101,974 transactions were settled in foreign currencies, with the most dominant currency being the dollar.
Transactions in United States dollars (USD) recorded the highest activity in terms of value and settled volumes during the period under review.
Other foreign transaction currencies during the period included the British pound, the euro, the Kenyan shilling, the Tanzanian shilling and the Rwandan franc.
The value of foreign currency checks cleared by the automatic clearing house declined significantly by 24.1%, from $ 221 million to $ 167.7 million.
Uganda, unlike some countries, accepts foreign currency transactions, especially in high-end purchases such as hotels, commercial rentals, retail such as supermarkets, aviation and tourism, between other. The majority of them are paid in dollars.
Uganda’s national interbank and settlement systems, which is a true gross settlement system that enables real-time settlement of large value and urgent payments, in 2020, the Central Bank reported, has seen some disruption although these have not exceeded the recommended maximum downtime of two hours.
Plastic money card payments are integral to achieving the cashless economy.