Banks to double point of sale machines


Reserve Bank of Zimbabwe governor John Mangudya

LOCAL banks have embarked on an aggressive acquisition of point of sale (POS) machines in a move that is expected to augment efforts by the central bank to promote the use of plastic money.

This comes against the background of worsening cash shortages that have disrupted cash transactions and triggered agitation among the country’s restless population, which has borne the brunt of sustained economic degeneration that has resulted in record levels of unemployment.

Banking sector officials said the financial sector was planning to increase the number of POS machines from about 18 000 machines to 30 000 machines to reduce reliance on cash by the transacting public.

But sources indicated that the country may require more than 30 000 POS machines to efficiently facilitate transactions in the country, including re-fuelling motor vehicles at fuel  stations.

This follows a May policy statement by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya calling for an extensive programme to increase POS machines in the country after noting that many wholesalers and retailers were operating without the gadgets in their outlets.

“This scenario exacerbates demand for cash as consumers will be compelled to look for the required amount of cash to transact with them.

Accordingly, all retailers, wholesalers, businesses, local authorities, utilities, schools, universities, colleges, service stations, informal sector among others are, with immediate effect required to install and make use of the requisite POS machines, so as to reduce the demand for cash in the economy,” Mangudya had said.

He said all utilities and municipalities would be compelled to promote the use of plastic money by installing the POS machines in their banking halls.

This requirement, he said, would also apply to government departments and public entities that provide services oncash basis to the public, such as Ministry of Home Affairs’ Registrar General’s department, the Zimbabwe Road Authority and government hospitals.

“Banks and payment services providers are also directed to ensure that appropriate electronic payment systems such as card, POS, mobile and internet are availed to all businesses as a matter of priority,” he said.

An RBZ director responsible for banking supervision, Norman Mataruka, told delegates at a Buy Zimbabwe Summit held in Mutare last week that banks were importing more POS machines to reduce reliance on cash transactions in light of the current liquidity challenges.

“Banks are importing more point of sale machines to reduce reliance of cash transactions,” said Mataruka.

CBZ Bank’s head of e-banking and card services, Saul Chin’anga, confirmed CBZ Bank was on an aggressive purchase of POS machines.

“We are procuring and deploying more POS terminals in the market to retailers so that they accept plastic money,” said Chin’anga, who also spoke at the Buy Zimbabwe conference.

“We have also seen other banks purchasing additional terminals and deploying them in the market.

“There are about 18 000 machines in the market but as a sector, we are targeting to have 30 000 POS machines around the country.”

Chin’anga said business should embrace technology by accepting and promoting plastic or digital money because this had several benefits such as convenience, cost savings, security, accountability, customer loyalty and promoted liquidity at macro level.

He said: “Technology is a smarter way of doing things that we have always been doing.  It’s safer to transact in e-values than carrying the physical money.

“ There is a perception that POS terminals will bring in added expense through merchant services commission. This is incorrect as these expenses are now much lower. The RBZ has reduced electronic and other transaction charges to ease the liquidity challenges.”

The biggest hurdle for the promotion of widespread usage of plastic money is likely to be that the majority of Zimbabweans don’t have bank accounts, although the central bank has launched a campaign to enhance financial inclusion in the country.

The central bank had hoped it could persuade banks to entice millions of Zimbabweans to bank their money through a cocktail of measures that include use of modern technology.

But that project suffered soon after launch as a cash crisis in the country worsened, resulting in depositors failing to withdraw their money from banks.

This was made worse by pronouncements by government that it would launch a new form of currency called bond notes, which would circulate alongside the US dollar and other currencies.

The bond notes, which will rank pari pasu with the US dollar, will be launched on October. It is meant to alleviate the cash shortages, according to the RBZ, which said the printing of the notes would be backed by a US$200 million facility from the African Import and Export Bank.

The economic decline of the past 15 years had led to the collapse of many companies, resulting in the informalisation of the economy.

 Zimbabwe economy shifted to an informal one resulting in more than 90 percent of the population working in the informal sector.

The RBZ is targeting to achieve 80 percent use of plastic money in five years.

Zimbabwe ditched its currency in 2009 to escape hyperinflationary pressure.

Follow us on Twitter @FingazLive and on Facebook – The Financial Gazette