National Payment Systems (Sandbox) Regulations, 2021

The National Payment Systems (Sandbox) Regulations, 2021, made under the National Payment Systems Act, 2020 and published on 5 March 2021, establish a regulatory sandbox operated by the Bank of Uganda (BoU) for the testing of innovative payment products, services, business models and delivery mechanisms. The sandbox lowers the barrier to market entry for fintech innovators who may not initially satisfy full licensing requirements, allowing them to run live, time-limited experiments under close BoU supervision. Scope and applicability: the Regulations apply to prospective and existing payment system participants seeking to test innovations in the payment systems ecosystem. A 'sandbox' is defined as a temporary experiment of innovative financial products, services, business models or delivery mechanisms in the payment systems space. Eligible applicants include start-ups and prospective payment service providers who cannot yet meet standard licensing thresholds, as well as licensed institutions wishing to test new offerings. Core obligations and process: applicants must demonstrate genuine innovation, consumer benefit, and readiness to test, and must apply to the BoU for admission. On admission, the BoU sets the test parameters, duration, customer caps, transaction and value limits, eligibility of test customers, risk controls, and required consumer safeguards and disclosures. Participants must obtain informed consent from test customers, maintain safeguards for customer funds and data, report regularly to the BoU on agreed metrics, and observe AML/CFT obligations. The BoU may grant tailored regulatory reliefs or waivers for the duration of the test while retaining oversight. Exit and supervision: at the end of the test period the BoU evaluates outcomes and determines the exit path, progression to full licensing, extension, modification, or discontinuation. The BoU monitors participants throughout, may suspend or terminate a test where consumer or systemic risks arise, and requires orderly wind-down protecting customers. The sandbox complements the principal National Payment Systems Regulations, 2021 and supports responsible innovation in Uganda's payments and fintech market.

1. 1Establishes a BoU-operated regulatory sandbox for live, time-limited testing of innovative payment products and models
2. 2Open to start-ups/prospective PSPs unable to meet full licensing requirements, and to licensed institutions testing innovations
3. 3BoU sets test parameters: duration, customer caps, transaction/value limits, risk controls and consumer safeguards
4. 4Participants must obtain informed test-customer consent, safeguard customer funds and data, and observe AML/CFT obligations
5. 5BoU may grant tailored regulatory reliefs/waivers for the test period while retaining oversight
6. 6Defined exit paths: full licensing, extension, modification or discontinuation; BoU may suspend/terminate tests posing consumer or systemic risk