7 February 2013

Zimbabwe: BAZ Lobbies RBZ Over Mobile Banking

BANKS have lobbied the Reserve Bank of Zimbabwe to act against Econet Wireless' reluctance to open up its mobile banking gateway to allow them to transfer money from clients' bank accounts straight to the beneficiary mobile number.

The Herald Business understands that the call from banks comes as the financial institutions fear losing a significant chunk of their market to the rapidly growing mobile money transfer platform, especially Econet Wireless' EcoCash service.

The banks' reservations arise from the fact that Econet Wireless has not opened up its platform to allow banks to initiate bank transfers from the bank accounts of the mobile phone operator's subscribers straight to the number of a beneficiary.

It is against this background that BAZ called for a level playing field in the banking sector, before they agreed to a Memorandum of Understanding on interest rates, bank charges and other contentious issues regarding the banking sector. The MoU to guide bank charges, interest and lending rates could be signed by the first quarter of 2013.

Only CBZ Bank, TN Bank and FBC Bank currently have access to the giant mobile phone operator's mobile banking gateway, as Econet seems to take a cautious approach to partnering all the banks.

BAZ immediate past president Mr John Mushayavanhu said banks did not have a similar problem with other mobile phone operators (NetOne and Telecel), regarding the transfer of money straight from the operators' customers' bank accounts.

"The governor (of the Reserve Bank of Zimbabwe) said he will come up with a plan by which the issue will be addressed," said Mr Mushayavanhu. "He said he would discuss this with the Postal and Telecommunications Regulatory Authority and the issue would be sorted out."

The matter has to be negotiated with Potraz first as the Banking Act currently does not sufficiently cover mobile banking.

"Banks want Econet to open its gateway so that banks can initiate transactions straight from the bank accounts of the customers to a given mobile number. Other operators have opened their gateways, but Econet has not," said Mr Mushayavanhu.

He said since Econet was the biggest mobile phone operator with more than eight million subscribers, it would become easier to move money between people while Econet also capitalised on the text messages as its clients transact.

Efforts to get a comment from Econet were fruitless by the time of going to print yesterday. But it appears the firm is protecting its own mobile money transfer business, EcoCash, which has experienced phenomenal growth since its inception.

Yet aside from losing a significant chunk of their money transfer business, the banks have also lost out to the function of acting as safe storage service provider for small amounts of money, which can be kept in an EcoCash e-wallet.

While acknowledging the immense benefits mobile money transfer has had on the economy, in terms of access to financial products, Dr Gono said the facility was merely for payment or delivery channels, and not a deposit holding facility.

"We advise that mobile money transfer services are merely a payment system or delivery channel which does not amount to deposit-taking. Accordingly, mobile money transfers should operate on a credit push principle where all e-money value is backed by pre-funded balances which are held in banking institutions," he said.

"Notwithstanding the bold strides attained in the provision of mobile banking services, immense opportunities for growth in mobile payments abounds, particularly in view of the rapid rise in penetration rates."

The RBZ chief urged banks to leverage on this development in the area of mobile banking as an effective distribution network for financial products.

In light of current developments, the need to align with international best practice and to comply with the National Payment Systems Act, the RBZ will issue out payment systems oversight guideline by 30 June 2013, e-money and electronic payments guideline by end of September 2013 and, agency banking guideline to be finalised by 31 December 2013.

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