There are only 13,000 credit card users issued on Simtel since 2008, which is really low for a country with 8-10% economic growth that has an untapped market.
I will not go into infrastructure issues as I have criticised Simtel enough as an outdated system so I will focus on other issues that make credit card use so low.
The first reason is that our banking system is not integrated; we could hardly call it a system because the banks work almost independent of each other.
You cannot pay BCR from your BK account or vice versa, this cannot go on. Until our banking system is fully integrated then banking is not viable in Rwanda.
The banks do not solicit credit card holders or aggressively try to spread out their use; it is something you have to truly fight for, i.e., just to obtain a card.
This should be reversed, as credit cards are vital easy earners for any bank, it is perfect for them. With our interest rates relatively high at 18% APR, it is common for credit cards to charge 30% APR for short-term borrowing. We need better risk management from the banks, risk = rewards, their lack of risk harms the rewards.
Even if credit cards are not viable now, there are other cards that could be used. Pre-paid charge cards that enable electronic transactions, debit cards where money is instantly deducted, or secured credit cards where half the money is paid in every month.
This is the only way to introduce credit cards and electronic transaction in a safe way to a reluctant public. Credit cards and banks are facing serious competition from telecom companies that are already using their own electronic payment systems, so they have to avoid extinction.
We cannot avoid liberalising our electronic transaction system; Simtel cannot be left to have the field alone.
Visa has Mastercard, but Simtel is a monopoly that is killing our banking industry, their malaise is reflected in all our banks with their indifference and bad service. The credit card system has several parts and stages that Simtel simply just can’t handle in time.
The card-user, the issuing bank, the merchant, the acquiring bank, independent selling association, the credit card association, the transaction network and international networks all have to work in unison.
Fraud is always the excuse given for reluctance for change, and more fraud will occur but the benefits will outweigh the losses. Rwanda has a very good tracking system; any criminal is usually tracked down in less than a day.
The security services have to facilitate risk assessors to give them confidence that they can track down fraudsters.
There is need to extend soft credit to ordinary people, people with irregular incomes and most importantly to help people build a credit rating. This can only come if we overhaul our banking system, integrate our banks to work closer, and externalise the risk assessment and credit rating.
Above all we need the banks to aggressively pursue electronic cards.