The reduction in bank service charges that has been put in place by the central bank is a big step in promoting the use of plastic money and financial experts are imploring banks to proceed and reduce interest rates and effectively, the cost of doing business.
BY TARISAI MANDIZHA
Last week, the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya announced new reduced charges on electronic transactions that will see electronic fund transfers attracting reduced charges of between $0,33 to a maximum of $2,10 as a way to promote plastic money transactions and to reduce demand for cash.
Mangudya said real time gross settlement (RTGS) transactions would now attract a maximum fee of $5.
Point-of-sale (POS) transactions for amounts of $10 or less now attract a fee of 10 cents while those above that threshold will attract a fee of 45 cents.
Confederation for Zimbabwe Industries president Busisa Moyo said the fees, including interest charges by the banks needed to continue coming down so that the country did not create more bad loans.
“Zimbabwe is a high cost environment for business and productive sectors,” he said.
“This is the biggest impediment to productivity and industrialisation.
“The reduction in this context is welcome but the authorities must be careful with this command economics and rather allow competitive forces to lower prices and find a sustainable equilibrium.”
Buy Zimbabwe economist Kipson Gundani said the reduction in the charges was a positive development where the transacting public was being persuaded to use plastic money.
“This is a positive development, particularly in this era where the public is being persuaded to transact using plastic money,” he said.
“Though there may be need to further reduce the charges, this however provides a significant traction towards increased use of plastic money.”
However, Gundani said the measure was addressing symptoms as opposed to the real challenges affecting the economy.
“The real Zimbabwean problem is production and productivity,” he said.
“Unfortunately, this is not the sole responsibility of monetary authorities, but of every stakeholder in the economy, with the government leading the way.
“Some of the problems we face today will fall by the wayside once we sort out the supply side issues which are at the centre of the economic erosion.”
The reduction in charges comes on the back of an increase in the use of plastic money in retail shops through points of sale in response to the cash crisis.
Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu said the move to slash bank charges came as the use of plastic money increased in most retail shops to about 60% of daily sales, up from 5%.
Retailers recently met Mangudya at a meeting where the RBZ boss agreed to set up a retailers’ desk at the central bank.
At the meeting, Mangudya agreed to work with financial institutions and the CZR to expedite the installation of point of sale machines across the breath of the retail sector including tuck shops and small to medium shops in all the geographic locations across the country
“Retailers agreed to bank money daily and to take up the plastic money route with the attention it deserves,” Mutashu said.
A banking analyst said the reduction in bank charges would promote use of plastic money which would in the long run become an alternative for cash, projecting that a number of formal and informal businesses will over the next few months hook up onto electronic platforms.
“There is an increase in the number of businesses now requiring banks to install point of sale terminals on their premises as there is now an irreversible shift from a cash economy.
“In the long run, the wider use of plastic money will drastically reduce the demand for notes and coins so the policy should, with wider support and acceptance by the public, offer a permanent solution to the current cash crisis,” he said.