New Law Compels EcoCash- OneMoney Interoperability: Will It Change Things?

Farai Mudzingwa

6 May 2020

Recently, Statutory Instrument 80 (SI80) was effected into law and among the big talking points is the fact that all mobile money operators will be mandated to connect to a national payment switch;

It shall be mandatory for every money transmission provider and mobile banking provider shall be connected to a national payment switch, as shall be directed by written notice by the Reserve Bank from time to time that enables interoperability of payments systems and services.
S.I 80 of 2020 – Banking (Money Transmission, Mobile Banking and Mobile Money
Interoperability) Regulations

The most talked-about feature of the national switch is interoperability. You’ll finally be able to send mobile money between EcoCash and OneMoney or Telecash without need for an agent. It’s important to note that this functionality is NOT yet available at the time of writing.

For a long time, EcoCash has resisted interoperability with Zimswitch and has functioned in a vacuum but because of a superior merchant network and the larger user base, they have been able to do so without consequence.

Now that interoperability is a must what are some of the outcomes we can expect?

EcoCash’s omnipresence finally threatened?

The ubiquity of EcoCash has always meant that when the time to choose a mobile-money operator came 9/10 people would choose EcoCash. Why? All your family and friends used EcoCash, every shop accepted EcoCash and so did every vendor which left consumers with very little choice.

Interoperability brings choice back into the equation. If it doesn’t matter which mobile money service your friend is using and shops/vendors can accept all services your choice of service is now determined by other factors. Price-conscious users might turn to the cheapest service provider whilst those less conscious of pricing might opt for the outright most seamless service providers.

Moral of the story is Telecash and OneMoney will have a chance to compete on service delivery and that’s something they’ve never had before. Whether that will actually result in a shift or not is another thing altogether.

Once upon a time in Kenya

In April 2018, Kenyan regulators made mobile money interoperability mandatory. In Q1 of that year, Safaricom’s M-PESA had a market share of 71.9% and the following quarter it dropped 69.1%.

By October of 2019, Airtel had clawed at M-PESA’s market share and it was down to 63.5% whilst Airtel the closest competitor grew from 21% to 24.6%. Not a huge difference but when you consider that Kenya has over 31 million subscribers, the significance of that movement becomes more apparent.

Will something similar happen in Zim? I don’t know. People have always clamoured for alternatives to EcoCash citing high charges but when the alternative presents itself we don’t know what it will look like or whether there’s actual appetite to switch over.

Kwese was one such project. Everyone wanted an alternative to DStv and one presented itself and failed miserably on two fronts – the content wasn’t good enough and the business model wasn’t sustainable.

Maybe being the alternative to EcoCash will come with the same issues, maybe not. Time will tell.

Economy, Mobile Money

10 comments

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Winter Soldier

6 May 2020 11:45

good article but did kwese fail because of bad content or …?

Reply
1. Farai Mudzingwa
  
  6 May 2020 20:59
  
  A mix of bad content and bad business decision i.e buying content without the subscriber base to pay off those debts
  
  Reply
Gillian Muranda

6 May 2020 12:02

Ultimate rubbish plan, I can smell greed and evil plan to help one money and tel cash. But this would create a deadly nightmare for big players as One and Tel … won’t pay the dues to EcoCash and others …. #GodsaveEcoCash

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Tsokoz

6 May 2020 13:34

This sounds good at least for the economy. Monopolies are always bad news. They do whatever they like with prices and this Econet group is without remorse. Personally I nolonger use ecocash because of the huge charges. Cashout costs you 50% yaAgent, 8% charges plus 2% mthuli. If you could tell me of any other demon greater than ecocash I would go back.

Reply
1. Anonymous
  
  6 May 2020 18:53
  
  I agree with you Tsokoz! Econet has grown to big that it is now calling the shots to the detriment of consumers and the economy. The other time it was called upon to rein in its Agents who were charging exorbitant cash out commissions, it threatened to close its entire Ecocash System thus effectively holding the entire nation at ransom. Back then in the US$ era, it advised its supplier’s that those who wanted to be retained on the Econet Suppliers list have to reduce the prices of their products and services by about 25%, they had no choice but to comply. Shortly thereafter the Econet employees were forced to accept a 25% salary cut. Just last week, Econet repeated hstory once again, by asking its suppliers to accept another reduction in the prices of their products and services, but yet on or about Tuesday 05-05-2020, Econet hiked the prices of its services. When Econet increased the prices of its services, NetOne followed suit and Telecel will soon do so. Econet is abusing its Telecommunications market leadership position to the detriment of its stakeholders. I wonders why POTRAZ, RBZ & the Tariff & Competition Commission are not being proactive to rein in Econet as it abuses its monopolistic and monopsonistic position and encourages cartelistic tendencies in the Telecommunications sector!
  
  Reply
Maxwell Christian

6 May 2020 19:13

Or is it because the Regulatory authorities are kind of blinded by the various donations that Econet gives to charity in Zimbabwe? Surely, it is not good for a business entity to silence law enforcement agencies like the way ZACC was silenced when it raised concern over the illegal and high cash out commissions by Ecocash Agents last year. RBZ must move in and strictly control the Ecocash Tariff and ensure that interoperability is achieved quick and fast. With the advent of COVID19, e-learning is being encouraged, but it will be difficult for the generality of the people to engage in e-learning when Econet is at the forefront of increasing data prices and other market cellular and fixed network players resultantly following suit. Is the Government somehow being ‘bribed’ by the 2% collected via Econet that it is ignoring the abuses being perpetrated by Econet? Are the philanthropic endeavours of Econet like donations to the cholera outbreak about two years back, Cyclone Idai, and now COVID 19, etc a form of gag on the Government and its Regulatory Bodies that Econet can do as it wishes in the market to the detriment of its stakeholders? If YES, then these donations are poisoned chalice! An entity whose products &/or services costs an arm and leg, which then takes a portion from the same and donates to charity is not really a philanthropic entity as it may just be engaging in extortionate pricing in order to give a portion thereof to the vulnerable in the community.

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Tinashe Chimwariro

7 May 2020 10:43

Just imagine transferring $6 from the bank to wallet and getting charged $10 in one go. Let’s see who has the ball rolling. I am just too big to be overlooked.

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Anonymous

9 July 2020 19:37

Its all comes base to the customer base.

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Llodza

9 July 2020 20:42

After all has been done and said it boils down to who is innovative among the three. The other two have a shareholder who has an appetite for dipping their fingers in the pie thereby making them not able to plough back profits. In case you didn’t know, now Econet is the biggest data carrier Africa south of the Sahara through Liquid Telcom. It achieved this through its dedication and seriousness to business approach and the innovativeness I referred to. It provides both Vodacom (5G) and MTN with broadband internet so a small market like Zim won’t affect it that much.
Also remember that the average Zimbabwean always sticks to one brand. We have to ask ourselves why they are all staying with EcoCash when the other two are cheaper.

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Nic

12 August 2020 15:34

How far are we with the interoperability issue? I understand the deadline was August 15 right? Is big brother Ecocash going to comply or we are preparing for another turf war in the courts of law?

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