Consumers and Third Parties Protection under the National Payment System Proclamation No.718/2011

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Addis Ababa,University


As result of the rapid development of payment systems worldwide, the Ethiopian Government has enacted the National Payment System Proclamation No 718/2011. It is widely believed that the enactment of this law is one step forward to modernize the payment system of the country. Consequently, the use of electronic systems to transfer funds provides substantial benefits to consumers. However, due to the unique characteristics of such systems, the application of existing consumer protection legislation is unclear, leaving the rights and liabilities of consumers and financial institutions in electronic fund transfers undefined. A cursory look at the various provisions of NPSP shows that it has not provided adequate legal framework to protect consumers of PI and EFT. Therefore, this paper argues that neither the NPSP nor TCCPP provides sufficient safeguard for the rights and interests of consumers. Moreover, NPSP lacks clarity with respect to whether regular courts could assume jurisdiction in disputes involving the consumer and PII. Hence, an attempt is made to clarify this issue. It further examines issues relating to protection of third parties under the NPSP. The paper, among other things, recommends that a law which determines the reciprocal rights, liabilities and obligations of consumers and PII should be enacted so as to protect consumers. It also recommends that an exception to the principle of irrevocability of payment should be made.



Consumers and Third Parties Protection under