CASHLESS trading is fast becoming a reality in Zimbabwe as banks and mobile network operators scramble to set up partnerships offering a variety of mobile money transfer services.
Report by Taurayi Mangudhla
The moves, which dovetail with government’s initiative to encourage use of alternative forms of money, have seen the rapid proliferation of mobile money services.
In the 2013 National Budget Statement, Finance minister Tendai Biti said banks should issue mandatory debit cards without application to encourage use of plastic money.
He said his department would also commit resources towards promoting use of e-banking platforms through point of sale (POS) facilities.
However, card-based systems tend to cost banks more as they have to invest in extensive infrastructure such as Automated Teller Machines (ATMs) and POS which read the cards before accepting card-based transactions.
Some banks have introduced innovations where customers can effect cardless withdrawals from ATMs using the cellphone-based technologies.
With most of Zimbabwe’s estimated 14 million people currently in the unbanked bracket and government failing to solve the small change crisis emanating from the adoption of a multiple currency regime in 2009, experts say mobile money transfer services offer an ideal solution.
A FinScope survey launched in May 2012 revealed only 38% of Zimbabweans are served by formal financial institutions while 40% of the population is financially excluded from both the formal and informal financial products or services.
The survey indicates only 24% of the other population have access to a bank account, 27% of the adult population keep their savings at home instead of using formal financial savings products, 51% of the rural adult population is financially excluded.
The appetite for mobile money is huge in the country with, most of the population having access to mobile phone services.
Latest figures show the country’s three mobile networks-Econet Wireless (Econet), NetOne and Telecel Zimbabwe (Telecel)- have a combined 10,5 million subscribers, whilst mobile penetration is now estimated at over 70%.
Earlier this week, Econet integrated its 45% owned TN Bank on its mobile money transfer facility, Ecocash, a week after unveiling CBZ Holdings as the first of five top banks the mobile phone company will be connecting with directly to grow the mobile money service.
The move, Econet CEO Douglas Mboweni said, would see EcoCash becoming a financial service and not just a mobile money transfer service as EcoCash registered banks’ account holders would be able to transfer money from their bank accounts to their EcoCash wallets and vice versa.
“Anyone with a bank account does not need to go to an EcoCash agent anymore to put money into their EcoCash account, and they do not have to wait for banking hours to move their money,” said Mboweni.
In addition, depositors can also check their accounts, get statements and transfer money using their cell phones. They can also make payments using their bank accounts and withdraw cash at any time of the day.
CBZ Holdings said the move was a major step in bringing convenience to both the banking public and the unbanked in the pursuit of a cashless economy.
“This partnership allows existing bank account holders to easily make payments from their accounts through EcoCash to beneficiaries of their choice without visiting banking halls. Non account holders who were only using EcoCash to collect cash should now be able to make payments to any beneficiary bank accounts without having to collect cash,” said CBZ Holdings CE John Mangudya.
Since it was launched in August 2011, Ecocash has 1,8 million subscribers and has handled funds worth US$300 million in the first year of operation.
The amount is expected to exceed US$1billion in the second year on various initiatives that include partnering with banks and developing new products like the Ecocash commuter, which is used by commuters to pay their public transport fares.
Econet’s move comes after Telecel abandoned its Skwama product, a mobile money transfer service it launched in 2011, for a broader product connection on ZimSwitch.
ZimSwitch, a Zimbabwean third party transaction acquiring business operated by Uniswitch, is connected to almost 20 of the local banks.
NetOne also has its mobile banking facility, branded OneWallet, principally for money transfer service, airtime top-up and utility bill payments.
The mobile money transfer facilities are common with the rural population who have no access to banks, but are near shopping centers where some retailers are Ecocash agents or have POS machines.