In an effort to modernize the Bahamian economy and better protect its financial system, debate in the House of Assembly kicked off Wednesday on a bill that seeks to provide the legislative and regulatory framework for the oversight of non-cash financial transactions, such as pre-paid credit cards.

Minister of State for Finance Zhivargo Laing led the debate on the Payment Systems Bill, 2011. The bill was seconded by Deputy Prime Minister Brent Symonette.

Prime Minister Hubert Ingraham tabled the proposed legislation in the lower chambers earlier in the week.

Payment systems is the term used to describe the transfer of money using alternatives other than cash.

These payment methods include credit cards, debit cards, internet banking, e-commerce payment systems, electronic funds transfer (ATMs), direct credits or debits.

“Payment systems lie at the heart of the financial services sector; they provide a highway over which individuals and companies receive and make payments for goods and services,” explained Laing. “A payment system is essentially a set of instruments, procedures and rules for the transfer of funds among system participants. Disruptions in a system, or the total failure of a system, pose a threat to the stability of the financial system.”

A safe and efficient payment system, Laing said, is critical to the effective and smooth functioning of any financial jurisdiction.

The legislation, driven by The Central Bank of The Bahamas, is expected to strengthen the legal underpinnings of payment systems operating in The Bahamas by ensuring that all payments cleared are final and irrevocable in the event of the insolvency of a system participant.

It will also offer protection for payments flowing through the system.

Amendments to The Central Bank of The Bahamas Act, 2000 (CBBA), in 2010 enhanced Central Bank’s powers to regulate payment instruments, acting as precursor to the Payment Systems Bill, which sets out in detail the bank’s powers in respect to the oversight of payment systems and payment instruments.

tblair@dupuch.com