'Mobile transacting suffocates banks'

HARARE - Mobile money transfers are increasingly suffocating the traditional banking sector due to the provision of low-cost extensive services reaching Zimbabwe’s most remote parts, a financial services research firm has said.

Oxlink Capital (Oxlink) says the introduction of mobile money services’ low entry barriers has witnessed over 25 000 mobile money agents being established across the country, out-competing just around 500 automated teller machines (ATMs) countrywide.

“Mobile and electronic payments are defining the future. Telecommunications companies and banks are in fierce competition that, although requiring mutual synergies, has revolutionised the industry and resulted in faster, cheaper and convenient banking and payments services outside the traditional brick and mortar structures,” Oxlink said.

To this end, Oxlink, a renowned micro-finance institution is hosting the inaugural Mobile Money and Digital Payments Conference and Awards slated for end of this month.

The conference is expected to debate on issues such as sufficient and fair regulation in the mobile money industry that is resulting in a fair play field between the banks and telecommunications companies, and more importantly whether mobile money customers’ deposits are safe.

“These are some of the issues that the conference will debate and attempt to influence policy and regulation progressively in an effort to eliminate challenges that the mobile and digital payments industry is facing,” Oxlink said.

Last year, mobile money transfer rose by 80 percent to $1,4 billion against prior year in tandem with the widespread use of mobile phones coupled with the convenience that mobile money services brings to the unbanked public.

However, concerns have been raised over the regulation of mobile money transfer services with most banking institutions calling for tightening of regulations.

Last year Information and Communication Technology (ICT) ministry’s permanent secretary Sam Kundishora revealed that government was crafting a law to regulate electronic transactions to protect consumers against system failures.

He said that regulation had become critical with the rise in usage of mobile platforms to transfer money in the country.

The current law regulating the sector was launched in 2007 and does not address issues of electronic commerce.

“There is no policy that regulates e-transactions and that is a potential disaster area,” Kundishora said.

“We are developing an e-transactions bill separately from the ICT policy and it is already at an advanced stage,” he said.

Kundishora noted that input into the bill had already been provided by the Reserve Bank of Zimbabwe, Finance ministry and mobile network operators among other stakeholders.

He added that payments using electronic-based systems had increased with the growth of the ICTs sector since dollarisation in 2009.

Comments (1)

How very convinient these MTS's are! They bridge the gap between conception of the idea to transact and actually carrying out the transaction. No worries about Kombie rides or fuel to the bank, and no worries that ATM card can be swallowed by the machine. Crime risk is also significantly reduced by using MTS's. Mobility and ICT is definitely the future of this banking industry.

Timothy Musara - 16 July 2015

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