Cashless economy: Is Mobile Money too expensive?

A man uses mobile money service to transfer funds in Kigali. A large portion of mobile money transactions in Rwanda does not qualify as fully-fledged cashless payments. Photo: James Munyaneza.

In most of Kigali’s business outlets, a client paying for a product or service via Mobile Money is often required to add at least Rwf300 considered as withdrawal charges.

This renders cashless payments more expensive than paying cash over the counter and has led to reluctance by entrepreneurs to embrace the cashless payment system that the Government, through the National Bank of Rwanda (BNR), promotes.


This could also explain why despite the growth of mobile money penetration and transactions over the years, much of the money is cashed out or used for airtime purchases.


For instance, at least six million mobile transactions valued at Rwf2,058 billion were carried out in the first half of 2019, according to BNR.


However, the same figures show, only 4 per cent of the sum was used to pay merchants for either goods or services.

Mobile money agents at Gishushu, Kigali. Emmanuel Kwizera.

With that, A large portion of mobile money transactions in Rwanda does not qualify as fully-fledged cashless payments.

A solution to the current scenario would be to popularize playbill numbers that allow merchants to receive payment from clients without any extra charge.

However, very few establishments in Kigali and across the country have the provision, most of them are high-end establishments.

Small formal and informal business establishments across the city such as market vendors who have high number of transactions remain unaware of the provision.

MTN’s Chief Business and Corporate Affairs Officer, Chantal Kagame told The New Times that they are working to address the challenge to ensure the increase in the uptake of the paybill.

She said that already, the company has provisions for merchants to request to be included in the paybill system, which will allow their clients transact more easily.

She, however, noted that there is need for awareness on the paybill provisions to encourage uptake as well as to demystify perceptions of costs among merchants.

“Merchants need to know that they no longer need to ask their clients to add withdrawal charges,” she said.

MTN has an agent network of about 30,000 which is expected to play a role in encouraging uptake of the paybill provision.

Airtel Rwanda Managing Director Amit Chawal said that they have deployed 90 agents who are recruiting merchants taking up the paybill provisions.

He said that at the moment, they are acquiring at least 300 merchants a month.

“Airtel Money has a huge drive on merchant acquisition, currently we are acquiring at least 300 merchants per month. We have deployed at least 90 agents that are recruiting merchants to take up paybills as a way to drive the cashless agenda. Telecoms in Rwanda are also in discussions with the regulator on interoperability,” he said.

Interoperability of payments enabling payment across networks would also play a huge role in encouraging mobile money payments as opposed to currently where one can only make a mobile money payment on their network.

John Karamuka Bagirishya, the director of payment systems at the Central Bank said that interoperability will be possible once an interoperability switch had been set up.

He expressed optimism that an interoperability switch set up by a private player would be available by next year.

Interoperability is the ability for different financial systems to connect with one another, so that customers can find it easy to send and receive payments across different financial institutions.

Central Bank Governor John Rwangombwa said that value in mobile money as a platform for cashless is created when money payments are made through the platforms as opposed to being cashed out.

“As we send money through digital platforms, let’s also challenge the receivers to transact and pay directly rather than cashing it out, he said.

With that, he challenged service providers to look at the bigger picture to bring more people on board to enjoy economies of scale later.

“How do we allow or incur bigger costs today to build the network, to bring people on board and then enjoy the benefits of the economies of scale later,” he said.

Experts say that mobile money is suitably set to drive the cashless economy ambitions going by the access to phones with close to 10 million Rwandans owning phones. Mobile technologies are also more adaptive to innovation.

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