Although a section of Rwandans and financial institutions have adopted cashless payments systems in line with the Government’s push for cashless economy, transactions in the country remain largely in cash.

Cashless payments in the country are often through mobile money and smart cards. 

According to statistics from the central bank, points of sale (POS) transactions using debit cards between June 2015 and June 2016 were about 269,241 in terms of volume, worth Rwf16 billion.

Mobile money is the highest means of cashless payment with over 94 million transactions between June 2015 and June 2016, worth Rwf469 billion.

However, experts say Rwanda can post higher volumes given the financial ecosystem and the potential of the market.

Among the reasons for the confidence in the Rwandan market are the findings after the pilot phase of mVisa, an interoperable mobile branchless banking solution carried out in 2013 and 2014 using two banks. 

Following its successful testing, the system has since been launched in Kenya too.

The experts say given the ecosystem created by the Government, policy directives and laws requiring banks and other financial institutions to have certain cashless payment services as well as incentives for traders could speed up adoption.

They have also called for the introduction of incentives such as tax rebates for business that report high usage of cashless systems.

Incentives have been found to be effective in increasing cashless payments uptake in markets such as India.

To reduce dependence on cash-based systems, the Indian government has offered small tax rebates to traders who report that at least half of their transactions were made through cashless payments. 

This, according to analysts, has led to enterprises embracing POS machines and get pay bill numbers for mobile money payments encouraging clients to use them.

Laying the ground

Central bank governor John Rwangombwa said they are considering the best strategy to encourage adoption and uptake and should have a way forward by the end of the year.

Admitting that the volumes and value transacted through cashless means was "good but not good enough,” he said that the ecosystem created so far was positive and most of the infrastructure has already been laid out.

"We are working with other institutions to put in place a strategy in which we can promote the uptake of the cashless payment systems,” he said.

Rwangombwa is, however, not for the idea that policy directives and laws could speed up adoption of cashless payment adoption. Instead, he seeks for further improvement of the environment, which will encourage players, including traders and consumers to use non-cash alternatives.

"I don’t think that it is an issue of policy decisions for banks to invest in such, it is creating an environment that will encourage both traders and buyers of goods and services to use alternative to cash. What we are doing is to create an environment. The infrastructure is almost there,” he said.

The governor said with most of the infrastructure already in place, the next step will involve integrating them to make it usable over a wide range of consumers.

"We expect to see POS that allows the use of mobile money. We expect to see full interoperability of electronic payment systems. We have infrastructure in place but mainly standalone which need to be integrated. By the end of the year, we should have a clear strategy on how we are going to work with the Government, banks and switches to promote electronic means,” Rwangombwa said.

From a banker’s perspective, Hannington Namara, chief executive of Equity Bank Rwanda, said ensuring a high level of cashless economy adoption goes beyond policies and laws to citizen awareness.

"The biggest challenge with cashless economy is that you have to have everybody paying and everybody being paid linked to a gadget or system they can use for payments,” he said.

Noting that mobile and internet penetration levels, as well as literacy levels of both traders and buyers, were on the rise, Namara said there is need for educating to users on systems.

"There also has to be levels of confidence among some of the tools. For us, we have had multiple tools to push for cashless economy. For example, we (Equity Bank) issue cards on account opening; however there is no guarantee that it will be used by the client. We have to educate our people to make sure they have confidence in the tools and systems,” he said.

Namara said customer sensitisation was key as some customers were hesitant to use outlets that were not traditional banking hall that they were accustomed to.However, Namara believes incentives could play a huge role in encouraging uptake among traders and banks and was likely to trigger investments in better systems and measures toward cashless economy.

Crane Bank Rwanda managing director Edigold Monday told The New Times that as Rwanda seeks to increase cashless payment system uptake, incentives and awareness could play a bigger role.

"Merchants need to understand the advantages of cashless payments which include access to better credit and easy book keeping among others. Buyers also need to understand the convenience and ease of using cashless payment system,” she said.

"Before putting the rules to bend people, let’s understand the economy, set goals and work towards them. We need to look at it from both ways. We need to also learn from other countries on how they did it.”

Would-be users of cashless payment systems say that among their reasons for not using it is the lack of consistency among business establishments in the country.

They say their preference for cash is that they are certain it is acceptable everywhere unlike cashless alternatives that only work in few establishments across the country.

John Mugiraneza, who owns two debit cards and has a mobile money account, told The New Times that his preference for cash is because it’s acceptable everywhere unlike cashless options.

"Most times if you carry around debit cards, you are unlikely to use them as a large number of businesses do not have POS machines and do not have a mobile money pay bill number. I would rather pay in cash than the hassle of trying to locate places that allow cashless,” he said.

As to why businesses seem to have a preference for cash as opposed cashless alternatives, a number of them said the option comes at a expense of their profits.

A petrol station manager, who spoke to The New Times on condition of anonymity, said one of the advantages of using cashless payments is that it facilitates them to curb loss of income from theft.

However, the source added that it comes at a cost charged by banks.

editorial@newtimes.co.rw