The future of a cashless economy

Across the globe, new technologies are rapidly replacing coins and notes, with variations among countries. According to the World Payment Report (2018), non - cash transaction global volumes continue to grow at a double-digit rate of 10.1% within an ecosystem of 482.6 billion people. 

Multiple reports have also shown that the emergence of digital technologies is driving unprecedented change across African countries and Tanzania has joined the bandwagon of nations experiencing robust shifts in digital technology. These paradigm shifts include liberalisation of financial systems, improvements in infrastructure technology and innovations in payment systems. 

Prior to Tanzania’s independence, people paid for goods and services using various currencies such as: The East African rupee, the Zanzibari rupee, the Zanzibari riyal, British East Africa Florin and the German East African rupee. Since the government issued its first Tanzanian shillings in 1966, the country has by and large been a cash-based economy where the majority of businesses and transactions operate on a cash basis only. The introduction of M-Pesa in 2008 revolutionized the payment/transaction landscape in Tanzania; coupled with the advent of the Internet of Things, the rise of e-commerce will disrupt the way business is conducted. 

In the last decade, the country has seen ground breaking innovation of electronic payment methods ranging from mobile money, online banking, credit and debit cards, charge card e-wallet or QR scan to the Government e-Payment Gateway System (GePG). Recently, the Bank of Tanzania (BoT) launched an Instant Payment System (TIPS) which is set to create a shared platform for payments originating from different delivery sources to facilitate inter-provider payment for electronic systems and the use of digital financial services among payment service providers. The TIPS ecosystem includes traditional banking services, mobile money and telco network operators providing financial services. 

According to the Tanzania Communication Regulatory Authority (TCRA), the use of mobile money in the country has recorded a robust growth in recent years, with the value of transactions averaging USD 1.6 billion per month, with over 45 million registered mobile money accounts. Mobile money platforms such as M-Pesa, continue to innovate and simplify the transfer of money across geographical boundaries as well as narrowing financial inclusion gap between men and women. 

There has also been an increase in the uptake by businesses in the utilization of online payment solutions and the landscape continues to evolve, ensuring safety, security and convenience for consumers to transact online. Vodacom Tanzania limited has been on this journey since it launched M-Pesa in 2008, the platform has combined versatile digital products such as M-Pesa app, M- Pesa Mastercard, M-Pawa, and a newly launched Vikoba digital platform – M-Koba, all these platforms enable Vodacom universal customers to perform transactions without the need of cash, in a more safe and convenient way.

 “With the wider variety of payment options at consumers’ fingertips, the broader objective is to pursue the national cashless payments agenda, in which M-Pesa system will be a driving force in ensuring that over 60 percent of our transaction will be digitized by the M-Pesa cashless platform come 2025” said Vodacom Director of M-Commerce Epimack Mbeteni. 

Tanzania is on the path to a cashless community and mobile companies like Vodacom are playing an integral role through the use of the digital technologies which allows all people, even in rural areas, to become a part of his cashless society though money transfers, e-payments to businesses and government agencies but also saving and access to loans. Going cashless is becoming increasingly popular among small and medium business all over the country who want to reap the benefits which include faster service, easier financial reconciliation, reduced risk of theft, and appeal to customers who don't carry cash. 

A whole new suite of value-add services is possible when cash is replaced by electronic-based payment. This presents an opportunity for an inclusive cashless economy without the inconvenience of cash and geographical boundaries. Cash handling is expensive, and in today’s connected world, unnecessary. With 60% of transactions already taking place on mobile platforms, the future is undoubtedly cashless using mobile devices that over 40 million Tanzanians own.