In the latest Reserve Bank of Zimbabwe (RBZ) report on National Payments Systems which covers the third quarter of 2017 it was revealed that both values and volumes of transactions processed increased. Transactions worth $26.26 billion were processed in the three months to September 2017 from 287.5 million transactions meaning the average transaction was worth about $91.
RTGS remains the biggest payment stream in terms of of value of transactions, unsurprisingly. The value of RTGS transactions increased by 11% to $16.16 billion, good for 62% of payments processed, whilst the number of transactions was 1,682,991. The average RTGS transaction was therefore for about $9602.
The humble cheque is proving to have some serious staying power. In the three months, cheque payments were over $16m although that was an 8% drop from the preceding quarter. Who besides government departments is using cheques?
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It is no surprise that cash payments decreased by 19% to about $741m, which represents 2.82% of all processed transactions. Zimbabwe has been battling a cash shortage for a while now. The government in response has been advocating for the use of other payment streams.
There are cash withdrawal limits at banks which meant the amount of cash withdrawn dropped by 19% to about $920m. ATMs are also usually without cash and ATM transactions processed decreased by 41% to about $70m.
The problem for us as Zimbabweans is that there are certain merchants who only accept cash and so we all have to queue up sometimes to get the green and purple backs, or more commonly the silverbacks (coins). So being limited in the amount one can withdraw means more withdrawal transactions.
This means one has to go to the bank more times than they would want. In the third quarter, the number of over the counter cash withdrawals decreased by just 4% but the value of those withdrawals decreased by about 19%. The low withdrawal limits put off some (4%) but for most going cashless is still not possible.
The number of cash withdrawals had been increasing from Q2 2016 to Q2 2017 because of/despite withdrawal limits. This scenario would have meant better revenue for banks if only they could charge a fixed fee for every transaction. They did that for a while and there were rumours that some banks were deliberately limiting the amounts people could withdraw so that they could maximise on bank charges.
That only lasted for a few months as the RBZ heard the peoples’ complaints and made it so that withdrawal charges were a percentage of the withdrawal amount and not a fixed fee. So for someone who wants to withdraw $100 for example, the bank charges will be the same regardless of whether the daily limit is $20 or $100. Only the inconvenience of going to the bank multiple times remained.
For banks, this withdrawal limit scenario means they have to process more transactions without a corresponding increase in income (from bank charges.) Ever full banking halls call for more staff to handle it but since there is no increase in income banks are not in a position to hire more staff. So even when we complain that we are having to queue up for hours because are only two tellers serving hundreds of people, banks have no choice but to ignore us.
This might explain why banks are discontinuing manual RTGS. Cash withdrawals cannot be done remotely and are taking too much time and resources and so all else that can be done online is being moved there in an effort to limit the number of people making the trip to the bank.
In Q3 2017, internet payments increased by 31% from Q2 to $1.9 billion. That represents 7.24% of all payments in that quarter. As stated above, this was more than double the value of cash transactions in the period.
We are not quite sure what is regarded as internet payments by the Reserve Bank and efforts to get clarification were unfruitful. We take it to mean the electronic exchange of money involving the use of computer networks and the internet. Internet payments would then include those transactions over the internet that result in transfer of funds from a customer’s bank account into a seller or service provider’s account.
Zimbabweans are getting comfortable with making payments over the internet and for e-commerce players this is encouraging. It starts with people making their bill payments online and next thing you know people are buying groceries online. Logistics and distribution still has to be solved but the biggest hindrance to e-commerce blowing up in Zimbabwe was and is the lack of trust of the online payment systems.
The cash crisis contributed to this improved adoption of internet payments, we were short of alternatives. So the cash crisis was a silver lining to e-commerce players if they can come up with solid offerings.