Banks in the country have begun rolling out mobile visa payment platforms as an alternative to costly point of sale machines. Besides eliminating the need for costly infrastructure, the platform is cheaper for lenders when it comes to expanding.
Dubbed M-visa, the platform involves the use of mobile phones to make or receive payments without the need for the traditional visa plastic card and point of sale machines.
According to KCB Bank Rwanda chief executive Maurice Toroitich, point of sale machines are very expensive and M-visa is a cheaper option for growing the merchant network.
“If we issue 1,000 Point of Sale it means we have to spend $50,000, which is very expensive. These machines require a huge investment and yet they might not be adopted by smaller businesses,” he said.
Mr Toroitich said rolling out 1,000 M-visa agents will cost the bank nothing. “It is basically like your card in a mobile. The only thing we do is that at the M-visa point you can scan your product using your phone and make a payment,” he said, adding that it is now possible to expand electronic payments to businesses.
Shoppers can log into a mobile app that automatically enables the camera in the phone to scan a code displayed at the merchant’s outlet, and then the money is deducted from their bank accounts. It also works on feature phones.
According to recent data from Bank Nationale du Rwanda (BNR, the central bank), the number of point of sale terminals in the country increased from 1,700 in 2015 to 1,800 in 2016; due to increased demand from new merchants like hotels.
Lucy Mbabazi, the director for Visa in Rwanda, said the number of point of sale machines has increased but many more businesses are yet to adopt the technology.
“When we have more than 100,000 businesses, but only 1,800 point of sale machines, when will we build a cashless economy?” she asked.
Banks deploy payment machines to their partner merchants, but they might be limited by the cost of the devices which go for $500 each.
Ms Mbabazi said mobile visa will complement these machines. However, there are other factors that hinder the use of payment machines.
For instance some businesses are using many point of sale machines, yet one is enough.
While M-visa may provide alternative payment options and reach new small businesses, banks could encourage merchants to accept mobile payment.
“Banks should work with vendors to look at ways to adopt M-visa,” said Ms Mbabazi.
M-visa is now being used by refugees in what is known as cash-based transfer where they receive money to buy food in markets around camps.
KCB Rwanda, which is the latest to launch M-visa said it will first focus on promoting the new payment platform.
“We need to first make sure we have merchants who accept M-visa,” said Mr Toroitich.