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Econet explains why the new EcoCash tariffs are cheaper overall

ecocash-logo1When we first posted the announcement of the EcoCash Tariff review by Econet a few days ago, we noted that small amounts, that is most value ranges below $50, had actually become more expensive, while the larger amounts are significantly cheaper. We also noted that without knowing the average value (or most popular statistical mode of transaction value) of EcoCash it’s difficult to assess if the review is a tariff drop overall or not.

So we contacted Econet Services CEO, Darlington Mandivenga, to get this data. Unfortunately he wouldn’t provide any specific data in response to our questions, only mentioning in a very vague statement that the most popular band of transactions is the 100 to 200 range. Here’s part of the response:

The lower value transactions you refer to account for less than 50% of the transactions. In this market the money is flowing from the urbanites (employed) to the ruralites (dependents).The most popular band is the $100 – $200 which alone accounts for more than 30% of the transactions. As you will note from the new tariffs, a $1.05 reduction has been effected for sending money in this band. In addition, the cash out fee for this band has been reduced by $2.10. The total saving for a cash in, send money and cash out for the most popular band is $3.15, down to $6.85 from $10.00. These are significant reductions and the users of EcoCash will be extremely excited about this development. Consider also the cash out reduction for $200  from $6 to just $3.90, a $2.10 reduction! Numbers do not lie!

When we got an opportunity to speak to him eventually this week, he and new EcoCash CEO, Cuthbert Tembedza, explained that they couldn’t go into specifics stats because they are in their annual results closing period. They also explained that the review is really a numbers game and not  something spurred by the fast approaching deadline from the Reserve Bank of Zimbabwe to review the tariffs. “The volume of transactions has increased significantly and as volumes increase, we will always review the tariffs downwards” said Mandivenga.

In his email to us Mandivenga also said that EcoCash Agents are critical to the success of the service. “The commission structure is designed to attract quality Agents to ensure improved liquidity, fiscal velocity and motivated customer service. The overall effect [of the tariff review] on Agent commissions is that it remains attractive with notable commission increases up to above 70% of the fees in the upper bands.”

Mandivenga also explained their move from the linear percentage based tariffs to the banded model:

some of the lower bands of the band will pay marginally higher whilst the upper band now pays lower. The overall effect is a significant tariff reduction across the board. Although we have reviewed our tariffs downwards, our costs remain unchanged. For example, the minimum cost to us per transaction is $0.50 before VAT and Agent Fees. The business has taken a conscious decision to subsidize transactions in the lower band as we promote financial inclusion. You are obviously aware that the minimum charges levied by other services that can be considered alternatives range from a minimum of $0.20 to as high as $2.50. At, $0.09 the minimum charge for EcoCash is the lowest available on the market. Cashing in and registration is free although there is a cost to EcoCash for offering this service

 


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7 thoughts on “Econet explains why the new EcoCash tariffs are cheaper overall

  1. how can you justify that you’re cheap when you’re the ONLY M.N.O offering that V.A.S!

    1. Oh I dont know, probably the same justification people used when complaining that it is expensive?

  2. not putting kingdom cellcard on the same level as ecocash sending money to any mobile number in Zimbabwe is $1.95 from $20 up to $1000 and the card less withdrawals at an ATM are free, the use of agents is what makes using ecocash expensive

  3. As the volumes of transactions go up, I am sure it will get even cheaper to use this service.

    I have a friend who is an Ecocash agent and they are grateful for the commission structure Econet gave them – it is heavily skewed in favor of the agents. I read that Econet have deliberately made effort not to reduce the agents’ commission too much and I salute them for that. They are in this thing for the long haul.

    I, for one, will continue to use Ecocash… in fact, I would like Ecocash to become my primary mode of transacting going forward. It just makes sense.

  4. TechZim makonzeresa, now look, econet has employed people to come and defend their everything on this site, certain names always come out defending the SP, and their timing says a lot

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