The payment systems are typically labeled based on the value of transfers-(retail or large value), the mode of the transactions (paper or electronic), type of settlement (net or gross) and the mode of settlement (real time or deferred). A walk through the payment system canvas depicts how the payment systems have evolved over the years in Oman.
a) Up-to 2003 – Payments were witnessed only through Cheques & papers (Letter, Telex & Swift) apart from cash. The clearing and settlement of such cheques was carried out by CBO.
b) 2003 witnessed the unfolding of the Electronic Fund Transfer Strategy which paved the direction for payment systems implementation in Oman.
c) 2005 saw the emergence of major initiatives – (i) the Bank Net that provided communication backbone to all the planned payment systems on behalf of all banking community & (ii) Real Time Gross Settlement System which is an electronic processing system that provides real-time settlement of payments, transfer instructions or other obligations individually on a transaction-by-transaction basis there by reducing the credit risk and every payment is settled finally and irrevocably in central bank money. Many systems in the CBO have also been integrated with the RTGS such as (a) MOD implementing a new securities settlement system, viz. DEPO/X system was integrated with RTGS for effecting the funds settlement of the business transactions (b) A new treasury and investment system viz. WS Suite was implemented by the International Settlement Department (ISD) and integrated with RTGS and (c) Financial system package (Oracle GLIF) has been integrated with the RTGS. d) 2006 facilitated the roll out of the Automated Clearing House, which facilitates electronic transfer of funds through multi-credit or multi-debit transactions. It is typically designed for low-value, high-volume transactions. This system contributed to advancing the economic cycle facilitating faster and more advanced e-payments such as bill payments, loan deposits, salary transfers, person-to-person fund transfers, person-to-business, person to government, etc.
e) 2009 introduced the Electronic Cheque Clearing that provides all inter-bank cheque clearing by capturing the cheque image in a Straight-Through-Processing (STP) form directly from the teller/branch level, calculates Net Clearing Positions (NCP) for each bank & settlement in RTGS. All the bank branches across the Sultanate were covered under ECC in the 2nd phase which concluded in December 2010. ECC also witnessed an upgrade to incorporate additional features aiding in the efficiency of the system.
f) 2010 witnessed the facilitation of the OmanNet Switch – an Integrated Payment Engine to acquire, authenticate, route, switch and authorize financial transactions across multiple channels. It went live with ATM Transactions. The Oman Net is also linked to GCC Switches for the ATM transactions within the region. The OmanNet switch is also geared to provide the switching of the Point of Sale (POS) transactions among banks and the transactions emanating through the Payment Gateway. (History: Shamel Switch established in 1993 – 5 banks/Al-Watani Switch in 1996 – 6 banks/2 Switches linked – 1999)
g) 2012 saw the formation of an oversight section which aids in the preparation of reporting formats to be submitted by the participants of the various payment systems, analysing and scrutinising the reports, monitoring and analysing developments through the data submitted to help identify risks for the safety and efficiency of payment systems. The importance of the oversight function is being realised with the formation of an oversight division with more resources soon. The oversight section engaged with the World Bank for carrying out the assessment and establishing a framework for the oversight of payment systems.
h) 2012, the RTGS witnessed a technology overhaul with the RTGS environment (hardware) upgrading to new technologies in alignment with the ITD strategy. This enabled connecting to the consolidated firewall and switches in line with the CBO strategy of maintaining one LAN/WAN for better management and support. This also enabled identical environment in the Disaster Recovery and the live production architecture.
i) 2015, the Settlement & Dispute Management System (SDMS) went live. The previous Concourse settlement system has been replaced with a new system and has a comprehensive dispute management mechanism. The SDMS system went live on 17th December 2015. j) 2015, attempt was also made to enhance the security of the transactions carried out with the cards at various channels with internationally accepted practices. The National EMV Compliance-EMV is a standard for interoperation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. Upgrading the OmanNet Switch to process EMV transactions, and also mandating adoption of this standard across all the banks operating in Oman has been a major initiative thereby providing more secure payment environment .
k) 2016, the Payment gateway was provided by CBO for E-Commerce transactions initiated through the domestic debit Cards issued in Oman that will facilitate / encourage merchants in the Sultanate of Oman to offer E-commerce services (including e-Govt. services). While facilitating online payments, the gateway will also provide consumers with advanced authentication mechanism to ensure enhanced safety in the financial transactions. Presently acquiring banks are in the process of integrating all their merchants to the payment gateway for processing the transactions effected with the domestic debit cards at E-commerce websites. The objectives of implementing a Payment Gateway (PG) at CBO include ensuring safety & security of E-commerce transactions by implementing the latest industry acceptable standard, facilitating the national usage of this channel through controlling Merchant Discount Rate (MDR) charges and minimizing stakeholder's investment costs by centralizing the PG at a national level.
l) 2017, the MpClear (Mobile Payment Clearing & Switching System) an interoperable infrastructure, was implemented by CBO to enable real time exchange of mobile payment transactions through the mobile number.
m) 2017, the Automated Clearing house (ACH), catering to the recurring and single small value transactions (direct credit & direct debit) was implemented along with the Wage Protection System.
n) 2018, The enactment of the National Payment Systems Law (NPSL), has been drafted to firm-up the legal backing and enhancing the legal framework for the payment systems operations in the country. The need for this law was emphasized due to the rapid developments of this sector and the responsibility of central bank to ensure that all payment services are provided in a safe efficient and effective manner.