According to a report by The Standard, VISA, the global payments service is setting up a local payment settlement service which will see all local VISA transactions settled by a local authority.
VISA will be introducing a National Net Settlement Service next month meant to process, clear, report, and settle all domestic transactions allowing Zimbabwean banks to carry out interbank settlements via Visa cards within the country’s territory, something VISA has done in the past in countries like Nigeria and Uzbekistan.
The local settlement system comes at a time when local banks had begun to suspend the use of VISA cards locally requesting their clients to revert back to Zimswitch system for any local transactions.
Since there was no local settlement service in place Banks would be forced to settle local VISA transactions with their depleting off-shore accounts in USD for local Bond Note transactions.
Speaking on the new development RBZ’s Deputy Director for Financial Markets welcomed VISA’s investment in Zimbabwe which he says will ensure that local transactions be settled locally while international payments are settled internationally.
Techzim believes that this new development will not have much of an impact on the ordinary Zimbabwean as VISA is still more or less an elite service, also, VISA card transactions are more expensive to use locally than ZimSwitch so it is difficult to determine where and to who this new service would actually apply to, most Zimbabweans have VISA cards to make international payments.
Techzim is also under the impression that through this move VISA and our local Banks have now separated VISA USD payments (international) and Bond Note payments (local) successfully at a time where some local banks had begun to reject bond note deposits in international payment accounts, requested clients to revert back to pre-paid USD systems set limits on all international VISA transactions and completely suspended local use of VISA cards.
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5 comments
What does that mean in technical terms? We already read the story from mainline newspapers.
We used to have VISA Electron cards that were only valid in Zimbabwe. You couldn’t use them outside the country, and neither could you use them for online payments. This must be the return of them
Yes. That network was owned by Barclays.
Not sure what has happened since the sale of its African business.
Your report is grossly incorrect and is meant to scare our market from such a noble initiative.
Nonetheless, let me school you; Visa local settlements means that transactions that banks would have settled using Nostro funds, will be settled locally just the same way banks are settling local transactions on ZimSwitch. Local card transaction charges are regulated by the central bank which means that the charges applicable on ZimSwitch today will apply on the Visa cards issued and transacting locally.
Visa is not an elite product. It is an everyday product which comes with additional advantages of using the card abroad.
There’s NOTHING like a Bond Note transaction if it’s electronic. Where does the Bond Note fit into an electronic transaction? A Bond Note is a physical entity, whilst your bank account is denominated in USD, not Bond dollars. You shouldn’t jump onto the anti-bond note bandwagon with ill-advised opinions.
TechZim should do research, or just Google if you are lazy. VISA transactions done locally at the moment are settled outside the country and hence cost more as we are using external infrastructure and systems. As well, they are settled using the “Nostro” accounts which are supposedly empty, so how should the service continue to operate efficiently?
VISA is NOT an elite service! A lot of banks clients use it, more banks are on VISA as compared to ZimSwitch. It made financial sense to suspend the service locally and encourage the use of ZimSwitch. NMB actually did this, requesting clients get the NMB Access card, as it also saves the clients money instead of being charged a variable amount normally above a $1 I am now charged $0.40 to swipe. Stanbic only recently joined ZimSwitch, otherwise it’s cards were strictly VISA cards.
If you have difficultly understanding the benefits, using VISA (internationally settled) it is not too different from using a strictly international remittance service to send money to an individual residing in the same country as you. Settling VISA locally would reduce the costs as the overheads from international transaction switching are removed. The local VISA service could potentially operate even when the international service is down, providing better service delivery to VISA clients.