E-cash system riles Zimbabwe’s banks

"I now keep my money in this thing," said John Marufu, an accountant at a Harare firm. Poking his cellphone, he continues: "If there is a crisis at home and there is an urgent need for cash, I send it through the phone."

"My rural folks now trust that I can send them the money, even over the weekend, and they love it. I just need to have the money in the [mobile] wallet."

Marufu is one of thousands of Zimbabweans who have embraced EcoCash, the country's mobile money payment platform. But it has upset bankers, who claim it is unfair competition and the service, owned by the largest mobile telecommunications firm, Econet Wireless, is unregulated.

EcoCash, launched in September 2011, has witnessed phenomenal growth, with its subscriber base increasing by 62%, from 1.3-million, in the year to February 2013, according to latest Econet financial results.

The agency network supporting the EcoCash business grew by 242% in the same period, to over 3 000 agents.

The EcoCash services have included bill payments, bulk payment merchant services and bank-related facilities but a new service that allows companies to pay employees' salaries directly into their EcoCash wallets, a virtual bank account, has upset the banking industry.

"An opportunity in the financial services sector"
James Myers, Econet's board chairperson, said the telecommunications group had launched EcoCash as a response to "an opportunity in the financial services sector where most of the people in the country did not have access to bank accounts".

But the Bankers' Association of Zimbabwe has complained to the Reserve Bank of Zimbabwe and asked it to curb, or at least regulate, the activities of EcoCash.

The bank's governor, Gideon Gono, initially ignored the bankers' request but later said all mobile money transfer companies should now be backed by funds held in banks.

To get around this, Econet acquired control of a commercial bank, TN Bank, in which it now has a 98.6% shareholding. Myers says the acquisition now allows EcoCash "to be firmly in control of the future growth prospects of its financial services-related innovations".

But bankers say Econet is not only using its dominance in telecommunications to sideline them but is also denying them access to its network to roll out mobile money services similar to its own.

"Econet has refused to allow us to use their network as a gateway for our own mobile money transfer service.

"We want that to allow bank customers to transact on their bank accounts using their mobile phones," said a bank executive who did not want to named.

Unstructured supplementary services data
The gateway is the unstructured supplementary services data (USSD) that is available on the global system for mobile communications networks and is required to connect two or more different networks, including performing protocol conversions.

Bankers say access to Econet's USSD service would enable their customers to make cellphone-to-cellphone payments on bank platforms and ZimSwitch.

ZimSwitch is the sole national electronic funds switch owned by a consortium of banks used to process domestic card-based ATM and point-of-sale transactions among member financial institutions in real time.

Econet is creating what appears to be a rival platform to that offered by ZimSwitch and is courting banks to join the EcoCash platform.

Myers said some banks and EcoCash were already integrated, with new features such as the bank-to-wallet functionality that allows customers to transfer money from their bank accounts to their Econet mobile wallet.

EcoCash has also launched EcoCash debit cards, which allows payments to retailers from the mobile wallet.

So far, only four banks have been integrated with EcoCash — CBZ Bank, Agribank, Stanbic Bank and TN Bank. Those that have shunned it include Barclays Bank (Zimbabwe), FBC Bank, Kingdom Bank, ABC Bank, MBCA Bank and the building society CABS. They insist Econet should give them full access to its gateway.

A disgruntled bank chief executive, who did not want to be named and whose bank has not been integrated with EcoCash, said Econet allowed banks only limited access to its network for a few services such as airtime top up, the payment of Econet bills, balance inquiries, real-time gross settlements and mini bank statements.

Econet denies that it has refused to give banks access to its gateway, describing the allegation as "simply not true".

Darlington Mandivenga, an Econet execcutve responsible for the rollout of EcoCash, said: "We have agreements with most of the banks, and we are currently carrying out physical connections with most of them. Econet initiated the process but it cannot be rushed because it involves accessing bank accounts."

Another banker said the other network operators, the state-owned NetOne and Telecel Zimbabwe, had already connected banks that wished to use their USSD service for a fee. "We want the same thing with Econet," he said, and complained that the reach by the other two networks was limited.

NetOne and Telecel have slightly fewer than five million subscribers between them and access in rural areas is poor. Econet has over eight million subscribers and an extensive network coverage.

Telecel has said that it will launch its own mobile banking services soon.

NetOne's OneWallet has been un-able to draw a respectable following, despite launching before EcoCash.

The bankers' association chief executive, Sijabuliso Biyam, would not disclose how far the Econet issue had been taken.

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