Demand for POS machines rises

HARARE - As President Robert Mugabe’s government struggles with a cash crunch that has forced people to spend hours at banks queuing for money, several small businesses across urban and semi-urban areas are busy requesting the Reserve Bank of Zimbabwe (RBZ) to set up card-swipe machines or point-of-sale machines (POS) so that they do not lose business to their more tech-savvy rivals.

The machines facilitate acceptance of payment from customers by swiping of their debit, credit or pre-paid cards on the POS terminals.

Following the introduction of bond notes in November, the US dollar was completely wiped out of the system.

Now the surrogate currency is also in short supply, with the RBZ moving to limit the cash-back facility to a maximum $20 per customer in attempts to ease worsening cash shortages.

Banks have also reduced their withdrawal limits from $100 per day to $30.

A central bank official said there has been a sharp rise in demand for Pos, saying the apex bank has recorded a three-time jump in demand for the machines over the last few months.

While the official did not specify the quantum of increase, he said: “We have witnessed a sharp increase in demand for our payment solutions at merchant outlets and for deployment of Pos machines — significantly higher than our weekly average.”

The requests are coming from new categories of merchants such as beauty salons, small stores, even vegetable vendors.

This surge in demand builds on a trend. POS transaction volumes surged 260 percent in 2016 on the back of the cash crisis after the country processed transactions worth $2,9 billion in 2016 from $1,7 billion processed in 2015.

The 2017 monetary policy statement delivered by RBZ governor John Mangudya in January indicated that there were 52,4 million Pos transactions in 2016 up from 14,5 million in 2015.

This was the first time since the adoption of a multi-currency system in 2009 that the value of Pos transactions exceeded ATM values, indicating another migration from ATM activity which is also a reflection of cash circulation through registered banks.

Market experts anticipate POS volumes to surge again this year on the back of a deepening cash crisis and increased Pos infrastructure, putting more strain on the system.

Bankers say that the surge in demand for POS machines is good news for the economy.

Said a banker: “Earlier, a lot of merchants discouraged customers from using their cards. Now that they are installing them, it will significantly raise the quantum of e-transactions.”

Card transactions also improve cash management and enable speedy payment.

POS machines are provided by the central bank and anyone with a registered and valid business establishment is eligible.

Bankers Association of Zimbabwe (Baz) president Charity Jinya told the parliamentary portfolio committee on Finance and Economic Development that the country’s banking system was overwhelmed due to increasing transactional volumes.

Jinya argued that the country, accustomed to a cash system, was on the verge of crashing banking systems as e-transactions were surging on the back of increasing cash-lite transactions.

“It is no secret that the system is presently overwhelmed. It has never processed this many transactions before as people used to rely on cash transactions,” she said.

The Real Time Gross Settlement System (RTGS) still dominate the bulk of transactions by value, accounting for between 70-80 percent on a weekly basis, while mobile dominates the volume of business, also with between 70-80 percent of all transactions.

Taurayi Marembo, the chairperson for Harare Chamber of SMEs, said small business were being urged to adapt to the use of plastic money in the same way big businesses have done.

“The most common questions I have been asked by the majority of SMEs as we move around registering those who want POS machines for their businesses and encouraging their acquisition are, ‘how will I restock because where I order my stocks they want cash? How do I get my money if I want cash as the banks do not have cash? How do I get forex when I want to restock outside the country where I get my goods?’

“I think by now the majority of wholesalers should be having POS machines. Those who do not have POS machines by now are the ones who are among that group of mercenary business people hunting for US dollars and externalising it.

“It is a pity the RBZ doesn’t have a law that makes it compulsory for wholesalers to have POS machines,” Marembo said.

Mangudya has been pushing measures to encourage the use of credit and debit cards as a means of reducing pressure on physical cash transactions amid a biting bank note shortage in the country.

Economist Vince Musewe said though there are multiple factors to the current cash shortages, the biggest is that there are no cash inflows into the country.

“Foreign-owned businesses do not put money back into the system but instead take it outside when they are importing their goods for re-sale.

“Again, people within the region have been coming to Zimbabwe and exporting the US dollar, leaving the country with nothing. Now re-importing cash will be just too expensive. Ultimately our trade deficit is still too high because whatever is being imported is not for production but consumption, which will only sink the economy even deeper,” Musewe said.

He, however, said that while the temporary solution was to use plastic money considering that $6 billion was in the RTGS system, infrastructure for implementation was still inadequate.

Senior economic consultant Ashok Chakravati said the general shortage in bond notes is because when they introduced the fiat currency, it was pegged at the same rate as the US dollar.

Chakravati said the country is in a Catch-22 situation because even if they print an additional $100 million in bond notes, it will still not be enough to curb the cash shortages.

“We need about $1 billion in circulation to avoid any cash shortages. However, the issue is where to get it considering that we do not have adequate export earnings. Under the current system, the only viable alternative is to adopt the rand as currency,” he said.

Joseph Mverecha, an economist with a local commercial bank, said if Zimbabwe is to have any chance of re-introducing her own currency inside the next decade-and-a-half — the rand is the only option “and we can have that option, without necessarily joining the (Rand) Customs Union.”

Comments (1)

POS devices are supplied by banks not RBZ - these devices process electronic transaction authorisation and electronic banking into one's company account. You can only get one if you have a company bank account, Some of the people you mention here do not qualify to have these devices. I'm surprised Jinya talks of banking systems about to crash. With all those profits made by banks they must upgrade from the mickey mouse systems they have to robust, resilient fault-tolerant non-stop systems available out there. I have always assumed that those leading in banking are privy to such basic electronic banking information.

Sagitarr - 24 April 2017

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