Ecocash waded into the local US Dollar remittance game in a move that is bigger than many people are giving it credit for. The leading mobile money transfer provider and undeniable payment king in Zimbabwe have finally joined the space with an aggressive approach. They launched with a promotion that would see them match money cashed in up to US$10 per person to sweeten the deal. They will use the existing infrastructure of mobile US dollar wallets, Econet and Steward Bank branches for cash in and cash out purposes.
Doing it big
One thing Ecocash seems to understand about Zimbabwe is our love for grand occasions. The new service was launched in Harare on Friday as reported by the Herald. Present were many representatives of Ecocash and interestingly the Reserve Bank of Zimbabwe. This is where they also detailed the promotion that matched cash in amounts made by customers up to US$10 per transaction. US dollar local remittances are the big cash cow in the nation at the moment with many players from the traditional financial services businesses such as BancABC, Steward Bank, OneMoney and those not traditionally in the business of financial services such as Simbisa having stepped in to serve this underserved market.
Why did it take so long?
Ecocash has what can best be described as a colourful history with monetary authorities in the country. Foreign currency transactions on Ecocash are not new, this capability was already present. However, the past struggles that led to Ecocash merchant accounts and agent networks being abandoned through being made illegal had the mobile money provider partly hamstrung. Ecocash has been blamed for everything from the parallel market rate to money supply growth by the Reserve Bank of Zimbabwe and their Financial Intelligence Unit in the past.
Competition is good
The fees for transferring US dollars with Ecocash have a similar structure to sending Zimbabwean dollars with Ecocash. There is a cash-in fee, sending fee and a cash-out fee involved. What we have been able to discern is that the fees are relatively smaller as the amounts grow. So for example sending fee for US$1 is US 6cents but when we get to US$20 you are paying the US 2.4 cents per dollar sent. So with all charges concerned the bigger the transaction the cheaper the charge is. The system does allow sending to both registered and unregistered phone numbers with different limits applying for the two. Registered users will have the benefit of transacting up to US$2000 per month while the unregistered are capped at US$1000 per month. What Zimbabweans certainly needed in the arena are more options.
Too little, too late?
The game has been on for a while and Ecocash is a late entry at best. BancABC and Simbisa through City Hopper and Innbucks respectively have dominated the game. Other players such as NetOne’s OneMoney and Ecocash subsidiary Steward Bank have found space in the market too. With the majority of the market hailing Innbucks as the leader in the market due to their massive branch footprint and ease of transacting one wonders if there’s space for Ecocash. Ecocash, lest we forget was Zimbabwe’s last mobile money transfer service not its first. Econet launched the transfer service quite some time after both Telecel and NetOne had launched theirs. The rest as they say is history. Ecocash also has both experience and infrastructure on their side, even with their wings clipped without the agent network.
The ace up the sleeve
Ecocash’s advantage rests in theirs being a wallet and not just a service. The USSD menu shows the option to pay merchants and that is the real advantage here. If Ecocash can make cashing out easy or unnecessary for business users they will be more open to accepting payments via the system and this could be the way they move to the top position in the market. It’s not plain sailing as people may not entirely be comfortable with having their hard-earned US dollars sit in accounts given past experiences with the same in the country. However, this is the Ace up Ecocash’s sleeve that could see them become big if not the biggest player in this market.
What are your opinions on Ecocash joining the party? Are you going to claim your US$10 cashback?