Will the reduced tariffs affect Ecocash usage?

Price slash is always great news to any consumer, particularly if it’s a product that they use often. Likewise, there were celebrations yesterday as Econet made its mobile money tariff reduction announcement that would affect the millions of Zimbabweans that use EcoCash both as subscribed and non-subscribed customers.

However instead of just celebrating, most couldn’t help but raise their concern for the 10-15% unofficial charges that come with cash-outs. It makes sense though because to be honest, of what value is a 4c slash if you’re still going to pay an extra US$1.50 to cash out yours $10?? It even gets worse in some areas where every US$10 cash-out attracts a US$3 ‘commission’ fee!

I don’t know if this announcement will help rectify the decline of EcoCash’s active subscribers which was noted in the POTRAZ report for Q1. But from what I see, it might not do much considering how grieved it’s customers are due to these unofficial fees that are widespread throughout the country. Besides, unlike last year’s tariff slashes, this year’s are quite marginal – which is understandable lest they lose their business considering that this slashing is beginning to look like an annual trend.

Last year the greatest tariff drop for registered customers was for the US$300.01 to US$400 transaction band which was reduced by US$0.99 while this year’ greatest tariff decline is for both the US$200.01 to US$300 and US$300.01 to US$400 transaction band which has been reduced by US$0.38. For unregistered customers, the greatest tariff decline that was noted last year was for the US$400.01 to US$500 transaction band which was reduced by US$6.09 and this year the greatest tariff reduction was also for the same band but only reduced by US$1.03.

However, it seems as though both the previous and the current tariff reductions benefit the unregistered customers the most since the transactions become significantly cheaper for them than for registered customers. Maybe it’s because they started off very high hence they are ‘easier’ to slash or it’s a way of luring them to sign up with EcoCash since they get to ‘feel’ the benefits from outside and after all, it’s cheaper to transact as a registered subscriber anyway.

Check out the table below for the new tariffs vs. the old

Amount (US$)	Send to registered customer charges that were effective before the reduction (US$)	Send to registered customer new charges effective from 1 Aug 2017 charges (US$)	Difference between the old and new tariffs (US$)	Percentage drop between the old and new tariffs (%)
1.00 – 1.99	0.12	0.11	0.01	8.3
2.00 – 5.00	0.13	0.12	0.01	7.7
5.01 – 10.00	0.24	0.21	0.03	12.5
10.01 – 20.00	0.42	0.37	0.05	11.9
20.01 – 30.00	0.60	0.53	0.07	11.6
30.01 – 40.00	0.79	0.67	0.12	12.6
40.01 – 50.00	0.99	0.87	0.12	12.1
50.01 – 60.00	1.40	1.22	0.18	12.9
60.01 – 75.00	1.46	1.28	0.18	12.3
75.01 – 100.00	1.94	1.69	0.25	12.9
101.01 – 150.00	2.43	2.12	0.31	12.8
150.00 – 200.00	2.83	2.47	0.36	12.7
201.00 – 300.00	2.92	2.54	0.38	13
301.00 – 400.00	2.96	2.58	0.38	12.8
401.00 – 500.00	3.00	2.62	0.38	12.7

Well, these were not the first price reductions performed by Econet this Quarter (beside promotions like Zero-Fees-Thursday). In July, we reported how they had slashed EcoCash merchant fees by up to 50%, I can’t help but think this in response to the POTRAZ Q1 report considering it was only Econet that experienced a decline in its mobile money subscriptions of 1.7% while Telecel and NetOne experienced a 5.1% and 22.6% increase respectively.

Nonetheless, the fact that last year during the same month (also on the 1st), Econet again effected the new EcoCash slashed tariffs it had announced earlier on might prove that the slash was already in the pipeline, with or without Q1’s subscription decline. If so, should we look forward to more Ecocash tariff slashes on the 1st of August every year???