Payment systems shaping way towards cashless Economy

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Payment systems shaping way towards cashless Economy

With the introduction of payment systems three years ago, is now showing positive progress, with success already registered in the journey to a cashless economy.

The Rwanda Integrated Payments Processing System (RIPPS) is composed of three main parts which include an Automated Clearing House (ACH-a netting system), a Real Time Gross Settlement System Transfer System (RTGS) and a Central Securities Depository (CSD).

This includes the introduction of Automated Teller machines, point of sales, the mobile banking and paperless transactions at the stock exchange, something experts believe smoothen transactions in the financial sector.

All these, according to Governor Rwangombwa help to ease payment processes, fast track cashless economy thus boost the economy which is vital in seeing the country grow to a middle income economy by 2020.

“We want to reduce cash payments; so this is why we want to see all payments done electronically,” Rwangombwa said earlier

But the increase in transactions through the payments that was registered in the first half 2014 as compared to same period  last year  now provides optimism that the payment system is paving way for a positive outlook for the economy.

Accordingly, in the first  half 2014 customers’ transactions through credit transfers  increased  in volumes  to ,089,206 transactions from  1,065,967 transactions representing an increase of 2 percent while  it increase in value by 12 percent  in value from Rwf1,325 billion to Rwf1,484 billion.

To further strengthen this performance, the central Bank  has established  a policy on interoperability  that will  in ease of transactions between different platforms of the industry players mainly   in  cards based payment system and mobile financial service.

Statistics from Central Bank also indicate that  number of Automated Teller Machines-ATM increased to 343 in June 2014 from 323 in June 2013 while their (ATM) availability increased to 93 percent by June 2014 from 91percent in June 2013 while number  of Point of Sales  increased by 33 percent  from 797 in June 2013 to 1,057 in June 2014.

Whilst,  cards issuance   rate grew  at 27 percent  in June  this year up from 17 percent of bank accounts recorded  in  the same period last year  with  number of debit cards increased to 532,157 up from  440, 875 indicating  a  21 percent  while the number of credit cards increasing by 32 percent  from 1,179 to 1,561.

Again, the introduction of e- tax payment saw a decrease in the use of cheques  by  9 percent  in volume to 148,827 transactions from 163,578 transactions  with a reduction  in value from 366 billion FRW to 342 billion FRW  indicating 7 percent.

Nevertheless, there is still low card usage since their introduction two years ago which cripples the  use of electronic  payments while also Point of sales that  facilitate  transactions such agency banking , electronic  shopping as well as mobile banking  are lackadaisical to  extend to rural areas.

“As long as people still drag their feet to engage into electronic   payments for some reasons say difficulty in access, security and others, then a cashless economy is hard to be realized,” James Gabo, a financial educationist says.

Consumers also  note that  there is need  for  Banks to harmonize  their platforms with the  telecoms mobile  banking platforms  so as to allow them(consumers) to transfer money freely  from their phones to  their  bank accounts.

For example, Airtel Rwanda and MTN Rwanda have already introduced partnership with banks to enable both their clients to cash out from their accounts through their mobile phones and vice versa while they also facilitated bill payments.

“… is an indication of our commitment to provide convenient payment solutions to the Rwandan people,” said MTN General Manager of MTN Business, Norman Munyampundu.

But the implementation of the regional integration mainly the fast racking of free movement of goods and trade across the border is thus pushing for regional harmonization of payment systems which means the government has to  further look at regional Interoperability of payment systems while also dealing with  the home  payment system usage.




About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

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