Cashless economy takes shape as digital payments surge in Tanzania

The central bank is implementing policy measures to promote the adoption and use of electronic payments through formal payment systems.

Electronic payment systems in use include the Tanzania Interbank Settlement System (TISS), Tanzania Automated Clearing House (TACH), Tanzania Instant Payment System (TIPS) and electronic cards.

The Bank of Tanzania (BoT) National Payment System Annual Report for 2024 highlights a remarkable expansion in the country’s digital financial landscape.

The number of active mobile money users jumped by 22.2 percent to 63.2 million in 2024, up from 51.7 million the previous year.

Similarly, mobile money agents grew by 18.97 percent to reach 1.47 million, reflecting a widening network that enhances accessibility.

According to the report, the volume of mobile payment transactions rose by 26.73 percent to 6.41 billion transactions, while their value increased by 28.54 percent, reaching Sh198.86 trillion.

The surge is attributed to economic growth, fintech innovations, an extensive agent network and progressive regulatory policies promoting digital transactions.

TIPS registered impressive growth, with transaction volume increasing by 92.52 percent to 452.5 million in 2024 from 235.04 million in 2023.

Similarly, the value of transactions processed through TIPS surged by 143.02 percent, reaching Sh29.82 trillion, underscoring the increasing reliance on real-time digital payments.

To encourage the adoption of digital payments, BoT said several policy measures have been implemented, including reducing transaction costs, enhancing interoperability through TIPS and launch of the interoperable Quick Response Code (TANQR).

“By leveraging fintech innovation, the Bank continued to collaborate with and encourage financial service providers to introduce new, simple, and adoptive digital payment products relevant to Tanzanians’ needs,” the central bank says in the report.

Merchant digital payments also witnessed significant growth, with the number of registered merchants more than doubling from 657,346 in 2023 to 1.33 million in 2024. Electronic Money Issuers (EMIs) accounted for the majority of these merchants, reinforcing the role of non-bank players in Tanzania’s digital financial ecosystem.

The BoT report further reveals that internet banking transactions increased by 23.78 percent, with the number of active subscribers rising to 165,977. Additionally, the number of transactions processed through Point-of-Sale (POS) machines grew by 38.53 percent, with local transactions valued at Sh3.3 trillion.

Despite this progress, the report indicates a decline in the use of local brand cards, which dropped by 27.92 percent. Instead, there has been increased adoption of international brand cards and virtual cards issued through mobile wallets, highlighting changing consumer preferences.

Experts speak out

Speaking with The Citizen yesterday, Dr Tobias Swai of the University of Dar es Salaam said one of the most significant benefits of Tanzania’s digital payment boom is the impact on financial inclusion.

He said digital platforms have allowed millions of people, especially in rural areas, to access financial services without the need to visit a physical bank branch.

“This shift is making financial services more accessible and convenient for people across Tanzania,” Dr Swai said.

Dr Mwinuka Lutengano of the University of Dodoma credited government initiatives with promoting financial inclusion and digital literacy for the surge in digital transactions.

“The policies encouraging mobile payments and digital banking have led to a cultural shift in how people manage their finances. Businesses, both small and large, are integrating digital payment options to meet consumer demand,” he said.

Beyond convenience, digital payments have also strengthened financial transparency and accountability.

The executive director of the research think-tank Repoa, Dr Donald Mmari, noted that digitising government payments is playing a great role in financial transparency.

“Electronic transactions minimise opportunities for fraud and mismanagement of public funds, ensuring money reaches its intended destination,” he said.

Dr Daudi Ndaki of Mzumbe University said digital payments reduce cash-handling risks.

“Businesses that embrace digital payments experience fewer theft and fraud cases. It also helps them maintain better financial records, which is crucial for long-term growth,” he noted.

The younger generation has been instrumental in accelerating this shift.

Dr Isack Safari of Saint Augustine University of Tanzania (SAUT) said, “Young people are driving the digital revolution. Many prefer mobile banking and online transactions over handling cash, which is changing the financial landscape in urban areas.”