In this month’s finance briefing we focus on the national payment system in Tanzania. Legislation was introduced in 2015 to regulate payment system providers.

A payment system

In its simplest form, a payment system in Tanzania is a facility that ensures circulation of money. This includes payment instruments, banking and money transfer procedures, and interbank fund transfers.

Legislation in Tanzania

Payment Systems in Tanzania are regulated by the following legislation:

  1. The National Payment System Act, 2015 (The Act);
  2. Payment Systems (Licensing and Approval) Regulations, 2015 (The Licensing Regulations); and
  3. Payment System (Electronic Money) Regulations, 2015 (Electronic Money Regulations).

The Act

The Act provides the legal framework for payment systems to operate in Tanzania. The Act is an all-encompassing law for licensing, compliance, enforcement, and matters of liability for breach of the law. It allows companies, other than banks and financial institutions, to operate payment systems in Tanzania by obtaining a licence from the Bank of Tanzania (the BoT).

Banks and financial institutions that operate payment systems by virtue of their banking business are required to simply obtain approval from the BoT to issue and operate electronic or written instruments for ordering transmission or payment of money (i.e. payment instruments).

Similarly, in order to be able to issue money that is stored electronically in an instrument or device, the Act requires non-banks or financial institutions licensed as payment system providers to obtain an electronic money issuer licence.

Additional requirements are imposed on non-bank or financial institutions that offer payment system services. The Act requires non-bank/financial institutions applying for the licence to issue electronic money to set up a separate legal entity (in form of a trust) for issuance of electronic money; and in order to be able to issue electronic money, a trust account to be maintained by the trust entity must be opened for management of customers’ money.

Regulatory framework

The BoT regulates national payment systems in Tanzania. It is vested with the power to grant or refuse the prescribed licences, approvals, and basically has the mandate to regulate, supervise, investigate and oversee operations of payment systems in Tanzania.

It is important to note that in its supervisory role, the BoT works closely with other regulators and Government agencies in order to implement the provisions of the Act and its regulations.

Licences and Licensing requirements

By way of summary, the following are the licences issued in respect to payment systems:

  1. Payment system licence;
  2. Payment instrument licence; and
  3. Electronic money issuer licence.


Before the Act came into operation, banks and financial institutions and other private companies obtained approval from BoT to operate payment systems and issue payment instruments and electronic money pursuant to circulars and guidelines produced by the BoT.

When the Act came into force in 2015 it required these banks/financial institutions and non-bank/financial entities operating payment systems to comply with the Act by applying for the prescribed licences and seeking approval where applicable within six months.

The timeframe provided by the Act for compliance has long expired since December 2015, however the BoT through a public notice issued by the Governor on 17 March 2016 has extended the timeframe for compliance to 1 July 2016. This means potential applicants are required to comply with the Act before 1 July 2016.

Requirements for applying for a licence

Payment system licence

  1. Establish a trust entity separate from the common business;
  2. Obtain network services or application services licence from Tanzania Communications Regulatory Authority (TCRA);
  3. Fill in the application form (Form A);
  4. Attach the accompanying documents prescribed under regulation 6 of the Licensing Regulations;
  5. Pay for the application fee.

Payment instrument licence

  1. Fill in the application form (Form F);
  2. Attach the supporting documents prescribed under regulation 30 (2) of the Licensing Regulations;
  3. Banks and financial institutions that simply require BoT’s approval in order to issue payment instruments are required to fill in Form E only and provide the supporting documents prescribed (Regulation 22 (2) of the Licensing Regulations).

Electronic money issuer licence

  1. Fill in the application form (Form C);
  2. Attach the accompanying documents prescribed under Regulation 13 of the Electronic Money Regulations.


The key stakeholders in the payment system industry are the BoT (as the regulator and monetary authority in Tanzania) and banks and financial Institutions.

Other stakeholders include infrastructure providers (e.g. telecommunication companies), payment system providers (e.g. swift or card operators), payment system end-users (individuals, corporate businesses and Government of Tanzania), regulatory authorities (e.g. TCRA), Regional monetary authorities (e.g. East African Community) and international monetary authorities.

Other applicable/relevant laws

The coming into force of the Act makes other legislation applicable to payment system operations and services in Tanzania.

The Electronic and Postal Communications Act, 2010 and the Tanzania Communications Regulatory Authority Act, 2003 together with their relevant subsidiary legislation are applicable. The reason is that, the applicant for a payment system licence is required to have a network services or application services licence granted under the above mentioned legislation.

Other relevant legislation include the Electronic Transactions Act, 2015; the Cybercrimes Act, 2015; the Companies Act, 2002; the Anti-money Laundering Act, 2006; and the Prevention of Terrorism Act, 2002.


The Act envisages that payment system providers can provide their services through agents. However the Act requires non-exclusive use of these agents. It also requires payment system providers to set up consumer protection mechanisms.

Before appointing an agent, payment system providers are required to submit documentation to the BoT for review (regulation 38 of the Electronic Money Regulations).

It should be noted however, that payment system providers remain liable to their customers for any act or omission committed by their agents within the scope of the agency arrangement/agreement.