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Payment System

The National Payment System Overview

The National Payment System (NPS) Modernisation Project

The Government of Tanzania enunciated the National Payment System (NPS) Modernisation Project in 1996 to re-examine the country’s payment systems with the aim of developing an efficient payment system.   The NPS Vision is to have in place an efficient customer centred payment system by the year 2005.  The Project is spearheaded by the Bank of Tanzania.

The National Payment System involves all major payment systems users, owners, providers, and managers of the national payment systems defined as stakeholders who wish to improve the country’s payment systems. These include Banks, and Financial institutions, Government, Capital and securities Market Authority, the Stock Exchange, Infrastructure providers (e.g. Telecomms, Post, Power, etc), and, Business/ Consumer representatives, and major users (e.g. Pension funds, Insurance companies, etc).

The national Payment System council (NPSC) is the apex body of payment system in the country. Members of NPSC are Chief Executives Officers of major payment system stakeholder institutions (i.e Banks and Financial Institutions). The Governor of the Central Bank is the Chairman of the Council.

The project activities are administered by the Bank of Tanzania (The Central Bank). For the purpose of involving stakeholders in NPS decisions and synchronisation of NPS activities the NPSC established sub-committees responsible to look into specific matters concerning payment system institutional arrangements. The committees analyse and recommend amendments and NPS development activities. There are four committees namely

The Operations Committee;

 The Legal Committee;

The Automation Committee; and

 The Standards Committee;


NPS Modernization Project Mission Statement is : To provide an efficient customer centered payment system designed to meet the payment needs of the country”.


The NPS Modernisation Project aims at developing efficient payment systems in the country and to meet the broader needs of the economy.

The main objectives are:-

  • To minimise payment, clearing and settlement risks and achieve reliable, secure, convenient, cost effective, universal and integrated systems to meet the needs of the economy.

  • To improve microeconomic management capabilities of Bank of Tanzania by supplying timely and accurate information on stock and flow of funds;

  • To facilitate a faster the exchange and settlement of funds and securities in order to reduce floats and improve efficiency on the circulation and transmission of funds;

  • To expand flexibility in the long term and allow the adoption of, and migrate to modern modes of payment mechanisms at the same time be responsive to user needs; and

  • To establish an efficient and effective legal and institutional framework capable of regulating new payment systems.


The execution of NPS Modernisation objectives adopted a two-track approach. On one hand, to solve the current pressing needs in the shortest time possible, while on the other hand to adopt a strategic phased approach for long-term goals and objectives.

The short term objectives include the Automation of Clearing Houses using MICR document processing, disk exchange mechanism, SWIFT standards adoption and development of guidelines for introducing Auditable Payment Schemes.

The long term implementation plans are divided into four phases designed to achieve the following:-

Phase 1-Situational Stocktaking Analysis Phase aims at developing a common understanding of the current economic, financial, technical and payment system traffic and structures in the country. The stocktaking exercise was necessary to form an appropriate vision and to conceptualise systems relevant to the country’s problems, opportunities and constraints;

Phase 2-Vision And Strategic Framework phase aimed at formulating a vision and a conceptual framework for future development work to be undertaken in order to address the country’s short-term and long-term needs;

Phase 3-Physical Design phase provides technical specifications for systems to be developed as planned; and,

Phase 4-Construction And Implementation phase establishes regulations, facilitate procurement, development and implementations by the stakeholders based on agreed strategies.


The Stocktaking phase was finalised and the Situational Stocktaking document publicised in January 1998. 

This report concluded the first phase of the National Payment System (NPS) modernisation project, which took about a year and involved banks, users, regulators, providers and most parties with a stake in the country’s payment systems. It was carried out through literature reviews, research, study tours, interviews, surveys and workshops. The findings of this phase formed the base for the work to be undertaken in subsequent phases of this project.

The report focused on the major factors influencing payment systems in the country. It includes the problems associated with NPS, background of the country’s socio-political culture, economy and an outline of its vision;

The infrastructure situation, the state of automation within and between bank branches and their customers; the legal structures that affect payments, the key institutional structures; the existing payment instruments, Inter-bank Clearance and Settlement systems. he risks associated with Payments in the country and, the country’s national payment system needs, vision and some preliminary suggestions on the way forward.  For more details view the

Stocktaking Report.

As part of harmonization, the SADC Forum compiled each member’s payment system status known as the SADC Payment System Green Book which indicates the country's status in the payment system arena. 

Green Book tables of statistics can be obtained here:

    -  2005 Green Book statistics.

    -  2003 Green Book statistics.


The Bank of Tanzania in collaboration with the stakeholders documented the NPS Vision and Strategic Framework which states the NPS Mission and sets out the Payment needs of the country. It further sets out the payment systems conceptional overview, vision and strategic framework for the year 2005 identifying the basic characteristics of a modernised payment system including among others the structure, roles and responsibilities and the implementation programs.

For more information visit the Year 2005 NPS Vision And Strategic Framework document.

In appreciation of initiative shown by various companies to introduce card based electronic Money Schemes in the country, in January 2000 the NPS Project issued Guidelines, which shall be followed by any party wishing to introduce electronic auditable payment schemes in the country. The aim is to comply with the NPS objective of reducing cash usage and to promote non-cash based instruments in the country.  The guidelines therefore serve as a safeguard measure to consumer interests as well as having standardization, which will facilitate future cooperation and system integration. See full document on Guidelines for introducing of Auditable Card Payment Schemes in Tanzania

The Bank of Tanzania also participated in the development of Guidelines for licensing and Regulating Electronic Money Products and Schemes as agreed by the East African Countries.  The document provides guidelines, which will facilitate system’s future integration of the three countries. See full document on Guidelines for licensing and Regulating Electronic Money Products and Schemes.

Bank of Tanzania in conjunction with Tanzania Bankers’ Association documented Paper Instruments Standards which have been agreed by all payment system stakeholders. The standards specify the requirements for the design of paper instruments used for inter-bank payment in local currency between banks in Tanzania. The standards were adopted in January 2000. Banks shall therefore ensure full compliance with the specifications given. These standards shall be read and applied in conjunction with the Tanzania Bankers Clearing-House Regulations and Regulations.  .


In the quest to achieve efficiency in the payments clearing and settlement processing the Bank of Tanzania initiated efforts to automate the clearing house operations in order to replace the manual processing. Automation of Clearing Houses aimed at reducing time taken to clear an instrument and reduction of errors and acts of fraud emanating from manual processing.  The NPS automation developments includes but not limited to:

A. Tanzania -bank (TISS)   

The Tanzania Inter-bank Settlement System (TISS)  is an on-line system that processes high value and time sensitive payments that enables real time and gross settlement of payment instructions between banks. The system facilitates settlement of inter-bank transfers and clearing houses balances, money market and foreign exchange market transactions. The system aims at improving efficiency in payment systems by eliminating settlement lag for high value and time sensitive payment.  It also minimizes settlement risks. The System went live with 19 Participants and it has been working properly since then, now the number of Participants has been increased to 27. It is also extended to the Tanzania Revenue Authority (TRA), where funds from specific Tax Payers are remitted and received by TRA on Real Time basis

TISS went live on 8th April 2004. Before the live date, the system went through hardware procurement and installation; and software customization, installation, integration and testing.  System User training and User Acceptance Testing (UAT) were conducted between February and March 2004, before the live date. 

 The Bank continues to provide Technical and operations support to TISS Participants.

B. Electronic Clearing House (BOTECH) System

The Bank of Tanzania  implemented the Electronic Clearing House (BOTECH) System to facilitate inter-bank electronic debit clearing.  The system aims at promoting efficiency by enhancing processing speed, minimize errors and acts of fraud in inter-bank transactions. Live running of the system at the Dar es Salaam Clearing House was on 01/March/2002.

C.   Implementation of MICR

Members of the Dar es Salaam Clearing House have installed the Magnetic Ink Character Recognition (MICR) equipment for processing paper encoded payment instruments.  The equipment incorporates reader and sorter mechanism that facilitates automatic data capturing and generation of electronic files and journals to be used by the BOTECH system at the Dar es Salaam Electronic Clearing House. The Bank of Tanzania acquired the MICR equipment that which has an image capturing facility for automatic archiving electronic images of instruments passing through the MICR system.

The introduction of the MICR payment instruments processing aims at  reducing of fraudulent items passing through the banking system by providing instrument standards that maintain a very high level of security features in conjunction with MICR code-line having validation checksums present within each instrument.

D.   Tanzania Bankers’ Clearing House Paper Instrument Standards

MICR System processes require that all paper instruments passing through the system conform to specific agreed standards.  In this case the Bank of Tanzania documented Paper Instruments Standards which have been agreed by all payment system stakeholders. The standards specify the requirements for the design of paper instruments used for inter-bank payment in local currency between banks in Tanzania. The standards were adopted in January 2000. Banks should therefore ensure full compliance with the specifications given. These standards are applied in conjunction with the Tanzania Bankers Clearing-House Regulations and Regulations.  The Bank of Tanzania coordinates adherence by examining cheque samples submitted by commercial banks against required standards prior to pressing orders from printers.

E.    Electronic Clearing House Rules and Regulations

As part of the Electronic Clearing House system implementation process the Bank of Tanzania coordinated the review and adoption of the new Clearing House Rules and Regulations. Changes from the old system include reduction of clearing days for debit instruments from 5 days and 30 days within the locality of clearinghouses and inter-regional clearing to 2 days and 7 days respectively.  The current Dar es Salaam Electronic Clearing House Rules and Regulations were adopted in January 2002.

F. NPS Legal Developments

As part of the strategic developments, the Bank of Tanzania has been working on the modernization and enhancement of the Legal and Regulatory framework to ensure support of the National Payment System. Various legislation relevant to the National Payment System were identified in the Vision and Strategic Framework Document. The Bank of Tanzania Act, 1995 was therefore amended by the Financial Laws (Miscellaneous Amendments), Act, 2003 to grant the Bank of Tanzania enabling powers over the National Payment System. This amendment is a mile stone in the regulatory framework in the national payment system. The Bank of Tanzania is also working with the Government towards the objective of ensuring that the county's legislations is supportive of the National Payment System matters.  

G. Harmonisation

The Bank participates in various Payment System harmonization forums under SADC, East Africa Community and COMESA auspices. Following the globalization developments the Bank with other East African Central banks and the SADC member countries, identified areas for harmonization to have a common initiative to ensure currency stability, systems integrity and cost effectiveness in payment systems.

In 1998, The Governors of the three East African Central Banks formed the East African NPS Harmonisation Committee with a view to co-ordinate and harmonise payment system developments within the region. The overall objective of the East African Payment System harmonisation efforts is to promote a sound regional payment system to further economic integration within the East African region.  Consequently, the Committee reviewed the payment and settlement system developments and identified the broad areas for harmonisation within the payment system area.  The identified minimum common features for harmonisation and cooperation include:

¨      Automation of Clearing Houses

¨      Payment System Oversight and Risk Management Policies

¨      Legal Framework

¨      Electronic money products and schemes

¨      Cross border payment schemes

¨      Wholesale and retail payment systems,

Consequently in 1999 the three East African countries adopted the following areas harmonization:

¨      Common Paper Payment Instruments Standards,

¨      Common Data Transfer Standards.

¨      Harmonisation of Payment System Oversight activities;

¨      Same-day High Value Clearing system;

¨      Formation of an East African SWIFT Technical Working;

¨      Incorporation of the Lamfalussy Standards and Core Principles for Systemically Important Payment Systems;

¨      East African Payment systems risks Management Profile;

¨      The Implementation of Automated Clearing Houses in East Africa;

¨      Harmonisation of East African Payment Systems Concepts and Definitions;

¨      Development of guidelines for licensing and regulation of e-money schemes and products;

¨      Modalities to facilitate clearing of cross border instruments; and

¨      Development of an East African Harmonised Payment System Draft Legal Framework.

¨      Minimum standards for Clearing and settlement systems.




The offices of the Directorate of National Payment System (NPS) are located at 10 Mirambo street, 8th Floor North Tower.

Postal Address: Box 2939, Dar Es Salaam

Telephone:- +255 22 2235433; 2235445; 2235440, 2235436-8; 2235499; 2235445/6

  E-mail address:


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