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Cashless society: EcoCash blip a wake-up call

21 Nov 2019 at 03:56hrs | Views
Zimbabwe, like most nations, is moving more and more towards a cashless society where financial transactions are executed electronically than in physical banknotes and coins.

Gone are the days when cash was a source of pride and identity. With national emblems, landmarks, tourist attractions and the signature of the incumbent Reserve Bank of Zimbabwe (RBZ) governor carefully captured on it, cash spoke directly to what it meant to be a Zimbabwean.

A cashless society, while without all the intimacy associated with cash, is largely preferred for convenience and reducing crime.

Sweden is among the world leaders in cashless transactions with ATM withdrawals falling by more than half, while the amount in circulation has fallen from about US$8,5 billion to US$6,1 billion.

In Great Britain, the number of contactless card payments has soared to £223 million a day.

Locally, use of plastic money saw transactions in the first quarter of 2019 rise by 45 percent from the last quarter of 2018, according to a National Payment Systems report. While not needing a wallet has simplified life for Zimbabweans, connectivity still remains a major challenge.

A number of banks claiming to have upgraded their systems are struggling to cope with transactions as some of their systems are usually down. Online banking, for example, has turned out to be a nightmare for depositors with a number of banks.

Ideally, online banking should take away the hassle of having to join long queues while paying bills for electricity, council service charges, insurance, school fees, satellite TV and various credit payments.

Carrying wads of cash feels good for a while, but shuttling from banking mall to another when "chopping" cash can be too much work and take too much time from the ever busy modern citizen. However, there is no convenience in a dysfunctional system.

A lot of time and energy is lost while re-trying transactions or complaining of failed transactions, more so in Zimbabwe where accessing cash is also an uprising. Being told that ZIPIT (Zimswitch Instant Payment Interchange Technology) is down is now the new normal at supermarkets and fuel stations.

If it is not ZIPIT, then it's EcoCash, Telecash or OneMoney, previously known as One Wallet, which is down. The mobile money platforms probably hurt ordinary people most when they are down as the bulk of the population is in the informal sector.

They also hurt the fiscus as Government has been drawing resources from the 2 percent Intermediated Money Transfer Tax. The recent challenges faced by EcoCash are a serious wake-up call to both monetary authorities and service providers.

As we reported yesterday, when EcoCash is down, major business losses are recorded since the platform handles 85 percent of Zimbabwe's transactions and 99 percent of mobile money transfers.

Effectively, when EcoCash is down, the informal sector is down. Perishables have to be destroyed and the transacting public is left stranded, without electricity, fuel, food and other essentials. We urge monetary authorities, banks and mobile money service providers to converge and put on their thinking caps.

Confidence and trust in cashless transactions is fast waning and as they say, "money is about trust". We urge the RBZ to step up to the challenges facing the monetary sector and take a leading role in finding lasting solutions to recurrent technical problems.

The decision by the central bank to inject more cash by dispensing new $2 and $5 Zimbabwe dollar notes as well as $2 denominations of bond coins to address the problem of acute shortage of cash, might have also been fuelled by erratic services on the electronic side.

The RBZ is gradually targeting increasing the amount of cash in circulation to 10 percent of the total money supply, which currently stands at about $19 billion.

Currently, bank customers are allowed to withdraw a maximum of $300 per week, but the amount remains far too little to meet daily requirements of citizens in an environment where inflation is believed to have exceeded the 175,6 percent rate last reported for June before Treasury suspended publication of the figures until February next year.

Having more cash could be good as a back-up, at least until current teething problems are addressed once and for all. However, a cashless society is the way to go. Zimbabwe cannot be stuck in the past.

Responsible authorities must act, and act fast.

Source - the herald
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