In a bold bid to propel the nation toward a cash-lite economy, Tanzania has announced the removal of all charges on card payments at point-of-sale (POS) terminals. This move, hailed by some as a forward-thinking stride into the digital age and criticized by others as a half-measure, aims to encourage the adoption of digital transactions among its citizens.
The Bank of Tanzania (BOT), the country’s central bank, issued a directive warning merchants against levying fees on card transactions. The penalties for non-compliance remain unspecified, perhaps deliberately, to maintain a sense of looming accountability. Governor Emmanuel Tutuba expressed optimism about the initiative, underlining the government’s intent to promote digital payment systems and reduce dependency on cash.
“Digital payments are a safe, convenient, and cost-effective method for conducting transactions,” stated the BOT in its circular, urging Tanzanians to embrace this shift. The central bank emphasized that the new policy aligns with broader goals of enhancing transparency and financial inclusion, while also boosting economic security and efficiency.
Digital payments are no stranger to Tanzanians. A recent survey revealed that 48.4% of the population actively use digital platforms for transactions. This growing trend is supported by projections from Statista, which estimates that the Tanzanian digital payments market will reach a transaction value of $4.43 billion by 2024. Of this, mobile POS payments are expected to dominate, reflecting a preference for flexibility and immediacy.
The World Bank also paints a promising picture of Tanzania’s economy, forecasting GDP growth of approximately 6% over the medium term. Key drivers include manufacturing, construction, tourism, trade, and financial services — all sectors poised to benefit from streamlined, digital payment systems.
Despite the policy’s lofty ambitions, skepticism abounds. “From my experience, I attempted going cashless but didn’t last a month due to the high transaction fees,” one user shared, echoing a common grievance. While the government’s intervention may eliminate charges at the POS level, other costs — particularly those imposed by mobile network operators (MNOs) — persist as a significant barrier. Indeed, in Tanzania, these operators often view transaction fees as indispensable revenue streams.
By the end of 2023, a total of 12.83 million payment cards had been issued to customers in Tanzania. Among these, debit cards dominated with 98.11% of the total, followed by prepaid cards at 1.77%, and credit cards accounting for just 0.12%. Visa and MasterCard were the leading card brands operating effectively in the country. Other card schemes, such as China UnionPay, Maestro, Cirrus, and American Express, had minimal presence in terms of transaction volume and value.
During 2023, the number of POS terminals increased by 18.25%, reaching 8,652, up from 7,317 in 2022. Both local and foreign transaction volumes saw significant growth, rising by 46.95% and 43.72%, respectively.
The value of local transactions increased by 43.04% to approximately $769.49 million in 2023, up from $538.31 million in 2022. Similarly, foreign currency-denominated transactions processed via POS terminals grew by 23.22%, reaching approximately $265.14 million in 2023, compared to $215.12 million in 2022. Notable foreign POS terminal in Tanzania include Paystack Terminal, DTB POS, Ecobank, UBA Tanzania, among others.
The new policy on card charges in Tanzania mirrors efforts by several other nations attempting to digitize their economies. India, for instance, introduced similar measures post-demonetization in 2016, with mixed results. While digital transactions surged, the lack of infrastructure and persistent cash reliance in rural areas diluted the impact. Tanzania’s policymakers may wish to heed these lessons, focusing on improving digital literacy and expanding POS infrastructure in underserved regions.