Last year the Zimbabwe government got a little greedy and decided to increase tax on domestic USD transfers from 2% to 4%. It was a bad idea and it took only about 6 months for them to revert back to 2%.
When they announced this tax cut we all worried it was too little too late. We shall see how it all pans out over the course of the year.
The tax cut was effective 1 January 2023 and we are starting to see remittance service providers adjust their fare tables.
Being the marketing geniuses they are, they are of course spinning it to say they are lowering transfer charges. They are not really revising their own charges down but rather are just reducing the fare by the 2% that IMT Tax was reduced by.
It is fair that they are doing this because when the high tax made their services more expensive they took the brunt of the flak.
InnBucks came out over a week ago talking about their downward adjustment of fees from 5% to 3%.
EcoCash is the latest to announce a fee adjustment. They are pretty much matching what InnBucks is charging.
If you send $100 via EcoCash, you will be charged $5 (5%) after the recipient cashes out. The govt takes $2 and EcoCash takes $1.30 when you send the money and $1.70 when the recipient cashes out.
It may seem like EcoCash is charging more than InnBucks but the 3% that InnBucks markets is before the 2% withdrawal fee. With both remittance services, you must cough up 5% to send any amount above $5. Most of the competition has also settled on 5%.
We’ve had high transfer fees for years and one is tempted to think 5% is a decent charge. Those are high charges, but coming from 7%, it feels like a win.
So, with the market settling on 5%, transfer costs are no longer a factor when picking a service. Convenience becomes the major factor. In my case, the neighbourhood shopping centre does not have a Simbisa outlet and so InnBucks is not really an option. It has to be either EcoCash or MojoMula for me.
I used MojoMula recently and it was just as painless to use as the other two we are talking about.
I had to register on the day as it was the only service my recipient would accept. Registration involved filling in a few lines on a little form and so I don’t think anyone needs to worry about it. Whichever service is geographically convenient should be alright.
Cash availability on the recipient’s end is the one thing you have to worry about. Let’s be real, very few of us receive these US dollars and keep them in those wallets. Most of us withdraw at our earliest convenience.
That’s why I insist on saying InnBucks costs 5% to use because 9 times out of 10, the 2% withdrawal fee comes into play.
I know you have been using these services. In your experience, which service providers always deliver when it comes to cash? It matters little how many outlets a service has or how little it costs to use if the recipient cannot withdraw on demand. Do let us know in the comments below.