EcoCash ta! To the rescue
Mobile payments have become an increasingly important and viable option in Zimbabwe’s payments landscape due, in part, to the prevailing cash shortages and government’s quest to enhance financial inclusion.
Financial sector spotlight with Omen Muza
However, standard USSD-based mobile payments are slow and unwieldy in retail set-ups, so EcoCash introduced debit cards linked to the EcoCash wallet, but still, many sellers/merchants do not have access to infrastructure that facilitates electronic payments, which means that many consumers still can’t pay via these cards.
In order to get around this problem, in early December 2015, Econet launched EcoCash ta!, a mobile payments solution that allows Zimbabweans to transact by simply tapping their phone on an NFC-enabled device [near field communication] when making a purchase, and the amount is automatically deducted from the purchaser’s EcoCash wallet.
However, the points of transaction costs and affordability of appropriate infrastructure continue to be of concern to users and merchants alike.
In August 2015, Visa launched — as a pilot with Indian banks — mVisa, primarily an in-store payment method, allowing users to pay for goods or services by scanning a QR code [Quick Response Code] on a smartphone or entering a merchant identifier code into their feature phones.
The QR code, which provides customers with the merchant’s bank details, can be in the form of a static printout (either on the store counter or on a printed bill) or a dynamic display generated on the merchant’s mobile device.
This allows merchants of all sizes to accept electronic payments without the need to obtain and run traditional point-of-sale devices, so mVisa eliminates the need for traditional infrastructure, simplifying the merchant acquisition process.
Consumers can also use mVisa agents for domestic remittances as well to access their cash if there is no ATM [automated teller machine] nearby.
On September 13, 2016, Visa partnered with leading Kenyan banks (Co-operative Bank, Family Bank, KCB, and NIC Bank) to bring the mVisa service to Kenyan merchants and consumers in competition to the wildly successful M-Pesa.
Since a number of Zimbabwean banks (namely Barclays Bank, BancABC, CBZ and Stanbic) issue Visa Cards, it means that they already have a relationship with the global payments technology company.
Visa could, therefore, easily leverage on these relationships, subject to the applicable regulatory approvals, to introduce mVisa to Zimbabwean consumers.
Regulatory support would most likely be forthcoming since financial inclusion is a core objective of both the Zimbabwean government and Visa.
In 2015, Visa made a commitment to the World Bank to bring the benefits of Visa and electronic payments to 500 million more people globally by the end of 2020.
Such an entry would put mVisa in direct, head-to-head competition with EcoCash, the dominant mobile money offering in Zimbabwe, alongside bit-part players TeleCash and OneWallet.
Therefore, Visa has to be prepared for a big fight in order to attract consumers, who are used to transacting via existing platforms and would be wary of switching costs, but the global payments company has a number of advantages it can rely on to prize away some of the market share.
The biggest difference between mVisa and other mobile money platforms is interoperability. What this means that mVisa is not limited to whichever platform a user is currently subscribed to.
An mVisa user would be able to transfer funds to TeleCash, OneWallet or EcoCash seamlessly.
Visa’s brand appeal could help attract users that might not have been otherwise interested in mobile money. Visa’s global network, VisaNet, brings scale, security and reliability to the mobile payments table.
mVisa may have an edge over the local mobile money offerings in terms of processing speed. Many, who have used EcoCash, for instance, will attest to the slow speed of transactions, which tend to drop before conclusion when the network is overwhelmed by huge volumes of transactions/traffic.
Visa, on the other hand, operates one of the world’s most advanced processing networks — VisaNet — that is capable of handling more than 65 000 transaction messages a second.
Owing in part to the lack of scale of its peers, EcoCash has so far been the dominant player, which currently controls the lion’s share of the market, a situation that has ensured that mobile money services remain expensive in Zimbabwe.
A strong competitor would help to diversify the available options and ultimately push transaction costs downwards for the benefit of the transacting public.
All the talk of recouping investment in infrastructure would suddenly become irrelevant and players would have no option but to lower charges in order to compete.
Banks in Zimbabwe have been complaining about restrictions/limitations imposed by Econet for those who want to access its gateway, and the prohibitive fees charged by Econet Wireless for using its infrastructure.
The banks are, therefore, likely to welcome Visa’s openness, which has ensured that mVisa is available with software developer kits and access to Visa APIs [Application Programme Interface], allowing them [banks] and programmers to build additional solutions to help address local payment needs. Who needs overpriced access to anyone’s gateway under those circumstances?
A matter of time?
Visa is planning to roll out mVisa in Uganda, Tanzania and Rwanda within two months. A deal with their first Nigerian bank is also in the offing, expected by end of year 2016. According to Andrew Torre, Visa’s head for sub-Saharan Africa, the company is in talks with South Africa to introduce mVisa as well. It may, therefore, be a matter of time before Visa considers introducing mVisa in Zimbabwe.
Should that happen, EcoCash can expect some tough competition to be brought right to its doorstep! Perhaps this is why, having initially launched EcoCash ta! in December 2015 with lukewarm results, the move to re-launch the product could be seen as a pre-emptive measure for a possible entry by mVisa into Zimbabwe.
So the question is: Can mVisa give EcoCash a run for its money? Or is it perhaps the other way round?
Omen N Muza edits the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact on email@example.com.