Bahrain’s legislation lacks rules governing electronic payment transactions

A legal study at the University of Bahrain called for the adoption of appropriate legislation to regulate electronic payment by means of the electronic money portfolio method to guarantee the rights and obligations of the clients, stressing at the same time to “not to leave such rights and obligations to the issuers of these portfolios, who may deprive the clients of their rights in order to protect their interests.”

The study stressed that the Bahraini legislation does not include rules governing the electronic payment methods, especially the electronic money portfolio, in spite of its importance in developing the commercial movement in the Kingdom, particularly with the great rush in the use of modern technology in commercial transactions.

The study, which was presented by Ms. Fawzia Mohammed Bubshait, discussed the “legal aspects of the electronic money portfolio” and its increasing importance in dealing with the different countries of the world. This type of transaction provides advantages that cannot be ignored by the clients. Ms. Bubshait discussed the legal impact of applying new e-commerce concepts through the use of its tools and technologies, including the e-money portfolio as most likely to be the most common tool in our countries in the near future after it has been used in the advanced countries. It has been established specifically for use through the Internet and as an alternative to real money.

The study, which was submitted for a master’s degree in law at the College of Law recommended “limiting the use of the electronic money portfolio to banking institutions controlled by the Central Bank of Bahrain to ensure the rights of clients and maintain confidence-building in this portfolio, taking into consideration the subsequent permission of non-bank institutions to issue such portfolios. The researcher pointed out that “it is not the drastic solution to the problems of electronic payment, as it may cause economic problems such as money laundering, if it is not properly used, or its provisions were not regulated in a way that prevents its misuse.”

The researcher explained that the emergence of the modern payment system, including the electronic money portfolio, will contribute to reducing the use of traditional payment significantly. This has been evident in the economically active countries, which have used these portfolios, and thus led to the reduction of the use of paper money significantly, and in the future it is expected to dispense with paper money to a large extent.

Ms Bubshait recommended launching a media campaign to demonstrate the benefits of applying the e-money portfolio as a means of payment, not only at the level of banking and financial institutions, but also at the level of individuals and potential users of such a portfolio, calling for “national or regional specifications for the equipment used when applying the electronic money portfolio.”

Ms Bubshait added that despite the growing interest in the electronic money portfolio, this portfolio has not had its own regulations in most countries as it is only referred to within the banking cards. However, it is considered a legal and practical tool because it saves its holder from carrying ordinary money and reduces the ensuing risk. This is in addition to having direct impact on the economy of the State if it is improperly used and if accuracy and honesty were not observed, and it differs from other bank cards. This requires legal regulation to protect it and regulate the legal relationship among its parties.