The Reserve Bank of Malawi (RBM) is on the drive to consolidate the gains from the various innovations in the digital financial services space to accelerate the shift from paper based payments instruments, such as cash and cheques to electronic based services.
In that vein, the RBM on Wednesday organised a conference at Sun ‘n’ Sand in Mangochi that attracted digital financial service stakeholders to appraise them that the transaction cost of using cash, whether by individuals or business entities, is far much higher than that associated with digital financial services.
Opening the conference, RBM Governor Madalitso Kabambe highlighted that the high costs include time and money spent accessing a bank branch or an ATM to either deposit or withdraw money and the risk of loss coupled with un-traceability of the lost funds.
He also said the manual transaction carry cost of security arrangement for transportation, storage of cash and — from the national and RBM perspective — the printing and shipping charges which unfortunately have to be met using hard earned foreign reserves.
“Cheques have also their own challenges since banks, corporate institutions and even individuals have lost money to fraudsters,” Kabambe said.
“Added to this, many people have complained of delays in receiving funds after a cheque is deposited. The challenges mentioned are non-existent in digital financial services.
“Therefore, why should one spend their time, energy and resources by using payment instruments that can easily make them lose money and potentially drive them out of business or dent their image?
“Why should one cling to a cheque which does not enable funds to be credited into their account instantaneously?
“Time has come for all of us to change the way we conduct our day-to-Day payment transactions and digital is the way to go.”
Kabambe went on to say that Malawi’s financial sector is certainly leading the way in bridging the digital divide as it has a world-class national payments system called the Malawi Interbank Transfers and Settlement system (MITASS), which has linked all commercial banks through which all transactions; high or low value, are processed in real time and designated time intervals.
“The Malawi Revenue Authority (MRA) has also been linked to MITASS through which they view the inflow of transactions from commercial banks into their accounts maintained at the RBM.
“We have also linked the Accountant General’s office and as a result salaries for civil servants are now processed digitally.
“This is why you would not hear of salary delays attributable to the banking system and plans are underway to migrate other payment streams onto MITASS so that we improve government operations.”
He added that besides MITASS, the RBM also implemented the National Switch (Natswitch) through which all ATMs and point of sale (POS) devices as well as two non-Bank mobile money solutions have been interlinked.
“Subscribers of TNM Mpamba can transfer money to Airtel Money users through Natswitch and we have also implemented the Microfinance Transaction Processing Hub to improve efficiencies in the microfinance sector and the Hub will be linked in Natswitch as well as nob-Bank mobile money solutions,” he said.Follow and Subscribe Nyasa TV :