News / National
Money changers hijack POS machines for big transactions
22 May 2023 at 01:35hrs | Views
DECKED out in trendy designer wear, clutching energy drink cans and munching take-aways while engaging in high-pitched conversations, illegal money changers, popularly known as osiphatheleni who have added a new device to their operations — Point of Sale (POS) machines serve their customers.
The device has become handy in facilitating transactions involving large sums of money, essentially "formalising" the illegal activity as street forex money changing is now formally linked to official banking systems.
Across several streets of Bulawayo, a horde of street money changers are a regular feature while carrying or waving POS machines visibly showing logos of various financial institutions to lure their clients.
While most illegal money changes operate from cars in areas surrounding Tredgold Building, several others have set up permanent spots where they do their trade in the open.
Former Governor of the Reserve Bank of Zimbabwe (RBZ) Gideon Gono once described the area around Tredgold Building as the World Bank of Bulawayo's illegal money-changing business.
So brave are the illegal money changers that they conduct their business right in front of the Magistrates' Courts and would be unmoved even when police officers pass by.
At one point, this raised the ire of Chief Justice Luke Malaba who questioned why money changers were being allowed to disrespect the courts by doing illegal business near the Tredgold Building.
Some are found along Leopold Takawira Avenue between Fort Street and Joshua Mqabuko Nkomo Street while others have drifted to George Silundika Street between 10th and 11th Avenue.
These are popular with members of the public who prefer the higher rates offered as opposed to the official rate in the formal market. Armed with POS machines, the illegal money changers are now able to circumvent bank transfer or EcoCash limits set out by the Reserve Bank of Zimbabwe (RBZ) and are making a "killing" out of it.
In Bulawayo as of yesterday, the black market rate was at US$1: Z$3 200 while the official rate trailed behind at US$1: Z$1 400. The police are not taking action and this seems to have emboldened the resolve by the illegal money changers to continue their activities, which they have fine-tuned.
The RBZ has been pushing for the use of electronic payment systems and plastic money to drive financial inclusion and for an eventual drive towards a cashless economy. However, the increasing use of POS machines at every point of operations by illegal money changers has prompted this publication to investigate how the swipe machines end up in the streets.
Our news crew sought to establish how POS machines are obtained from financial institutions and their conditions of usage as per the agreements signed. Posing as an entrepreneur at one of Zimbabwe Stock Exchange-listed financial houses, one official outlined to the reporter the process of obtaining a POS machine.
"First of all, you need to open a company bank account with us, providing the bank with your certificate of incorporation, CR14, CR6, a tax clearance certificate, memorandum and articles of association," said the official.
"We need to have sight of your minutes of the previous meeting, copy of identity documents, company profile and a deposit of $18 000. The whole process takes less than a week and we will issue you with POS machines depending on the number you require," said the bank official who was generous enough to provide his contact details "for further assistance".
However, a document provided, which relates to the POS merchant agreement details the usage of the gadgets and measures to be taken for violating the agreement. For instance, the document states that: "the equipment will be delivered by (name of the Bank supplied) to the delivery address.
"Bank at its own cost, provides telecommunication equipment to link the equipment to the merchant. The Merchant shall not remove the Equipment from the delivery address or relocate it anywhere else without the prior written approval of the Bank," reads one section.
On the part of the merchant, the document states that: "the Merchant will always keep the equipment fully charged, where applicable and in a safe place at the delivery address and ensure that it is used with due skill and care, and only in the manner and for the purpose for which it is designed and intended in accordance with the business of the merchant.
"The merchant shall ensure that the equipment is always operated in accordance with the law . . . where the equipment is used to commit fraud or bank reasonably suspects the existence of fraud or nefarious conduct in respect of the provisions of this agreement, Bank may terminate this agreement without giving the Merchant any notice and will be entitled to recover the equipment immediately."
Ironically, the publication spotted several POS machines in possession of osiphatheleni, an observation that dovetails with long-standing Government view that some businesspeople are fuelling the black market
During investigations, Chronicle established that some retail outlets were reportedly hiring out their gadgets to money changers for a fee while some are directly engaging osiphatheleni to conduct illegal forex trading on their behalf.
An illegal money changer who spoke on condition of anonymity said he got the gadget from a businesswoman who operates a boutique in the central business district.
"I have been using POS since February this year and it's effective. But I cannot disclose the name of my boss or her companies. If I do that, I will be exposing her. My task is to just swipe," said the male money changer.
Confederation of Zimbabwe Retailers president Mr Denford Mutashu indicated that although they are not officially aware of the practice, he called law enforcement authorities to step in.
"We have not received such heinous irregularities. However, we urge the law enforcement authorities to step in and restore sanity. Businesses should act within the confines of the country's laws," he said.
"Wantonly breaking the monetary regulations come with huge costs and irreparable damage to business brands."
Bankers Association of Zimbabwe (BAZ) chief executive, Mr Fanwell Mutogo, said they are not aware of the practice and could only say: "we just urge you to do more investigations before you conclude".
A former Bulawayo-based banker said the rampant practice "breeds money laundering and other illicit flows of money".
"To begin with, the parallel market is illegal. That practice is illegal and must not be encouraged at all as it breeds money laundering and other illicit flows of money," said the banker.
The device has become handy in facilitating transactions involving large sums of money, essentially "formalising" the illegal activity as street forex money changing is now formally linked to official banking systems.
Across several streets of Bulawayo, a horde of street money changers are a regular feature while carrying or waving POS machines visibly showing logos of various financial institutions to lure their clients.
While most illegal money changes operate from cars in areas surrounding Tredgold Building, several others have set up permanent spots where they do their trade in the open.
Former Governor of the Reserve Bank of Zimbabwe (RBZ) Gideon Gono once described the area around Tredgold Building as the World Bank of Bulawayo's illegal money-changing business.
So brave are the illegal money changers that they conduct their business right in front of the Magistrates' Courts and would be unmoved even when police officers pass by.
At one point, this raised the ire of Chief Justice Luke Malaba who questioned why money changers were being allowed to disrespect the courts by doing illegal business near the Tredgold Building.
Some are found along Leopold Takawira Avenue between Fort Street and Joshua Mqabuko Nkomo Street while others have drifted to George Silundika Street between 10th and 11th Avenue.
These are popular with members of the public who prefer the higher rates offered as opposed to the official rate in the formal market. Armed with POS machines, the illegal money changers are now able to circumvent bank transfer or EcoCash limits set out by the Reserve Bank of Zimbabwe (RBZ) and are making a "killing" out of it.
In Bulawayo as of yesterday, the black market rate was at US$1: Z$3 200 while the official rate trailed behind at US$1: Z$1 400. The police are not taking action and this seems to have emboldened the resolve by the illegal money changers to continue their activities, which they have fine-tuned.
The RBZ has been pushing for the use of electronic payment systems and plastic money to drive financial inclusion and for an eventual drive towards a cashless economy. However, the increasing use of POS machines at every point of operations by illegal money changers has prompted this publication to investigate how the swipe machines end up in the streets.
Our news crew sought to establish how POS machines are obtained from financial institutions and their conditions of usage as per the agreements signed. Posing as an entrepreneur at one of Zimbabwe Stock Exchange-listed financial houses, one official outlined to the reporter the process of obtaining a POS machine.
"First of all, you need to open a company bank account with us, providing the bank with your certificate of incorporation, CR14, CR6, a tax clearance certificate, memorandum and articles of association," said the official.
"We need to have sight of your minutes of the previous meeting, copy of identity documents, company profile and a deposit of $18 000. The whole process takes less than a week and we will issue you with POS machines depending on the number you require," said the bank official who was generous enough to provide his contact details "for further assistance".
However, a document provided, which relates to the POS merchant agreement details the usage of the gadgets and measures to be taken for violating the agreement. For instance, the document states that: "the equipment will be delivered by (name of the Bank supplied) to the delivery address.
"Bank at its own cost, provides telecommunication equipment to link the equipment to the merchant. The Merchant shall not remove the Equipment from the delivery address or relocate it anywhere else without the prior written approval of the Bank," reads one section.
On the part of the merchant, the document states that: "the Merchant will always keep the equipment fully charged, where applicable and in a safe place at the delivery address and ensure that it is used with due skill and care, and only in the manner and for the purpose for which it is designed and intended in accordance with the business of the merchant.
"The merchant shall ensure that the equipment is always operated in accordance with the law . . . where the equipment is used to commit fraud or bank reasonably suspects the existence of fraud or nefarious conduct in respect of the provisions of this agreement, Bank may terminate this agreement without giving the Merchant any notice and will be entitled to recover the equipment immediately."
Ironically, the publication spotted several POS machines in possession of osiphatheleni, an observation that dovetails with long-standing Government view that some businesspeople are fuelling the black market
During investigations, Chronicle established that some retail outlets were reportedly hiring out their gadgets to money changers for a fee while some are directly engaging osiphatheleni to conduct illegal forex trading on their behalf.
An illegal money changer who spoke on condition of anonymity said he got the gadget from a businesswoman who operates a boutique in the central business district.
"I have been using POS since February this year and it's effective. But I cannot disclose the name of my boss or her companies. If I do that, I will be exposing her. My task is to just swipe," said the male money changer.
Confederation of Zimbabwe Retailers president Mr Denford Mutashu indicated that although they are not officially aware of the practice, he called law enforcement authorities to step in.
"We have not received such heinous irregularities. However, we urge the law enforcement authorities to step in and restore sanity. Businesses should act within the confines of the country's laws," he said.
"Wantonly breaking the monetary regulations come with huge costs and irreparable damage to business brands."
Bankers Association of Zimbabwe (BAZ) chief executive, Mr Fanwell Mutogo, said they are not aware of the practice and could only say: "we just urge you to do more investigations before you conclude".
A former Bulawayo-based banker said the rampant practice "breeds money laundering and other illicit flows of money".
"To begin with, the parallel market is illegal. That practice is illegal and must not be encouraged at all as it breeds money laundering and other illicit flows of money," said the banker.
Source - The Chronicle
