He decided to withdraw the money from a mobile money agent, the transaction which cost him nearly 5,000/- as cost of withdrawing, which included the mobile network transaction fees and government levy.
After withdrawing cash from the agent, his mobile money account network had the remaining balance of 15,000/-.
Few hours, Minja went to the supermarket to purchase the stuffs he wanted, and went back home, without knowing that, he would have served his 5,000/- and remain with 20,000/- into his mobile money account, by using “lipakwasimu” services at the supermarket instead of cash.
Like Minja, Mohammed Yusuf (35) an employee of a private company in Dar es Salaam has a habit of using cash in doing purchases at the supermarkets and stores rather than a bank’s visa card or mobile money.
“I can’t purchase goods at the supermarket using my visa card, because I don’t trust technology over the safety of my money,” he said.
“Even if I have money in my bank account or mobile account, I rather withdraw first from the mobile money agent or bank’s ATM for paying my purchases.”
Yusuf said he doesn’t care what he has been losing money from withdrawing cash for purchases payment,because this is habitual to him; unless he is assured over the security of the technology.
Minjaand Yusufare among of millions of Tanzanians whom unknowingly, lost their money unnecessarily due to their habits of purchasing goods and services using costly and risky cash, rather than cheaper and safer digital payment systems.
According to Visa International, nine out of ten Tanzanians are purchasing goods and services using cash, rather than cheaper and safer digital channels, which are available all over the country; specifically Points of Sale (PoS) or mobile money payment channels.
Cash transactions accounts for 92 percent of personal purchases among Tanzanians, and only 8 percent are made through digital payment channels, lower than the global benchmark of at least 50 percent of the GDP.
Despite of having sufficient digital payment infrastructures, their use in Tanzania is lower than those of the neigbouring countries including Kenya where the rate is 55 percent of the GDP and Rwanda at 33 percent; although Tanzania is ahead of Uganda and Burundi.
Tanzania has proven to have an appetite for digital payment, primarily through mobile. The mobile money penetration is high with 40 million subscribers. The market is expected to reach $216.4 billion by 2024.
Apart from advancing financial inclusion, digital payments reduce the cost of providing financial services to the poor, increase safety and convenience; reduce government expenditure associated with printing and distribution of currency.
Visa International country manager Salma Ingabire told The Guardian in an interview recently that Tanzania has a long way to go, when it comes into realizing its goal of promoting cashless economy.
She mentioned some of the challenges facing the realization of cashless economy; include high costs of transactions, public trust on digital payment channels and perceptions among business communities, when it comes into the use of digital payment, specifically banks Visa debit cards.
She said the surcharge of 2-5 percent charged by seller of goods and services when it comes into paying using Visa card, also discourages the adoption of digital payment culture.
Bank of Tanzania (BoT), Mobile Network Operators (MNOs) and other stakeholders have been striving to promote the use of digital channels on payments, but the adoption by Tanzanians has remained very low.
“For the past five years, we have seen a huge change in digital landscape in Tanzania, as a country but not only the country, but across the regionfor various accesses including fintechs,” she said.
She said Tanzania being one of the Visa key markets, with large population across the East African Community (EAC), presents a lot of opportunities for both the country and stakeholders that want to work in the market.
“What we have seen for our side which is a result of what we have done with government, regulatorand our partners in the market over the past five years, we have seen a tremendous growth in purchases using visa cards,” she said.
“In the last five years, the purchase percentage was less than five percent, today we are about 12 percent of the total volume in this market. I really want to commend the partners we are working together, the banks, financial institutions, a few fintechs we are workingwith in the market, and most importantly, the regulator that has been regulating the market progressively through financial inclusion policy,” she said.
She said with the higher penetration of mobile telecom in Tanzania, offers opportunity for Visa to work with MNOs and Fintechs that have been providing solutions through mobile, while supporting mobile apps.
“The partnership is what we are doing and we want fintechs, mobile network operators to be part of our network,” she said.
The government announced recently that will in the next financial year direct more resources in creating conditions for cashless economy and wider financial inclusion.
Supporting fintechs
The Visa country manager said asfintech is an integral part of payment technology, because are coming up with financial solutions that are solving the real problems in the societies, the global company is mostly focusing on working with fintechs.
“Visa has done everything possible to accommodate fintechs in the network. We have different programmes such as Visa everywhere initiative where we are calling different fintechs across the region that have come up with solutions in solving social problems and we are trying to fund them and identify them,” she said.
“We enable them to come to us as to be part of Visa network.”
Through Visa Everywhere, the company has also allocated funds to support young developers through call of applications every year.
She said the company also has another initiative on SMEs to enable them to better manage their businesses through providing them with business solutions.
Digital security
As cyber threat remain a major concern, Ingabire said Visa International is providing solutions to banks and financial institutions, fintechs to ensure secure e-commerce.
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