Earlier this year, the Bank of Tanzania (the BOT) issued a statement regarding its plans to unveil a new instant payment system formally known as the Tanzania Instant Payment System (TIPS). TIPS will be a shared platform for payments, as it will allow transactions made by card, over mobile banking, electronic money schemes and internet banking to take place on one platform.
Currently, many Tanzanians use mobile money platforms such as M-Pesa (by Vodacom), Airtel Money (by Airtel) and Tigo Pesa (by Millicom), among other mobile money payment systems offered by mobile network operators (Non-Banking System) while fewer people hold bank accounts with banks operating in Tanzania (Banking System). TIPS would serve to bridge the gap between the Non-Banking System and the Banking System as it would allow for cross-platform transactions and also provide immediate confirmation as to whether the payment has reached the recipient, which is often a concern when people are using banking services in Tanzania.
TIPS will be accessible for payments to and from individuals and businesses. It will permit payments to mobile phone numbers as well as to bank accounts and it will serve to replace the more costly Tanzania Interbank Settlement System and the East Africa Cross-border Payment Systems.
It is anticipated that TIPS will be formally launched in June 2020.
More recently, Visa was launched on mobile phones in the country which allows consumers to send money domestically without incurring transaction fees. There are a number of commercial banks in the country that have been supportive of this initiative and have joined the scheme.
It is evident that the BOT is driving Tanzanians to embrace secure cashless systems through their awareness campaigns and promotion of financial services such as TIPS and Visa. Another factor to consider is that with the ever-changing landscape in the banking sector, it will be necessary to revisit existing financial legislation to factor in the move to cashless/digital systems. Although Non-Banking Systems have been used in Tanzania for quite some time now, with the introduction of TIPS, Visa and other cashless systems that are novel to Tanzania, it is likely that there will be some changes to legislation to ensure full consumer protection.