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Why digital payments are key to Tanzania’s cashless economy goal
What you need to know:
- A recent study by Visa, titled, Value of Acceptance: Understanding the Digital Payment Landscape in Tanzania, shows that 84 percent of surveyed SMEs have started accepting digital payments in the last two years.
Dar es Salaam. As Tanzania pushes forward with its digital economy agenda and more small and medium enterprises (SMEs) embracing digital payments, challenges remain that need to be addressed to accelerate Tanzania’s journey to becoming Africa’s digital economy hub.
Visa’s Vice President and General Manager for East Africa, Mr Chad Pollock, has been in Tanzania recently, engaging with stakeholders as part of the company’s efforts to expand its operations and support the country’s digital economy agenda.
In an interview with The Citizen, earlier this week, he expressed confidence in Tanzania’s potential, highlighting the steps taken by the Bank of Tanzania (BoT) to promote cashless transactions.
“Tanzania is an exciting market with a promising population that has the potential to transform the country digitally,” said Mr Pollock. “Having an involved regulator like the BoT that is keen on unlocking the digital economy is a strong foundation.”
A recent study by Visa, titled, Value of Acceptance: Understanding the Digital Payment Landscape in Tanzania, shows that 84 percent of surveyed SMEs have started accepting digital payments in the last two years. However, barriers remain.
The biggest challenge is the persistent preference for cash, with 76 percent of customers still opting for it for in-store purchases.
“This preference must be addressed to encourage wider adoption,” Mr Pollock noted. “Digital payment solutions need to match the convenience and security of cash while offering added benefits.”
Infrastructure is another hurdle. The study found that 40 percent of cash-only SMEs lack the necessary infrastructure to set up digital payments, deterring them from investing in new technologies.
“Developing innovative and accessible solutions, such as mobile POS systems and simplified onboarding processes, will be key in overcoming this challenge,” he added.
Security concerns also drive digital payment reluctance. The study revealed that 93 percent of businesses worry about cash-related risks, including robbery (77 percent), employee theft (62 percent), and errors in handling change (42 percent).
These concerns highlight the urgent need for safer and more efficient payment methods.
The government’s digital economy strategy
Tanzania’s digital economy strategy is anchored on financial inclusion, innovation, and an enabling regulatory environment.
The BoT has introduced policies to drive cashless transactions, including promoting mobile money interoperability, reducing transaction costs, and encouraging fintech investments.
A government official from the Ministry of Finance and Planning, who spoke on condition of anonymity, affirmed that the state is committed to fostering a digital economy.
“We recognise digital payments as a key pillar for economic growth. The BoT is actively engaging with financial institutions and private sector players to create a more inclusive financial ecosystem,” the official said.
As a global leader in digital payments, Visa wants to leverage its expertise to strengthen Tanzania’s digital infrastructure. Mr Pollock emphasised that Visa’s suite of solutions, such as Tap to Phone, Contactless Payments, and Click to Pay, could help businesses and consumers transition seamlessly into cashless transactions.
“By partnering with Visa, businesses in Tanzania can access a wealth of experience, resources, and cutting-edge technologies to accelerate digital payment adoption,” he said.
Visa has successfully supported digital payment transformation in other African countries. In Kenya, for instance, Visa’s collaboration with Safaricom’s M-Pesa has significantly boosted mobile payment adoption. Similarly, in Nigeria, Visa has partnered with fintech firms to expand payment solutions, enhancing financial inclusion.
Experts weigh in
Digital economy experts believe that Visa’s presence in Tanzania could be a game changer. Financial technology consultant Patrick Mmbaga noted that Visa’s entry provides a critical boost to local efforts.
“When global players like Visa step in, it signals confidence in Tanzania’s potential. Their expertise and infrastructure investments will drive digital payment growth,” he said.
Economist, Ms Asha Njove emphasised that digital payments reduce transaction costs, enhance business efficiency, and improve financial transparency.
“Cash-based transactions have hidden costs. Digital payments provide a more streamlined, secure, and accountable way of conducting business, which ultimately benefits the entire economy,” she said.
Tanzania’s journey to a digital economy is promising, but addressing cash preference, enhancing infrastructure, and strengthening security measures are crucial steps.
With the BoT’s proactive approach and the expansion of Visa into the country with a mission to drive digital payment solutions, the country is well-positioned to accelerate its transition.
