Malawi’s Cash Addiction

Have you ever been forced to abandon your shopping at the supermarket because the lone electronic PoS device ‘is not working’? Very typical in the retail sector in Malawi where traders just love the sight of cash! How else does one justify that sales went well that day? Hey, it also gives the people going to deposit the cash a free hour or two to catch up on Facebook and Nyasatimes while the poor bank tellers count and sift through grubby and soiled notes.

But this is not only characteristic of the retail sector. Then the August 2015 tweet below, a case of advance selling of tickets for a Carlsberg Cup match. The main issues were to do with counterfeiting and revenue.

The technology is there to deal with counterfeit tickets but that is a discussion for another day.

The second issue is that more revenue is generated when tickets are sold on the day of the match, at the door, than when sold in advance. Fine, it makes some sense because if there are only a few selling points, I have to make an unplanned trip to buy a ticket. But what if one can buy the tickets from their phone? Airtel Money and TNM Mpamba, mobile paying solutions, are the answer. And it’s not like it’s not being done. However one can only imagine why the sight of cash is such an allure for football administrators.

Malawi loves cash transactions over electronic payments

Back to retailers. National Bank of Malawi has been promoting the use of electronic payment via POS devices for a number of years. Other banks have followed suit. Despite this, there is one interesting thing. Until recently, one notices that these devices are tucked away and out of sight when you want to use them in-store. When you want to use them they miraculously can’t pick up the network, the battery is dead or the till operator doesn’t have the faintest idea how they work. All three of these problems were very common in a very large retail chain in the country (no names mentioned to protect the very guilty).

The chain has since closed down a good number of its shops in a restructuring. Small traders have now taken over these spaces and are notoriously slow to adopt electronic payment technologies.

Finger of blame

So, are the banks to blame for not incentivising their customers, both corporate and personal, to up their use of electronic transactions? Perhaps not. Most of the established banks have mobile or internet solutions, issue debit cards and have payment devices in retail outlets. They rather aggressively advertise their products and hold promotions too.

I can, however, report here that last year, while sorting out an internet banking issue I was having with my bank, I was surprised by a comment from a customer service officer. He said that internet transactions are very dangerous and that people are losing money online to criminals. It was a very troubling statement coming from someone who should be encouraging uptake of e-transactions. His bank has also invested a lot of effort into marketing its electronic products. But then again, he was not a young person so I sort of understood where he was coming from.

Lovely e-payment solutions

There is no lack of electronic payment solutions on the market. Visa debit cards are issued by the vast majority of banks. Then there is Airtel Money and TNM Mpamba, mobile money solutions from the two mobile telcos.

More recently Ecobank launched Masterpass QR. A feature on their mobile app, the cashless solution makes payments possible with a mobile phone just by scanning a QR code in-store. The video below from Ecobank’s Facebook page shows that this can be used in many different scenarios and not just in-store. A cashless option for many types of services.

I must, however, admit I have not seen this being used anywhere even though it is close to five months since the launch. Then again, maybe I am not visiting the participating shops.

How do you drive electronic payment uptake?

What is the solution and who enforces it?

Reserve Bank of Malawi? It is in their interest to see an increase in digital forms of payment. They are reported to spend over MK13 billion (over US$16 million) to replace banknotes this year alone. RBM has a programme called the National Taskforce on Electronic Payments (NTEP). According to its National Payments Systems Report, NTEP implements measures aimed at increasing the uptake of electronic payments in the country. But the numbers are not that impressive both in terms of the number of transactions and volume of transactions although they are better than in 2016. Some hope? Maybe.

The banks? Do they penalise retailers who bring large amounts of cash to deposit? It could be very difficult for them to know how many or few transactions generated the cash brought in. But they could incentivise traders who actively promote the use of their electronic payment methods.

Or is this up to retailers to force e-payment for purchases over a certain amount? For example, how many people who walk in a shop like Game to make a K400,000+ purchase don’t have a debit card? Most likely none. Maybe a good number actually don’t. Maybe it’s an ignorance thing. Or maybe the customer service officer at their bank also preached doom and gloom to them about using digital banking and electronic payment methods.

So what’s the way forward? Share your thoughts below.

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