unofficial translation
LAO PEOPLE’S DEMOCRATIC REPUBLIC
PEACE INDEPENDENCE DEMOCRACY UNITY PROSPERITY
The President No: 292/PSD
Vientiane Capital, date 15 December 2017
THE PRESIDENTIAL DECREE OF
LAO PEOPLE’S DEMOCRATIC REPUBIC
ON THE PROMULGATION OF THE LAW ON PAYMENT SYSTEM
THE PRESIDENT OF LAO PEOPLE’S DEMOCRATIC REPUBLIC ISSUES THE PRESIDENTIAL DECREE AS FOLLOWS:
Article 1: To promulgate the Law on Payment System.
Article 2: This Presidential Decree enters into force from the date of signature.
The President of Lao PDR
Stamped and signed
Bounnhang Volachith
LAO PEOPLE’S DEMOCRATIC REPUBLIC
PEACE INDEPENDENCE DEMOCRACY UNITY PROSPERITY
National Assembly No: 064/NA
Vientiane Capital, date 07 November 2017
RESOLUTION OF
THE NATIONAL ASSEMBLY SESSION
ON THE ADOPTION OF THE LAW ON PAYMENT SYSTEM
After the 4th Ordinary Session of the Eighth Legislatures of National Assembly reviewed extensively and intensively throughout the content of the Law on Payment System on the 07 November 2017.
THE NATIONAL ASSEMBLY SESSION AGREES AS FOLLOWS:
Article 1: To adopt the Law on Payment System with majority of votes.
Article 2: This Resolution enters into force from the date of signature.
The President of National Assembly
Stamped and signed
Pany Yathotu
LAO PEOPLE’S DEMOCRATIC REPUBIC
PEACE INDEPENDENCE DEMOCRACY UNITY PROSPERITY
National Assembly No: 32/NA
Vientiane Capital, date 07 November 2017
LAW ON PAYMENT SYSTEM
Part I
General Provisions
Article 1. Objective
This Law on payment system defines principles, regulations and measures on the management and monitor [oversight] of payment system activities in order to make those works to be more convenient, swift, safe, transparent, modernized and effective; aiming at stabilizing the financial and monetary situation, ensuring the promotion of trade, services, investment, [and] access to financial services and enabling the integration with the region and international as well as making a contribution to the national social-economic development.
Article 2. Payment System
The payment system is the whole transaction of payment services, comprising the orders of payment, transfer of, sending and receiving money between sender and receiver by using the payment instruments or payment mechanism of the payment system operators and payment service providers.
Article 3. Definitions
Terms used in this Law shall have the following meanings:
Article 4. Government policies on Payment System
The Government supports, encourages, [and] promotes the development of payment system to be strong, modern, convenient, [and] safe with coherent policy, infrastructure development, provision of manpower, budget, equipment [materials] and provision of facilities to the Agency managing the payment system and other relevant agencies as appropriate.
The Government encourages individuals, entities and organizations to participate in developing, managing and utilizing the payment system to reduce the use of cash and limit the use of foreign currencies.
Article 5. Principles of the Payment System Activities
The activities related to the payment system shall follow the main following principles:
Article 6. Scope of Application
This Law shall apply to individuals, legal entities and organizations both domestic and international ones participating in the Payment System of Lao PDR in the country and abroad.
Article 7. International Cooperation
The Government promotes and expands the cooperation with foreign countries, both regional and international front with respect to the Payment System activities by exchanging information, lessons, experiences, [and] technologies to develop human resources, [to modernize] the payment system and to be able to integrate into the regional and international payment system.
Part II
Development Strategy on the Payment System
Article 8. Development Strategy on the Payment System
The development strategy on the payment system is to determine the long-term vision for fifteen years; the strategic plan for development of payment system for ten years and the Program, the development Project for five years in consistence with the policy, vision and strategy on the national socio-economic development.
[The development strategy on the payment system is also] To develop the payment system to be modernized and expand the non-cash payment instrument broadly, aiming at reducing the use of cash and limiting the use of foreign currencies, promoting the access to financial services, stabilizing the national monetary condition, complying with the strategy on the financial-monetary system development of Lao PDR, and ensuring the align with other sectors.
Article 9. Content of the Development Strategy on the Payment System
The development strategy on the payment system has the following contents:
Part III
Payment System
Section 1
Forms of Payment System
Article 10. Form of payment system
The payment system has three forms of settlement as follows:
Article 11. Real Time Gross Settlement
The real time gross settlement is an electronically transferring system to provide the transfer money services by deducting the money from the [bank] account for each transaction immediately once the payment order is confirmed.
The real time gross settlement has only one system that the Bank of Lao PDR has created, developed and managed in accordance with the regulations of Bank of Lao PDR.
Article 12. Automatic Clearing House
The automatic clearing house is the payment system via the payment instrument by calculating and deducting the money from the bank account for many transactions at the same time per day or deducting money from the account for each transaction immediately such as the payment by cheque, card, securities, [and] electronic means.
Article 13. The Securities Settlement System
The securities settlement system is an electronic payment system to sell and buy securities, mainly the Government’s bond, the Bank of Lao PDR’s bond, shares and debentures.
Section 2
Payment Instruments
Article 14. Payment Instruments
The payment instruments used in the payment system are as follows:
If it is necessary, the Bank of Lao PDR can determine other payment instruments.
The issuance of card, fund transfer and electronic money shall get approval from the Bank of Lao PDR.
Article 15. Cash
Cash is a payment instrument comprising of banknotes and coins that are used to pay for goods, services and other debts.
The principles and management of the use of cash will be stipulated in separate regulation.
Article 16. Card
Card is another payment instrument comprising of debit and credit cards that are used to pay for goods, services and financial transactions through the device such as POS, withdraw – deposit cash machine [ATM] or the cash deposit machine and internet subject to determination [requirements] of the payment service provider.
The payment by card can be done through the same network [same banking network] or different banking network of the payment service providers in the country or abroad.
The issuance of card shall have the card number including the bank code that issues such card in accordance with the requirement of Bank of Lao PDR and international principles.
The principles, scope of application, methods and management of card will stipulate in separate regulation.
Article 17. Cheque
Cheque is a payment instrument used in payment of goods, services and other debts.
The cheque comprises of the cheque with the name of receiver, cheque without the name of receiver, cheque paid into an account and travelling cheque.
Individuals, entities and organizations can use the cheque for payment of goods, services and other debts. The one who orders to pay the cheque shall be responsible for the amount written in the cheque to the cheque receiver or the one holding such cheque.
The one who has rights to issue the cheque are Bank of Lao PDR, commercial banks, national treasury and financial institutions receiving deposit, which shall be approved by the Bank of Lao PDR and shall be a member of Cheque Clearing House.
The cheque clearing house has duties to calculate [clear] cheques for its members in order to facilitate [ease] the cheque payment in society.
The content in the cheque, how to use cheque, cheque certification and cheque guarantee, obligations of the cheque issuer and users and the cheque management will be stipulated in separate regulation.
Article 18. Fund Transfer
Fund transfer is a payment instrument which the payer used to transfer the money to receiver via electronic means by the fund transfer ordered by the payer or the fund transfer ordered by the receiver.
The payment by fund transfer can be done through the same or different banking networks of the payment service providers in the country and abroad.
The application, procedures and management of fund transfer will be stipulated in separate regulation.
Article 19. Electronic Money
Electronic money is a payment instrument with amount of money in the magnetic stripe, subscriber identity module – SIM or program which service users put cash or deposit to buy electronic money from the payment service providers in order to use it for payment of goods, services and other debts. The currency of electronic money shall be in Lao Kip only.
The delivery, receipt or cancel of the order to pay for goods and services by using the electronic money shall follow strictly the procedures and methods required by the payment service providers.
The payment service provider of electronic money cannot use the deposited money from the service users to provide credits by itself, through any financial institution or provide the credits to its payment system operator.
The payment system operator and payment service provider of electronic money shall follow the regulation on the risk control with respect to operation and technology in accordance with the regulation of the Bank of Lao PDR.
The issuance of electronic money can be done directly by the payment service provider or through the a representative agent.
Article 20. The effectiveness [validity] of the payment by payment instrument
The payment by cash and non-cash payment instruments as stipulated in the Article 15, 16, 17, 18 and 19 of this Law has equal value and lawful.
The payment by non-cash instruments will be fully effective when the money in the account of the payer is deducted and transferred it into the receiver’s account.
Section 3
Payment System, Guarantee and Validation of the Payment
Article 21. Payment System
The payment mechanism is the process of payment as follows:
Article 22. Payment Order
The payment order is an order to transfer money by document or electronic means such as telephone, computer, POS, cash withdrawal machine [ATM].
Article 23. Clearing
The clearing is to compare and classify the value of transactions between the branch or representative agent of the payment service provider within the same or different network in order to calculate the net balance and then to deduct it from the account.
The clearing of different network shall follow the regulation issued by the payment system operator endorsed by the Bank of Lao PDR.
Article 24. Settlement
The settlement is to deduct money from the payer’s account and put that money into the receiver’s account.
The settlement has two arrangements as follows:
Article 25. Payment Guarantee
The payment system operators can ask the payment service providers to provide assets as collaterals for the deduction from account to prevent the risk of settlement;
The collaterals comprise of deposit money, bonds, debentures, bank guarantee and other securities, determined by the bank of Lao PDR and in accordance with laws.
The collaterals can be obtained back once the completion of deduction of account.
Article 26. Effectiveness [Validity] of Payment
The order via electronic means sent to any payment system, in any case, cannot be suspended, modified, cancelled, withdrawn or opposed.
In case that the payment is wrong or incorrect, the payer can propose to the payment service providers to correct it in accordance with the laws after the completion of payment procedures.
Part IV
Payment System Operators, Payment Service Providers and Service Users
Section 1
Payment System Operators
Article 27. Payment System Operators
The payment system operators is those to deal with the clearing and settlement in any payment system.
The Bank of Lao PDR is the real-time gross settlement system and the selling-buying government’s bonds and the bank of Lao PDR’s bonds.
The commercial banks or entities approved by the Bank of Lao PDR to be a payment system operator of the automatic clearing house low value system.
The Securities Depository Center is the payment system operators mainly for shares and debentures.
Article 28. Requirement of the Payment System Operator
Those who are willing to establish a legal entity to be a payment system operator shall follow the Law on Investment Promotion and Law on Enterprise.
Those who are willing to be the payment system operator shall have the following requirements:
The foreign payment system operator is willing to establish the payment system in Lao PDR shall cooperate with the payment service provider in Lao PDR in accordance with the requirement of the Bank of Lao PDR.
Article 29. Rights and Obligations of the Payment System Operators
The payment system operators have the rights and obligations as follows:
The payment system operator is willing to connect its network with the foreign payment system operator to provide the cross-border payment services shall follow the requirements of the Bank of Lao PDR.
Section 2
Payment Service Providers
Article 30. Payment Service Providers
The payment service providers are the Bank of Lao PDR, commercial banks or other legal entities approved by the Bank of Lao PDR to provide the payment service directly to the service users, who have their own payment system; otherwise, to connect with other payment systems of the other payment system operator.
The Bank of Lao PDR is only one providing the real time gross settlement system.
The commercial banks, other legal entities including micro-finance institutions, security depository center and securities companies are payment service providers for the automatic clearing house (Ach) for low value transactions or securities transactions.
Article 31. Conditions [Requirement] as Payment Service Provider
Those who are willing to establish as legal entities to provide payment services shall follow the Law on Investment Promotion and Law on Enterprise.
Those who are willing to be payment service providers shall follow the conditions [requirements] stipulated in the Article 28, Paragraph 2 and [shall] have a protection system for the securities obtained from service users or through other payment service providers.
In case the payment service providers would like to issue the new payment system, they shall ask permission [approval] from the Bank of Lao PDR.
The payment service providers who are willing to connect with any foreign payment system operator’s payment system to provide the payment instrument serviced in Lao PDR shall follow the requirements of the Bank of Lao PDR.
Article 32. Rights and Obligations of the Payment Service Provider
The payment service providers have rights and obligations as follows:
Section 3
Service Users
Article 33. Service Users
The service users are domestic and foreign individuals, entities and organizations doing transactions through the payment service providers.
The Bank of Lao PDR, Ministry of Finance, commercial banks, securities depository center are the real-time gross settlement service users. The financial institutions or organizations who play the important roles in the financial-monetary sector shall get approval from the Bank of Lao PDR.
The domestic and foreign commercial banks, financial institutions, individuals, legal entities and organizations are the service users of the automatic clearing house (Ach) for low value system.
The domestic and foreign investors as individuals and institutions are the service users of the payment system for securities transactions.
Article 34. Rights and Obligations of the Service Users
The service users have rights and obligations as follows:
Article 35. Protection of Service Users
The service users shall receive the services with quality, transparency and equity to the laws from the payment service providers. They can send comments related to the services to the payment service providers or the competent authority and they will receive the protection in accordance with the laws.
Part V
Approval to be as Payment System Operators and Payment Service Providers
Article 36. Application for License
Legal entities who are willing to be [operate as] the payment system operator and/or the payment service providers shall submit the application to the Bank of Lao PDR to ask for the operation of the payment system.
Article 37. Consideration of the License
The Bank of Lao PDR shall consider the application for the operation as the payment system operator and/or the payment service providers within thirty days from the date of receipt of all completely and accurately required documents.
Article 38. Application of License
The payment system operators and/or the payment service providers shall use the license in accordance with the scope of application allowed under the license. It is not allowed to assign, transfer or give the license to other people to use instead.
The license has a valid period, determined by the Bank of Lao PDR from time to time. It can be extended, suspended or withdrawn subject to the violation of Law in case by case.
Part VI
Prohibition
Article 39. The General Prohibition
Individual, legal entities and organizations are prohibited from the following behaviors:
Article 40. Prohibitions against the Operator
Operators are prohibited from the following behaviors:
Article 41. Prohibitions against the Payment Service Provider
Payment service providers are prohibited from the following behaviors:
Article 42. Prohibitions against the Service Users
The service users are prohibited from the following behaviors:
Article 43. Prohibitions against the officers of the organization [agency] managing the payment system
The officers of the organization [agency] managing the payment system are prohibited from the following behaviors:
Part VII
Dispute Settlement
Article 44. Arrangements of Dispute Settlement
Dispute settlement on the payment system can be exercised by the following arrangements:
Article 45. Amicable Resolution
In case there is a dispute related to the payment system, the litigants can solve such conflict by consultation to compromise with each other with mutual benefits.
Article 46. Administrative Resolution
In case that there is a dispute related to the payment system regarding the administrative aspects, the litigants have the rights to propose it to the payment system operator, the payment service providers and the Bank of the Lao PDR to resolve such dispute in administrative procedures.
Article 47. Resolution by the Economic Arbitration Agency
In case that there is dispute related to the payment system, the litigants have the rights to propose it to the Economic Arbitration Agency to consider and resolve such dispute.
Article 48. Resolution via the People’s Court
In case that there is a dispute related to the payment system, the litigants have the rights to submit the case to People’s Court to consider and settle such dispute in accordance with the laws.
Article 30. International Arbitration
In case that there is a dispute related to the payment system regarding the international aspects, the dispute resolution shall be exercised based on the laws of Lao PDR or international agreements or conventions which Lao PDR is a party.
Part VIII
The Management and Inspection of the Payment System
Section 1
The Management of the Payment System
Article 50. The Organization managing the Payment System
The Government is managing the payment system centrally and uniformly throughout the country by assigning the Bank of the Lao PDR to be directly responsible to take the leading roles to cooperate and coordinate with relevant stakeholders.
Article 51. Rights and Obligations of the Bank of Lao PDR
With respect to the payment system work, the Bank of Lao PDR has rights and obligations as follows:
Section 2
The Inspection [Audit] of the Payment System
Article 52. The Payment System Inspection [audit] Authority
The payment system inspection [audit] authority comprises of:
Article 53. The technical inspection [audit]
The Bank of Lao PDR and/or its branches are inspectors of the payment system operators and the payment service providers.
The technical inspection [audit] has the content as follows:
Article 54. Forms of Inspection [Audit]
There are three forms of the inspection [audit] of the payment system as follows:
Article 55. The inspection [audit] of the International Payment
The Bank of Lao PDR coordinates with relevant foreign competent authorities to conduct the following inspection [audit]:
Part IX
Policies toward Persons with Outstanding Achievement and Measures against Violators
Article 56. Policies toward Person with Outstanding Achievement
Individuals, entities and organizations that have outstanding achievements in the implementation of this Law will be rewarded and received other policies as provided by regulations.
Article 38. Measures against Violators
Individuals, entities and organizations that violate laws and regulations regarding the payment system, including the prohibitions in this Law shall be subject to being educated, being warned, disciplinary sanction, being fined, suspending a part or the whole business operation, being withdrawn the license of payment system operator and payment service providers, compensating damages based on civil or criminal penalties depending on the case.
Part X
Final Provisions
Article 58. Implementation
The Government of Lao People’s Democratic Republic implements this Law.
Article 59. Effectiveness
This Law enters into force from the date of President of Lao PDR promulgating the Presidential Decree and then being published in the Government Gazette fifteen days.
Any regulations, provisions conflicting to this Law are nullified.
President of National Assembly
Stamped and signed
Pany Yathotu