Source: Plastic money fuels market quandary | The Financial Gazette May 4, 2017
IT is around 1800 hours and dusk is falling rapidly. John Murefu (not his real name) is preparing for super at home in Ruwa, when he receives a call about an illness.
He gets into his car and starts the engine. The fuel light flickers — the tank needs refilling if he is to get to his destination. There is no cash, but thankfully, a crusade by the central bank encouraging cashless payments has resulted in fuel stations getting point of sale (POS) machines for debit and credit card transactions.
Murefu drives his automobile to the fuel station nearby, and asks to pay with his card.
“I’m sorry we don’t have Ecocash,” the attendant responds, indifferently.
Ecocash is a mobile payment platform operated by the country’s largest mobile telecommunications network.
Murefu drives his car, heading towards Msasa and fortunately manages to get there without running out.
“I’m sorry our POS machine is not working. The network is down,” she says, curtly. “Try another place.”
Feeling terribly let down, Murefu takes the gamble to drive into Harare’s central business district.
It’s now very dark, and he may not get there with the little fuel in the tank. But what else can he do?
Fortunately, he manages; the fuel station he gets to first accepts his card, but the transaction is declined.
Murefu’s situation highlights the problems faced by millions of Zimbabweans grappling with a cash crisis in the country.
But the card payment system has wreaked havoc on the transacting public, with system failures and other problems undermining confidence in its crusade.
In supermarkets and at fuel stations, customers are increasingly getting dejected by failed transactions and inoperative POS machines.
Retailers who opened up to the Financial Gazette’s Companies & Markets blamed the telecommunications system which provides the backbone for the alternative payment facilities for the chaos.
If Zimswitch is overloaded, the system collapses, they said.
Rural areas have erratic network coverage which hampers the smooth flow of transactions using POS machines.
Regrettably, such areas are home to thousands of tobacco farmers whose payments for crop sales at the auction floors are being deposited into bank accounts as government tries to compel them to embrace plastic money.
Banks, they say, are too far away from their homes. Besides the challenge of network connectivity and supporting infrastructure, rural areas also have a massive shortage of POS machines, further compounding their woes.
The market has an estimated 35 000 POS machines against a target of about 50 000 in December 2016.
However, the target still falls short of what a country with a population of about 14 million would require.
The central bank is on record saying POS machines should be made available within 72 hours of application but there are many retailers around the country who are yet to access them despite having applied for the gadgets last year.
One retailer at the growth point said he applied for the machine in October last year but has not received anything.
While the RBZ said it would roll out affordable POS machines to support the informal sector, there are concerns over the feasibility of this project.
Statistics show that Zimbabwe has over 5,7 million registered small to medium entrepreneurs and satisfying this demand would be a daunting task.
They then help their friends, relatives and some customers to get the cash after using cards on the pretext of paying for goods.
They then sell the cash to people at a premium.
Consumer Council of Zimbabwe deputy executive director, Rose Mpofu, said they are worried about how market players were fleecing customers due to the cash shortages.