Last week the central bank launched a new campaign to encourage the business community to embrace electronic payment systems. The move is one of the many efforts aimed at promoting financial technology services that deepen cashless economy. However, the response from the public and business community has been slow despite this and other government initiatives geared at propping up uptake rates.

According to the ICT Minister, Jean-Philbert Nsengimana, the use of digital payment platforms is low in sectors like construction, retail trade and ‘partly’ hospitality. Nsengimana said the move toward a cashless economy will entirely depend on market response, adding that this makes it urgent for all stakeholders to join the drive to digitise Rwanda.

So what is the problem? Business operators and sector experts blame limited knowledge about these innovations and their benefits, as well as poor connectivity, among others, for the reluctance to accept some of these innovations.

Justine Ngarambe, the Simba Supermarket general manager, said users and some businesses do not understand the benefits of embracing financial technology (fintech) tools like electronic payments solutions.

Ngarambe added that there is also need to improve the necessary infrastructure to ensure constant connectivity and hence make the e-payment systems more efficient.

According to David Ishimwe, a bar and restaurant operator in Kimironko, a Kigali suburb, people are reluctant to embrace digital payment systems because of high user charges. Ishimwe said people don’t want to incur extra costs for using say debit and credit cards to pay for goods and services.

He added that the issue of data security is also holding back the usage of e-commerce products despite their big potential.

"More often, e-payment systems come with an increased need to protect sensitive financial information stored on a business’ computer systems from unauthorised access,” he said.

Firms with in-house digital payment solutions incur additional costs in procuring, installing and maintaining sophisticated technologies to secure the platforms, according to Rita Mugire, a software expert in Kigali. She said this is one of the reasons why most businesses may not rush to embrace such fintech solutions.

"Therefore, innovators and the regulator must put out information and messages that will help reassure the public of data protection,” she added.

Joseylne Mutoniwase, a Kigali-based businesswoman, said accessibility is a big challenge, noting that some areas don’t have points of sales (POS) merchants. Such challenges, she added, are huge hindrances toward embracing digital payment platforms and other fintech solutions. "Besides the connectivity (network) is always poor, making it hard for some businesses to use the POS devices,” she added.

Use of ATMs, POS up

However, the central bank and sector stakeholders continue to invest enabling infrastructure like the integrated payment processing system to expedite Rwanda’s efforts to become a cashless economy.

It’s these efforts that have seen electronic retail payments continue to increase. According central bank figures, the number of transactions through ATMs increased by 21 per cent from more than 3.8 million to over 4.6 million last financial year. There was a 28 per cent rise in value over the period to Rwf241 billion up from Rwf188 billion previously.

Equally, POS transactions increased by 94 per cent from 270,084 to 523,473 in volume and 98 per cent in value from Rwf16 billion to Rwf32 billion. The number of ATMs increased by 6 per cent from 398 to 405, while that of POS devices rose by 19 per cent to 2,030 from 1,707. Mobile financial service users rose to 3.37 million from 2.98 million.

This growth is largely attributed to increased demand from merchants like new hotels and petrol stations, the central bank says.

Facilitating innovators

The growth in use of e-commerce facilities requires an equal increase in devices and products "so that people can easily access them,” said Alain Ndayishimiye, the AuraSoft chief executive officer.

According to Ndayishimye, the central bank and sector players should encourage and facilitate innovators to bring to the market more alternatives and break the monopoly along supply chain.

"This will ultimately help bring down the cost and ease access, allowing more people to use them,” he said.

The official added that the firm is currently leveraging the power of innovation and technology to improve efficiency and reduce the cost of transactions through seamless payment solutions.

According to Simba’s Ngarambe, the supermarket chain encourages clients to make payments digitally, which she says saves time, is secure and more convenient compared to traditional payment methods.

What’s being done to promote e-commerce solutions

Maurice Toroitich, the BPR chief executive and chairman Rwanda Bankers Association, said banks are working with stakeholders to find ways of lowering the cost of e-transactions.

"We have put in place an automated and calibrated clearing house, allowing banks to make transfers and payments in real time,” he said.

He added that the industry was also moving toward creating a strong credit scoring information system which will facilitate the e-payment solutions.

"We are aware that customers feel more freedom to spend using electronic payment tools, including credit and debit cards,” he added.

According to Dr Diane Karusisi, the Bank of Kigali CEO, encouraging mobile and e-banking will boost their deposits enabling them to lend to the private sector at lower interest rates.

Leveraging mobile money services

According to Tigo Rwanda’s Chief Executive Officer, Philip Amoateng, the need to tap into opportunities presented by mobile phone technology should not be underestimated. "Mobile phone platform has the potential to boost the country’s financial inclusion and therefore should be used as an ingredient to expedite digital payment solutions.

Why cashless

The McKinsey Report of September 2016 estimated digital financial service to have potential of boosting annual GDP of all emerging economies, including Rwanda by at least $3.7 trillion by 2025, or 6 per cent above baseline projected GDP.

Such a potential, according Lindy Larson, the Reach for Change Africa programmes manager, can only be fully exploited through strong partnerships between financial institutions and telecommunication firms.

The experts further believe that with more and more digital financial service products, economies like Rwanda will at least enjoy low cost of providing financial services by up to 90 per cent, enabling providers to serve lower income customers profitably.

It will attract an additional $4.2 trillion in new deposits into the financial system, as more people obtain access to accounts and shift their savings from informal mechanisms.