The Sunday Mail
Kudakwashe Mutandi – Business Reporter
INNOVATION in the mobile telecommunications sector has pushed the frontiers of local mobile commerce (m-commerce), with mobile banking transactions now accounting for more than 85 percent of total retail transactions, the Reserve Bank of Zimbabwe (RBZ) has revealed.
But the sector is still infantile as transactions through this new platform are less than 5 percent of all electronic payments in the country.
Banks are still dominant and a key unit of the country’s national payment system.
There were fears that the growth in mobile banking and mobile money transactions would disrupt the operations and profits of banking institutions.
Mobile money services were believed to be taking a big bite out of conventional bank profits. Statistics from the central bank, however, show that out of a population of 13 million, three million subscribers are registered users of mobile banking across networks and banks compared to 2,5 million bank account holders of which 1,4 million are mobile banking accounts.
Also, individuals hold more than US$670 million in bank deposits, representing 14 percent of the total deposit base of US$4,8 billion. Of the individual bank balances (US$670 million), total electronic money balance was US$47 million.
But of the US$47 million, US$15 million, or 32 percent, is transacted by banked customers, while the remainder — US$32 million — is handled by the unbanked sector through mobile banking, underlying the growing value of m-commerce.
Just as in most other jurisdictions where mobile money transactions have become dominant, especially in Kenya, the rise of mobile banking has engendered critical questions of customer protection. The RBZ has begun drafting new electronic payment regulations in order to accommodate the new developments in the market.
“The Central Bank is cognisant of the fact that, while the current legal framework provides for the operation of electronic payments, including mobile financial services, there is, however, a need to enhance it in line with the new developments in the market.
“Meanwhile, the central bank is presently seized with drafting new electronic payment regulations covering cards (Point of Sale, Automated Teller Machines) mobile, internet and other electronic payments,” said RBZ in a report on Promoting Electronic Means of Payment.
It adds: “Pursuant to that, there are more avenues for the economy to offer more products and services. In light of the convergence of banking and telecoms, there is a huge opportunity for the country to spread financial services to the generality of the population.
“From the analysis, mobile financial services in the country are adequately covered by the current legislation. However, the various statutes in their inter-relationships provide relevance to areas critical for governing mobile banking.
“Accordingly, central banks world over are expected to draw a balance between regulation and innovation taking cognisance of the risk profile of the initiatives in line with international best practices.”
The RBZ contends that the country has to leverage on technological developments to bring banking services to previously unbanked and under-banked communities. Apart from reducing the use of cash in the economy, electronic payments provide an opportunity for the small and medium-scale enterprises (SMEs) and major commodity markets to also use the platform.
