Vpayments may not be for everyone

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This guest article was authored by Prosper Chikomo, an internet entrepreneur and author of Turning Iron into Gold: Golden Opportunities: How to Spot Them, Create Them, Make Money from Them, and How Not to Miss Them (Available on Amazon.comVpaymentsWhen mobile payments were introduced in Zimbabwe, I thought here is the chance for me to sell my book to Zimbabweans who do not have Visa cards, MasterCards etc. I made my first call to Big Bank in November of 2011 and asked them about accepting payments via their mobile money transfer solution. I was told it was Ok.

I wanted to accept mobile payments via a merchant number and for the whole process to be electronic. The mobile payments solution did not work out because it was going to cost thousands of dollars to integrate and I was going to have to integrate the website to the bank’s own system which was going to require RBZ approval etc and a lot of money too, plus insurance. (Yawn)

Because integration in that case would be at bank level I was told by a manager of the bank that, “You would have to come to Harare and there will be a date set for you where you can present your thing and everyone from IT to risk etc and Reserve Bank of Zimbabwe officials will be there. The RBZ will be interested to know if you are insured etc.” (Ok, all that just to integrate at bank level in order to sell a few digital products, accepting mobile payments.)

Come on! Imagine you are a young guy with just $1, the next big idea, and a website hosted by Project Brandify and then you are told you will need to have a meeting with the RBZ etc, entire bank staff, present etc. where you will explain your business and how it works, its model, resources, security features, expertise of your staff etc. … and say whether your business has insurance or not!

Remembering eTranzact


eTranzactThen I remembered Big Bank had eTranzact which could do online payments processing, including of major credit cards. I wanted the website to process Zimbabwean payments and eTranzact had it all. It could process even MasterCard transactions.

Finally in June of 2012, I would get a call from eTranzact’s managing director who was pleased that I was interested in their service (Yeah right). Maybe later I will tell you my service experience.

I am speaking from experience.

The ugly truth

As it is, I MYSELF, an individual, can open a vendor account on Amazon and start earning money. I can even receive payments for eBay sales and get paid electronically to my bank account. I can even open a merchant account that can enable me to accept purchases made with a major credit card like MasterCard, Visa etc.  on my website without being a bank or having a physical shop. I can even accept PayPal payments and I do not even need a physical store to do so. I can do all this without a shop licence. This is something not readily understood or appreciated by many Zimbabwean bankers, even at the Reserve Bank. Yes.

To cut many long stories short, being a writer, when I find a good story, I always end up investigating the matter to the full so I will have something to write about. That’s exactly what happened.. many months ago.

How eTranzact merchant application works

To integrate eTranzact on your website, you need to get a merchant account from your bank first. You do not get a merchant account from eTranzact. Those are the RBZ rules. The bank will vet your application and if all is well, a merchant account will be opened for you by the bank. Once the account is opened, you will have a terminal Id etc and other technical stuff which can be used to identify your account and payments to your account. The eTranzact Channel Interface Specifications (APIs) are a very closely guarded secret you only get when approved. They are not public. You will then be able to test the integration and you are good to go.

The merchant account application process is similar to that of Vpayments in that the bank decides the criteria for who becomes a merchant or not, even though integration will be to the eTranzact platform.

Getting the merchant account from Big Bank

I was ready to integrate eTranzact. So I visited their (eTranzact) participating bank. I told the bank everything I was going to do (completely virtual online store) and they said I must complete a merchant application form. The bank’s merchant application form, it turned out, was specifically designed for companies because if someone asks you for a CR14, it obviously means you must be registered as a company and not anything else, not even a Private Business Corporation (PBC).

I told the bank I was a sole trader and that the nature of my business did not require me to have a physical space or be a company and I was told that in that case I must bring a Shop Licence if I am a sole trader. I told them that the local authorities said it would be illegal for them to give me a shop licence because they are not authorised by the Shop Licences Act to issue licences for my type of business (completely virtual operations). I even “educated” them about PayPal. (laugh).

The bank said it was just following Reserve Bank of Zimbabwe rules. Things were now getting interesting.

What eTranzact said

I later called eTranzact to find out if they accept individual merchants like PayPal does and they (the lady I spoke to on the phone) said they do but the individual would have to submit KYC (Know Your Customer) information.

So you see, Big Bank had its merchant application forms tailored for companies which meant only companies could apply, while eTranzact was saying even individuals can have merchant accounts. (Just like Vpayments saying lone-ranger web developers “informal traders” will be able to open accounts, but the banks saying you can’t have a Vpayments merchant account unless you meet specific requirements e.g. CR14, Shop Licence etc.) The bank effectively did not accept merchant account applications from individuals/sole traders, let alone from purely virtual/electronic players.

The plot thickens

On Big Bank’s side, there are Reserve Bank of Zimbabwe rules they have to follow “risk mitigation” blab bla.

In one discussion on the issue of companies and shop licences, a manager at Big Bank put it this way, “Can you imagine, say there is a problem that happens – I am not saying it will but let’s just say – and its effects run into say hundreds of thousands of dollars. You know how most Zimbabweans feel about banks these days. Anything, no matter how small can lead to a run on deposits and even bank failure. Now, we are not saying we don’t trust you, but just saying what if something wrong happens? The RBZ will come in full force with its teams of investigators and find that there was a tiny little guy making millions of dollars in business out of thin air and they will ask us how this tiny little guy was doing such business under the bank’s nose, without a trading licence, and how and why we allowed that to happen.”

I had a good laugh. There is a lot more but I cannot fit everything in one article

What’s that got to do with Vpayments

Vpayments information I have read so far says that your bank will be the one approving merchants and opening merchant accounts, and it is your bank that determines the criteria and not Zimswitch. (It will be up to the bank, and Zimswitch will not have control over the decisions of the banks.)

So while Zimswitch will tell you it will welcome “informal traders” or rather “virtual traders”, you will find that your bank will want a physical building to come with your merchant application (RBZ rules), either in the form of company registration details or lease agreement and a shop licence. So if you were thinking of starting Yahoo in your dorm room, which you do not have a Shop Licence for, accepting Vpayments, you may have to forget about Vpayments.

Oh yeah, and eTranzact said they also charge fees for integrating. When I asked how much I was told “it depends”. I learnt from West Africa that their charge there is US$1,000.

Licensed to trade

The Shop Licences Act was crafted many many years ago before electronic businesses were the thing. A copy of the Shop Licences Act (1980) I have clearly states that it is:

AN ACT to provide for the control and licensing of certain trades and businesses carried on in shops, stores and other fixed places of business and by means of vending machines; to establish licensing authorities and to confer powers and duties thereon..

Your completely virtual online store is therefore not covered as it is not a “fixed” place of business. The Shop Licences Act is for brick-and-mortar businesses.

“Not covered” does not mean you are exempt. It means where a trading licence is required – like by your bank when you apply for your Vpayments merchant account –  (or when you want to open a business banking account) – you will not be able to produce a trading licence, which means you won’t be able to have a Vpayments merchant account.

You could try to circumvent the Shop Licences Act and place your computer in the “vending machine” category but this is how the Shop Licences Act defines a vending machine:

“vending machine” means a machine or appliance designed to contain goods which may be obtained by inserting a coin or any other token or disc therein or into any appliance attached thereto or which is accessory thereto.

That’s a “vending machine” for you, as defined by Zimbabwean law. That means exclusively accepting mobile payments or even “card swiping” (both not coins) will automatically disqualify your machine.

If you are like me and you do not like to pay rent when you could be renting to buy, obviously you will not want to rent. What the banking requirements (Shop Licences , CR14  etc.) then do is force you to do is to have a physical space which will be inspected by the city health department and then licensed  If you run a completely virtual operation, you will therefore need an office and not a shop. A licensed fixed physical place of business will add thousands of dollars in start-up costs. An office with nothing will cost you anything from US$500 – US$2000. If you add desks etc, that will add several thousand dollars more. In my case, I see no justification even for an office.

Don’t, therefore, expect to see US-style PayPal powered garage businesses. Vpayments may turn out to be not be for everyone. Most online start-ups are started by individuals who do not already have offices etc, and almost all of them do not have the capital to splash on fancy offices a bank would find acceptable for a “high-tech” business. (At the City Council, when I explained my business (online store) and demonstrated that I could operate it from anywhere and from a laptop or even cellphone, I was told it was too “high-tech”! There was an expectation that you can do this sort of stuff when you have infrastructure a la Econet with a heavy physical presence in every city in the country. Those folks could not conceive that it is possible to do so out of thin air right off he internet. My oh my how I laughed!)

I remember reading somewhere how WordPress (an Automattic project), a virtual business ,makes tens of millions of dollars annually with very few physical meetings and no physical facilities. Such a business would not have a place in Zimbabwe, except for taxation and maybe suspicion of money laundering. That is the kind of business I like. Un-invadable.

During my research, I was informed by one mobile money product operator that they have received many applications to use their product from many individuals for internet-based businesses who they cannot sign up for reasons of RBZ regulations I just mentioned above.


As long as it is up to the banks to grant merchant accounts and set merchant requirements, merchant accounts may turn out to be very hard to get to the point of excluding a Zimbabwean Jeff Bezos with a business model that could exceed Zimbabwe’s current GDP in under 10 years.

Banks are now too afraid to even deals with individuals that they would feel safer dealing with companies with visible fixed premises like Enron and WorldCom. That way, even should anything happen, they will produce documents of the company (CR14, Shop Licence, Lease agreement (all the usual KYC stuff etc) to say they actually did due diligence on the business.

After 2008 “The Year of Burning”, there is also always the suspicion that individuals who make too much money electronically will be engaged in some form of illegal activity that I prophesy account suspensions may become a normal business and banking risk for such players.


I have an idea for “unlicensed” virtual start-ups. Since CABS is now connected to Vpayments. You can just apply for a Youth Loan even if you don’t need to. They will give you up to 3 months to register as a formal business like a company or PBC etc. You will need a Textacash account and Textacash is Zimswitch ready. (Although I was told you cannot have eBanking on Textacash.) Since you would have borrowed money from CABS, and you use CABS Textacash, who knows, they might be more inclined to grant you a Vpayments merchant account. Anything to get their dollar back!

Besides, there have been many complains that youths are only applying for chicken projects funding.

You may also just rent a building and get a shop licence/whatever and sublet the space to somebody else. All the bank will want will be the shop licence/CR14s etc. So long as you can present a utility bill, shop licence, or lease agreement.


  1. Infinisystech says:

    Well said, its a shame how big brother is not having our backs

  2. munyah says:

    LOL LOL LOL, has to be the lamest thing I have heard this side of the 20th century! And we wonder why zim is not growing the ecommerce space. Its a shame…

  3. Time says:

    Ok…I see where your panic for the small guy trying to get into online payments may be coming from but I think that this post is a bit over the top and may just scare some guys with some really good ideas. However, I really do think a little creativity can go a long way. I do think VPaymnets can be for everyone even if you say banks will stand in the way. Why? For two simple reasons:

    1. Its super easy to become a “corporation” in Zim. Its called buying a shelf corporation. Idle companies that have already been formed that you can buy and change the directors names to yourself and your chosen directors..(mom, dad, friend etc..). These cost about $300 I think and this should then let you have the critera to apply for an account as you will own your own legal corporation. And if you are a determined entrepreneur, you will be able to source $300 whether it may take you a day or 6months.

    2.I remember reading about “Super Merchants” in the last article. These can then sign on other merchants without them needing to go to through the banks. This again should surely remove or lessen the possible stringent conditions that may or may not be laid out by the banks when VPayments makes its public debut.

    Just my thoughts on how to look at the presented problems positively – Something that people should really learn if they ever wish to succeed without driving themselves mad.

  4. Bethel Goka says:

    Very incisive article, kudos to you Prosper

  5. NonBanker says:

    Thank you very much Mr Writer for your research but the challenge, as you have noticed, is dealing with people who do not yet appreciate the technological era we are living in, they dont just see the light. Well personally i think we need a Zimbabwean solution for a Zimbabwean problem, yes other people have done it, the Western world, West Africa etc but as for us we need our own solution. First and foremost i must say that our banks are too rigid, and it will be difficult for us to deal with them. I dont know if the assumption is correct to say that most people with money have it in their bank accounts, but i would like to believe its not correct. In fact many Zimbabweans now shun banks. We just have to know that banks are not the only place where you find money, the industry has the money, people have the money, shops, supermarkets etc. So the kind of solution we need is not to rely too much on banks. When the banks see that money is no longer coming to them but its still circulating among the people they will eventually engage us. I have a research that i am currently working on and once i am through with it then we can share it with everyone. A certain Dr. once said that Success is to be able to see where people are going and getting there first, by the time they get there, we will be charging makandinzwanani..lol

    1. Prosper Chikomo says:

      Before EcoCash came along, banks had really stupid and excessive requirements to open a bank account and I remember reading somewhere that Barclays, a Top # bank had 300 000 customers.The POSB, the biggest by numbers, had 1 million customers. EcoCash and Cellcard exceeded 250 000 members within 6 months and within a year, Ecocash had over 1.2 million registered users. Why, because traditional bank accounts had “pay slip” requirements. in a country with 90% unemployment, how the hell could they demand a “pay-slip”-“proof of income” Cellcard and Ecocash did not have such nonsense and that is why they succeeded. Banks need to adapt to the environment and realities in the economy.

      Right now I have not read anything on vPayments’ website about online peer-to-peer transfers and whether they are possible. I hope they omitted to say online peer-to-peer transfers are possible because it makes no sense that someone can deposit money directly into my bank account in person, but I cannot make a online peer-to-peer transfer via vPayments. Would defy logic if you ask me.

  6. ndozvinei says:

    and they blame sanctions

  7. Chris Mberi says:

    Prosper, I think you nailed it. Taking from a few responses like the encouragement from NonBanker (without reinventing any tooth picks) I believe through efforts such as e-payments forum, we could come up with a pressure group that can engage the banking system and help in steering policy. As much as we tend to easily blame the “system” lets remember it is us humans that put systems in place. V Payments have done their part and all they are saying is “please help engage the system”. If a sizable group can present a single proposition to do e-business surely bankers will listen and many will clamor to satisfy that groups needs for the potential business it presents. Approaching relevant institutions as individuals may take a life time but if we team up we can then literally demand and set terms of business with banks while they listen. Same goes for local authorities and “OUR BY-LAWS” and the government that crafts all “OUR ACTS OF LAW” through parliament where we have chosen representatives. Its okay to laugh it off like Munyah but remember to ask yourself whether you have done anything about it like volunteering to be the guinea pig like Prosper…. kikiki


  8. purple says:

    Thank you my brother for pointing out the big elephant in the room…..I have been following the e-payments thing in zimbabwe and it seems a hassle as compared to paypal where you just click…click…type type…click click and you can be operating in less than an hour. We need a system that has no hassles and can be quickly intergrated onto a site. If you cant do that all these forums will come to nought….as paypal and other outside processors will muscle in when the economy really kicks up and serious funds start following

  9. Great article Prosper. Thanks for all the info.

    Seems we are a long way till Zim has an online payment platform.

  10. James Ritala says:

    Prosper thank you so much. From a layman’s point, it appears as if you are being a Pessimist. BUT I LIKE THIS KIND OF DISCUSSION!!! YOU HAVE RIGHTLY AND CORRECTLY POINTED OUT THE REASONS WHY ePAYMENTS WILL BE A CHALLENGE IN ZIMBABWE!! I mean how much worse can we get. Paypal, Amazon, eBay etc make all this seem easy peezy. I don’t need to be a registered, licensed, company, with certificates etc in order to sell anything in cyberspace….

    1. don’t we now have all the reasons to start a “crowd-funded” start-up to fix this mess!

  11. Okay, so after reading all this, here is the question: Is it not possible to “cheat” the elephant with something like http://www.payfast.co.za. Here is how it works.

    If you are buying online and you bank with MBCA, Pastfast will “ask” you to transfer $$ to their MBCA account using internet banking

    Same when you bank with CBZ, you will transfer your payment to their (payfast’s) CBZ account again using internet banking

    So in short Payfast has account with all banks and they can validate payments in realtime. now Payfast will take it upon themselves to transfer the $$ to the merchant less commision and charges. Let take a pratical example.

    1. Winky D sells his CDs online.
    2. You buy it and pay direct to Payfast’s account with your Bank. Validation and confirmation of payment takes less than 20 seconds.
    3. Payfast transfers the $$ to Winky D’s account at any Bank, less charges.

    If we design something like this, do we still need to involve the “Big Elephant”??

    1. Prosper Chikomo says:

      It’s a good idea. I think you would be a lot better off if you partner with Payfast. Not so long ago Techzim reported about SmartPay which is powered by Net1 of South Africa’s technologies. And when you do that, the RBZ will be more convinced you can do that. (more so the banks, especially if you have white people involved, and that is from experience.)

      I had an idea where people could pay into a bank account with their bank via different mobile payments platforms but integrating each bank… the total; cost was going to be no less than $500 000, with meeting after meeting with the RBZ…In Payfast’s case, at least they would go on to make more money as that would be their business unlike when you are just selling s few stock of your own.

      I also remember (must be) the CEO of PayU in one article proposing PayU as a payment processor for countries that dont have. I think they are open to such kind of business and might be ready to partner. (Not knowing how they will take the 51% issue.)

      1. Thanks, something to think over Christmas….

        1. NonBanker says:

          Christmas kure mufesi wangu, simbi inoda kurohwa ichapisa, otherwise walala washala

          1. Yeah, right now am winding up 2012 stuff…and take a well deserved holiday. Simbi tozoirova mugoredzva!

  12. tinma@n says:

    Great insight from your experiences. I will not take anything from your article but you have highlighted many items that I also concluded after my own past experiences(eTransact era). Mostly repetition

    1) Regulation. RBZ is established by regulation. By Law. There is nothing anyone can do to circumvent the laws that govern Banking & Finance, save for intervention through the legistlative process. Changing the law…. One cannot argue with that. It is the hope that the Ministry of ICT will lobby with its colleagues from Finance, Economic Development & SME’s to specify ecommerce as a business

    2) Risk. The banking sector is generally teetering on tight-ropes, with unforgiving,reluctant consumers and watchful regulator(RBZ). Zimswitch cannot manage that risk as they may not be prepared financially or have the appropriate(supporting) legal framework to cover them for risks associated with “things going wrong”. (back to point 1)So they pass on the burden to the bank, who are already covered by extensive vetting processes BUT conventional(non-electronic) commerce.

    3) Nomenclature/ Knowledge Gap. Elsewhere in the world, an INTERNET Merchant account is NOT treated similar to the conventional Merchant account. You may laugh at them but it is sincere ignorance. They do not know. They do not have the capacity or resource to understand how ecommerce works. They think in terms of conventional banking. A bank that has a “better chance” of understanding would be the former-Kingdom as they had exposure to the process through their eTranzact affiliation. Another thing is treating a virtual shop as a brick and mortar shop, like you have already comprehensively argued.

    4) A Fledgling model of business. There is mistrust because it is a new form of transacting. When they have witnessed a viable business doing it, I am sure they will be more open to engagement right across the board (legislatively through regulation-RBZ and through the banks). Rest assured, it will get better. Zimswitch will work hard to make the process easier as they stand to benefit through the business generated

    1. Prosper Chikomo says:

      Chris Mberi said

      If a sizable group can present a single proposition to do e-business
      surely bankers will listen and many will clamor to satisfy that groups
      needs for the potential business it presents.

      You also said

      It is the hope that the Ministry of ICT will lobby with its colleagues
      from Finance, Economic Development & SME’s to specify ecommerce as a

      I do agree.

      What we need is a powerful organization that (to make the point of its effectivenesss) has the power to change and even influence government policy – like the War Veterans. Right.

      When we have such an organization, the government will take concerns in the ICT field seriously. Ministers may be of little help because they will belong to one party and Zimbabwean politics being the most unZimbabwean, the minister might not be effective as hge may be opposed by the other minister who will be from another party. What is therefore needed is an independent organization.

      My feeling is that Zimbabwe needs the equivalent of India’s NASSCOM. NASSCOM lobbies on behalf of Indian ICT interested parties and it is very influential in India. Without it, India’s software industry wouldn’t be what it is today. The Indian government now listens to NASSCOM, even its nonsense, because the Indian software industry now employs 500 000 people and makes billions of dollars every year and brings in billions more in foreign direct investment. I have no faith in the Computer Society of Zimbabwe. None at all. Absolutely. Anyway, I am hopeful it is not going to be long before such an INDEPENDENT organization comes to life.

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