Mobile data reforms welcome, but more wanted

22 Jun, 2018 - 00:06 0 Views
Mobile data reforms welcome, but more wanted

eBusiness Weekly

Zimbabweans, thanks to the weird way they treat cash as a commodity rather than a medium of exchange, have become the world leaders in switching to mobile and digital banking and payments and banks and mobile operators have been upgrading systems and software to follow that push.

But there have been, and even with improvements continue to be, a number of issues that make a total cashless economy still out of sight.
This week has seen two significant improvements.

First the Government has ordered a reduction of up to 60 percent in the price charge for the data platform used for online transacting and banks have been told to pass the saving on to their customers.

Data charges in Zimbabwe are now far more in line with the more sophisticated regions. The cuts were not arbitrary; they were recommended by competent consultants. But they make sense since capacity utilisation, to use the ugly phrase of managerial efficiency experts, has been rising as more and more traffic is used on the system. This means that the providers of the services have seen their costs for each transaction fall.

As with all capital intensive businesses, mobile and digital banking only becomes seriously profitable when there is a lot of business. You need the same network for two people making one transaction a day between them as you need for the population of Zimbabwe making a couple of million transactions. Sharing the costs among all those millions means the unit cost is very low.

The second change is Econet, facing serious competition in recent months from Net-One despite the huge market dominance that came from being first in field, is upgrading its ubiquitous Ecocash to make it useful, indeed necessary, for businesses, large and small.
There is a good reason for better mobile money transacting. Generally speaking it is far easier to move money by a mobile money platform than by logging into the specialized banking applications; at least it is easier when networks are moving towards congestion and generally speaking most people want to make a payment during business hours rather than 2am.

But there are a whole lot of other improvements still needed.
The first is the minimum transaction that can be sent by Ecocash is $2. This means that the entire public transport system, with its 50c kombi fares, relies on cash, although fortunately coins are not hoarded and so are readily available. The same minimum also makes it difficult to buy newspapers and to buy a few vegetables from a street vendor or market stall.

We do not understand the reasoning behind setting a minimum. It makes the system a lot less useful. Dropping the minimum may well require another change, being able to use fractions of a cent when charging for a service. We cannot see that this requires more than a few more lines of code in the software, probably so that the provider takes a full cent and gives partial credit to the customer, which providers might well prefer to the customer’s account accumulating these fractions but only moving the cent when a whole cent is reached.

The other modest problem is the long line of data that needs to be punched into the phone, or the multiple choices made on a smart phone, to make the payment. Many supermarkets, always keen to make moving from customer to till as simple as possible, now have that nifty system that requires the customer to simply punch into the till keypad their phone number and confirming PIN. But we need some similar simpler systems for many other businesses. We have been, after all, adapting what was launched as a way of sending a few dollars to a relative into a standard method of buying and selling and mobile providers need to follow through on this.

Zimbabwe’s switch to an almost pure digital payment system is in many cases not by choice but rather driven by the need of sellers to collect money and buyers to spend money without banknotes or bond notes. But one day choice will be back and then the advantages of digital transactions need to be obvious.

There are some. For a start pickpocketing has almost disappeared. No one is going to risk jail or a thumping to steal a 50c coin. And that is often all people have in their pocket.
Admittedly the criminal classes, never ones to give up, are now cloning cards from stolen POS machines but instant reports of thefts and fast cancelling of these machines by the issuing bank minimize the danger, which could be eliminated at least for while if all banks moved over to the implanted chip now required for global cards.

Secondly the continuous cutting of transaction charges is making a digital transaction cheaper than cash in many cases. People forget that there are ATM charges and teller charges to collecting cash from a bank.

And thirdly there is an automatic record of the transaction, proof that payment has been made and giving everyone the basic “journal entry”.

Of course there are disadvantages. One we have alluded to, the need to spend a minute punching code or a few minutes trying to get a connection when cash would be a few seconds. The second major problem facing some users is the lack of anonymity. Most of the time most of us do not worry about this but sometimes we do not want the person we are paying to know our real name; there is an interesting new business ready for anyone who can develop a system of anonymous mobile payments. Tax collectors might still be able to follow the chain, but no one else.

Generally speaking the world is moving to mobile money following the tremendous switch in communications. Fifteen years ago ZimPost sold a lot of postage stamps and delivered a lot of letters. Now stamps only go on parcels, and deliveries consist entirely of franked bills, and even here outfits like Harare City Council want to email or sms bills. The switch from paper to digital was voluntary but permanent. A whole generation has grown up never having received or sent a letter.

We hope that the continuous improvements, and now growing competition in mobile banking, will continue and that we in Zimbabwe will change from being mobile consumers by necessity to mobile consumers by choice.

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