Back in 2011 when EcoCash was introduced, I don’t think any of us envisioned how ubiquitous the payments platform would become close to a decade later. In fact, our article covering the EcoCash launch 8 years ago only viewed the mobile money service as a peer to peer platform:
EcoCash will work almost exactly like Safaricom’s M-Pesa. Consumers will be able to deposit cash into their EcoCash accounts through registered agents. The money in the EcoCash account can be transferred to any mobile subscriber in Zimbabwe, regardless of the mobile network.
Recipients will simply need to visit a registered agent to redeem their cash. A big focus of the platform is bridging the rural-urban divide where remittances are concerned.
Whilst we acknowledged that merchants would accept EcoCash we didn’t gauge how impactful the platform would be. For a significant number of people (myself included) the mobile money platform is their first encounter with a financial service.
Considering how long EcoCash has been around for, we wondered if EcoCash is now better or at least more convenient than a regular bank. We’ll compare a number of scenarios/use cases and attempt to come up with a conclusion as to what’s better.
Ease of setting up…
First things first, how easy is it to get in the door for customers of either service?
Signing up for an EcoCash account is a fairly simple process –you just need to fill out a form at an Econet shop/agent, have an active SIM with any of the 3 MNOs and voila you’re done.
Opening a bank account, on the other hand, is more complex. First of all, for some banks, you have to be above 18 years of age and you’ll need more details which include current proof of residency, proof of income along with some passport-sized photos (in some cases).
The rigorous KYC process for opening a bank account is one of the main reasons why adoption of mobile money has been so widespread over the better part of the decade. The process of opening an EcoCash account is also much easier simply due to the fact that their agent system has far more reach than the bank’s branch networks.
More recently it’s become easier to open lite accounts with banks like Steward Bank which have less strenuous sign-up processes and have also adopted an agent system but in most cases setting up a mobile money account is easier than a bank account.
Swipe 0 – 1 EcoCash
Speed
You haven’t lived a full life if you haven’t heard the cliché “Time is money” and the question becomes what’s quicker, EcoCash or Swiping?
We performed 3 transactions with each payment method and averaged the time it took to complete transactions in a shop:
- Swiping took 19 seconds
- EcoCash took 54 seconds
If you’re impatient, you might as well ditch EcoCash and stick to your bank card. EcoCash transactions take so much time because of the multiple steps it takes to actually initiate and complete the transaction – from entering your number in the POS machine/ entering the merchant number > then amount and then waiting for the prompt to pop up on your phone. Swiping is much quicker because there are considerably fewer steps – i.e swiping the card and entering the pin.
OneMoney has eradicated this problem by allowing you to enter your number and then the pin directly into the POS machine, but unfortunately, that’s not widespread and will probably still be a slower than plain ol’ swipin’.
Swipe 1-1 EcoCash
Convenience
One of the factors that people love about EcoCash is the fact that it lives on a device you ALWAYS have with you – your mobile phone.
This makes it extremely convenient since it’s next to impossible to forget your phone as you would a bank card. Because most people have wallets/purses and are mandated to move around with their ID, the convenience doesn’t offer a night and day difference since you probably already move with your wallet – carrying a card won’t be irritating.
On days that you decide to move without the purse, however, you’ll still have your phone which means EcoCash is wherever you’re 9 out of 10 times. Heck, even if you’re going for a run you’re more likely to have your phone with you than you’re to have your wallet.
Swipe 1-2 EcoCash
Distribution & Reach
Mobile money takes this one with little to debate about. The 47 000 strong mobile money agent network outnumbers the 549 ATMs countrywide. Whilst the 20 000 merchants on the EcoCash platform are heavily outnumbered by the 107 067 POS machines – once you consider the number of POS machines you find in one shop and the fact that a lot of traders aren’t registered on EcoCash as merchants, it becomes clear just how much of an advantage EcoCash has in terms of reach and distribution.
For traders in certain areas, acquiring POS machines is expensive and the expense isn’t worth it since the people in these areas don’t have bank accounts.
One of the reasons mobile money is a revolutionary technology is that the barrier of entry for both traders and buyers (and those using it for P2P) is incredibly low when compared to banks.
Swipe 1-3 EcoCash
Uptime
Whilst the Mid-Term Monetary Policy statement of 2019 makes mention of the uptime of financial payment systems – it doesn’t further break it down to show how the banking sector fared on its own vs mobile money.
In terms of operational reliability, the payment system in the country achieved an average uptime of over 95% during the period under review. The Bank continued to maintain a strong focus on ensuring the resilience of the payment system infrastructure against cyber threats.
What’s become clear however is that due to the fact that people who have bank accounts are fragmented across 13+ banking institutions any downtime suffered by individual banks will be much less impactful than the effect of EcoCash downtime. Because of EcoCash’s monopoly on the mobile money market – downtime basically brings the nation to a halt which isn’t the case with any banking institution in isolation.
Swipe 2-3 EcoCash
Charges
One of the most important aspects of this debate is charges. Simply put, Zimbabweans care about how much they are being charged to transact.
We recently took a look at charges in the banking sector and here’s a table with those charges:
| Bank | POS fees (transactions below $10) | POS fees (transactions below $20) | POS fees (transactions above $10) | POS fees (transactions above $20) |
|---|---|---|---|---|
| Agribank | $0.20 | $2 | ||
| BancABC | $0.50 | $3 | ||
| CABS | 0.5% (min $0.40 – max $6 ) | 0.5% (min $0.40 – max $6 ) | ||
| CBZ | 2.5% (min $3.00 – Max $25.00) | 2.5% (min $3.00 – Max $25.00) | ||
| EcoBank | 1% of the transaction value | 1% of the transaction value | ||
| FBC | $0.20 | $0.74 | ||
| FirstCapital | $0.30 | $1.00 | ||
| Metbank | * $1.35 min – $5 max (* thresholds not specified) | * $1.35 min – $5 max (* thresholds not specified) | ||
| Nedbank | $0.50 | $2.50 | ||
| NMB | $0.50 | $0.50 | $1.85 | |
| StanBic | $0.20 | 0.5% – minimum $0.50 and maximum $10.00 | 0.5% – minimum $0.50 and maximum $10.00 | |
| Standard Chartered | $0.19 | $0.85 | $0.85 | |
| Steward | $0.80 | $1.65 + 0.05% of transaction value | ||
| ZB | $0.93 | $0.93 | $0.93 | $0.93 |
How do these charges compare to EcoCash? Well, it’s a hard comparison to make for a number of reasons including the fact that it’s a comparison between one mobile money institution vs 14 commercial banks which have different charges.
Another problem with this comparison is that because of the aforementioned reach and distribution of mobile money there are some cases where even if your bank is the cheaper option, it simply might not exist in certain areas which negate the advantage of being cheaper. For instance, the social norm is simply that if you want to perform a P2P transaction to someone in the rural areas you use EcoCash. In such situations it will not matter if banks are cheaper because i) there are no POS machines in many of these areas and ii) there are no ATMs to withdraw making a bank account an afterthought to the people in these areas.
Finally, another aspect that makes comparing charges between the two mediums difficult is the current lay of the land when it comes to charges for withdrawing/cashing out.
Withdrawing money from local banks is one of the best patience building exercises known to man. There’s uncertainty on just how much you’ll withdraw and because of the time it takes to withdraw citizens have all but given up when it comes to withdrawing from the banks.
If you don’t live in Zimbabwe, you would assume that this means cashing out through EcoCash is a clear winner – and whilst there are no queues or uncertainty over amounts you can withdraw, there is a different kind of devil you have to contend with. EcoCash agents understand that money is scarce and have begun selling money to whoever is interested in cashing out. The cash out premium has gone as high as 60% negating the convenience of avoiding bank queues and withdrawal limits.
In terms of charges, none of the two offers a better deal and I would call this a draw…
Swipe 3-4 EcoCash
So what’s actually better?
Well, as with most things, it’s really contextual and depends on what you need from your financial service provider. If the ability to perform P2P transactions, and easily set up an account is important to you EcoCash offers more. But if speed of transacting and fewer downtime issues are more important than that bank card will offer you a better experience.
As most of us will know, a hybrid (or having both) is actually the best setup because both banks and mobile money have pros and cons which make them integral to most of our lives and ditching one exclusively for the other will definitely mean missing out…
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