In the second semester of 2018, the financial sector of the Democratic Republic of Congo experiments the new Law No 18/019 of July 09, 2018, relating to payment and securities settlement systems.
The law contains 139 articles grouped into 8 titles. It intervenes in a market characterized by the deployment of new payment infrastructures (Automated Teller Machines) as well as the explosion of new payment instruments including payment cards, e-wallet, etc.
Beyond the bank institutions, the Telecom operators have increasingly revolutionized financial services based on the utilization of mobile phones across the country. However, the financial services carried out through the new technologies are relatively enameled by several risks which cause prejudice to users and other stakeholders in the sector.
Additionally, the transactions carried out through the new payment instruments have experienced the absence of legal protection regulations which reflects obviously the insecurity for the users of the payment instruments.
It’s in this context the Law No 18/019 has been adopted and promulgated in order of establishing a legal and institutional framework capable to sort out the various issues related to payment systems in DRC.
It should be noted that the law has introduced major innovations concerning the legal rules applicable to electronic payment systems and other payment instruments. It also determines the mechanisms for preventing and centralizing payment incidents.
By Gaby Kabue Kayombo
What is the role of payment systems in the financial sector?
According to the second paragraph of the preamble, the payment systems plays the role of facilitating the circulation of currency especially in form of scriptural, protecting the payments of different transactions between individuals and suppliers of goods and services, payments between financial institutions as well as fund transfer between financial institutions in order to ensure the low cost of the transaction.
Who are the stakeholders involved in payment systems?
Under article 4 of the law, the participants of the payment systems are composed of the Central bank, treasure, financial institutions, central counterparties, system settlement agents, system operators, postal financial services, and other issuers of the payment instruments.
However, the Central bank is required to ensure the promotion, security, efficiency, and solidity of the payment systems.
What rules apply to payment instruments?
Law No 18/019 provides the legal rules applicable to the use of different payment instruments. The payment instruments are defined as any means, whatever, the device used to allow any person to transfer funds, this include check, bill of exchange, payment card, etc.
In fact, the financial institutions and other issuers of payment instruments must prior to delivering any payment instrument, ensure that the applicant is not subject to any decision forbidding the use of payment instruments (Art 37).
They may, in the limit, by motivated decision reject to deliver the payment instrument. In case the payment instrument has been delivered, they also have the mandate to request the payment instrument return that they have already delivered.
The financial institutions and other payment instrument issuers have the mandatory to declare in the deadline of 6 days the restitution of payments instrument to the Central of payment incidents (Art 37).
They are required to sign a contract with the beneficiary to whom they deliver the payment instrument in which the rights, obligations, and responsibilities of the issuer and user are set out in accordance with the type-contract of payment instrument issue approved by the Central bank (Art 38).
The setting up, operation, and issue of payment instruments requires the obtaining of a license delivered by the Central bank (art 108). The applicant of the license is required to provide information to the Central bank such as a business plan, a program of activities, proof of capital, description of measures taken to protect the funds of users of payment instruments, etc. (Art110).
What institution is competent to receive claims relating to payment instruments?
The Financial Services Observatory is consecrated by Law No 18/019 as an institution authorized to receive claims related to the using of payment instruments.
In case the conditions are gathered, it can suggest pacific resolution of litigation or disputes submitted to its attention, through the conciliation or mediation way (Art 39).
By what means is the given payment order?
The payment order is given through instrument means to set on a paper form or by any unhand written method (Art 40). The signature of the decision-maker set on the payment instrument or given by any unhand written method.
What type of payment the consent could be required?
The payer’s consent is required for any type of payment transaction. It may be required for one or multiple operations accordingly to the form agreed between the issuer and user.
In fact, the operation of payment authorized must be executed unless if there is the withdrawal of consent or revocation of payment in accordance with the law (Art 42).
Under which conditions to oppose the payment made by an account holder?
Law No 18/019 grants the right of any user of payment instrument or interested third party to do any payment opposition to the payment account holder subject to the following cases:
[a] the loss of payment instrument;
[b] the theft of payment instrument;
[c] removal of a case from the holder of account administration;
[d] incapacity to receive the holder. The law requires that the opposition must be motivated. In fact, the law provides legal solutions in case the payment instrument is lost or stolen.
However, the holder of the lost or stolen payment instrument confirms his opposition in writing within 3 working days. When such payment opposition is done, automatically the financial institutions could not proceed with any payment (Art 44).
When does an account holder reimburse unauthorized or poorly executed payments?
Unauthorized or poorly executed payments are inherent to financial services, and in this context, the law determines the circumstances in which reimbursement may be possible.
Article 45 of Law No 18/19 stipulates that in event of unauthorized or improperly executed payment operation, the payer must submit a claim to the account holder within 60 days counted the date where the payment account has been debited.
Once the claim is proven, the law recommends to the payer’s payment account to re-establish within 30 calendar days from the receipt of the claim, the payment account debited.
In other words, the financial institution must re-establish the payment account in the same state, as it would have been if unauthorized or wrong executed payment operation had never occurred.
Needless to say, the Law recognizes the right for the financial institutions to deny the reimbursement if non-execution emerges from either an error or omission of the decision-maker about his instructions given, either it due to intermediate financial institution chosen by the decision-maker (Art 47).
Who has the right to open account and access to financial services?
Law No 18/019 acknowledges to the company and individual the right to open an account within the financial institutions (banks) entitled by the Central bank, to receive and to collect the public fund (Art 49).
In spite of the right to open an account bank, sometimes the banks can refuse to open an account bank to the benefit of the applicant, moreover refusing to motivate its refusal decision.
In this hypothesis, the law says in case of refusal to open account bank and absence of motivated decision succinctly presented by 3 banks, automatically the Central bank takes the decision to appoint a bank which has the mandatory to open a deposit account, giving the right to minimum financial service (account management, disposal of payment instrument surrounded by necessary security, the possibility to carry out the transfer ( domiciliation, encasing and payment) from this account, the reception, and discount related to the compassion of payment operation for the count of the customer (Art 50).
What are the obligations of the issuer, supplier, and holder related to payment cards and other payment instruments as well as electronic transfer funds?
With regard to payment card issues and other payment instruments, the law determines the obligations of the issuer, including ensuring the identity of the holder and verifying the payment instrument and the electronic fund’s transfer process.
He will be responsible in case of:
(a) execution of a transaction without the authorization of the holder;
(b) incorrect execution of transactions using an electronic funds transfer instrument;
(c) execution of transaction after the owner’s opposition;
(d) failure of the technical equipment, error in its use, or defect of electronic funds transfer instrument (Art 63).
In the event of misuse, fraudulent or unauthorized use of electronic payment instruments, credit institutions and other issuers of payment instruments have from the date of the discovering; block the payment instrument and then declare, without a deadline, this decision to the Central of payment incidents.
The blocking also occurs in the case of presumption of misuse, fraudulent or unauthorized use (Art 64).
In the case of proven unauthorized transaction or the fraudulent use of payment card or any other electronic payment instrument previously opposed, the issuer shall reimburse the holder the full amount of the payment, transaction, and its bank charges (Art 65).
The supplier of goods and services has the obligation to inform his customer that he accepts the payment through a card or all electronic payment instruments by posting the logo or denomination of the accepted payment instrument (Art 66).
The holder of the payment instrument is also obliged to use the payment card or the electronic transfer instrument in accordance with the legal and contractual conditions governing its issue and use. Take the necessary precautions to ensure the preservation of the payment card or electronic funds transfer instrument and data related to its use (Art 67).
The law provides for two situations where the holder of an electronic payment instrument is not liable if the disputed payment has been carried out:
(1) without physical use or electronic identification of his electronic payment instrument;
(2) for the counterfeiting of his electronic payment instrument and, at the time of the disputed transaction, he was in physical possession of his card (Art 69).
How long the electronic data could be conserved?
The operators of systems, participants, payment instrument issuers, suppliers of services and goods, and acceptors of payment instruments are collectively required to conserve electronic data for a period of 10 years. The electronic data must be conserved in this period mentioned in order to consult and access messages (art 107).
Is the law punishing payment card offenses and other instruments?
Law No. 18/019 provides for offenses and penalties for breaches of payment systems, payment cards, other instruments and electronic payment methods, checks, and other items drawn without the right to participants in the payment system.
For example, is punished from 5 to 10-year term of imprisonment and from 10.000.000 to 30.000.000 Congolese francs or one of those penalties only, anyone who has counterfeited or falsified a payment card or any other electronic payment instrument (Art 124 point 2).