The Bank of Tanzania (BoT) is developing a national switch to further enhance interoperability mobile telephone operators aiming at cutting costs for either party in electronic money transfers.
The central bank said the process is at an advanced stage and now plans to engage key stakeholders—mobile money transfers, banks and non-banks in a bid to develop the switch.
“[BoT] is in the process of engaging key stakeholders in the financial sector in developing the National Switch,” BoT said in its Monetary Policy Statement for June 2018 issued last week.
In 2014, Tanzania’s four major mobile phone operators—Vodacom, Tigo, Airtel, and Zantel—reached an interoperability agreement to allow their customers to interact with each other.
Through the interoperability agreement, customers can make payments from the mobile money account of one provider to the mobile money account of another provider.
This made Tanzania one of the first countries in the world with an industry-agreed interoperable market for mobile financial services.
The bank said the aim of developing the switch was to further enhance interoperability and reduce costs payment service to providers as well as to consumers.
The interoperability eased transaction by enabling a customer to send money to one’s outside network at an affordable rate and hassle-free.
Between July last year and April this year, utilization capability in mobile money transfer continued to grow to reach 80.7 million transactions worth 3.31tri/-.
This was 104.7 percent increase in volume and 78.9 percent in value compared to the corresponding period of 2016/17, according to BoT.
The interoperability of mobile financial services has contributed to overall growth of total mobile money transactions by 37.3 percent in volume and 23.4 percent in value in the period under review, compared to the corresponding period of 2016/17.
On top of that, the number of active registered accounts for mobile money stood at 19.5 million in April against 17.3 million last April.
Tanzania is one of the world leaders in mobile money transfers, being first introduced in the country in 2008 but interoperability was launched in 2015.
However, three years down the lane, the regulator wants to perfect the interoperability further. Among the key issue is to simplify further the services by having a single national switch that would allow any player, after being authorized, instead of a player to choose a partner.
“In ensuring safety and efficiency of the National Payment Systems the [central] bank continued with the process of oversight and licensing of new payment service providers under the current regulatory framework”.
There are six mobile money providers in the country namely Vodacom with M-Pesa controlling 43 per cent market share, Tigo with Tigo Pesa (36 per cent), Airtel with Airtel Money (17 per cent), Halotel with Halotel Money (3 per cent), Zantel with Ezy Pesa (1.0 per cent), and TTCL (0.04 per cent) as at March this year, according to Tanzania Communications Regulatory Authority (TCRA) statistics.