Tanzania Abandons Fees for Card Transactions to Encourage Digital Payments, While Mthuli's 2% Tax Hinders such Transactions in Zimbabwe
In recent years, Tanzania has seen a significant growth in digital payments, propelled by infrastructure readiness and government policies encouraging electronic money transfer systems. This shift towards a cash-lite economy is a road that Zimbabwe once walked, and now, the question of what would happen if Zimbabwe scrapped charges on digital payments, like Tanzania, is under discussion.
In Tanzania, digital payments have grown rapidly, with 48.4% of the population using digital platforms. The Tanzanian government has fostered a digital payment environment by minimizing transaction costs, which helped increase the use of mobile money and bank transfers, facilitating easier commerce and social transfers.
If Zimbabwe were to follow suit and remove charges on digital payments, it could significantly impact its economy. The removal of these charges would likely increase digital payment adoption, boost financial inclusion, promote economic activity and formalization, and reduce informal cash handling risks and costs.
Increased digital payment adoption would make mobile money and online payments more affordable for consumers and businesses, reducing reliance on cash. Boosting financial inclusion would encourage more unbanked individuals and small businesses to participate in the digital economy, similar to Tanzania’s success in scaling digital transfers to vulnerable populations.
Promoting economic activity and formalization would improve efficiency for merchants and consumers, facilitating smoother trade and government-to-person transfers. Reducing informal cash handling risks and costs that come with physical currency management in Zimbabwe’s volatile economy would also be a significant benefit.
Tanzania’s experience shows that removing or significantly lowering transaction fees can catalyze a digital payments ecosystem that supports broader economic participation and poverty alleviation, driven by strong digital infrastructure and policy frameworks.
However, the exact impact in Zimbabwe depends on several factors such as digital infrastructure maturity, user trust, regulatory support, and interoperability of payment systems. Unlike Zimbabwe, South Africa has seen rapid consumer shifts towards digital wallets and bank payments partly because of advanced fintech ecosystems—not just fee removal but also service innovation and security.
In summary, scrapping digital payment charges in Zimbabwe has the potential to stimulate economic growth and inclusion by lowering barriers to digital transactions, similar to the successful scaling of digital cash transfers and mobile money in Tanzania backed by infrastructure and policy readiness. Yet, Zimbabwe may need complementary investments in digital infrastructure and consumer education to fully realize these benefits.
This assessment is based on the broader context of African digital payment trends and infrastructure readiness reported in the search results. No direct study comparing Zimbabwe and Tanzania on this scrapping charge policy was found, so the comparison relies on analogous evidence and general financial inclusion literature.
It is worth noting that cash transactions in Zimbabwe do not incur the same costs as digital transactions, due to the government's imposition of a 2% Integrated Money Transfer Tax (IMTT) and additional charges from banks and payment providers. The goal of Tanzania's cash-lite initiative is to enhance security, transparency, and convenience in transactions.
As we look to the future, it is clear that the potential benefits of a cash-lite economy are significant. However, careful consideration must be given to the specific circumstances of each country, including digital infrastructure maturity, user trust, regulatory support, and interoperability of payment systems, to ensure a successful transition.
The removed charges on digital payments in Tanzania have contributed to increased adoption, financial inclusion, and economic activity, facilitating easier commerce and social transfers (finance). If Zimbabwe follows suit, it could likewise promote a cash-lite economy, boosting the digital economy and supporting broader economic participation (business, finance). However, the success of such a change depends on factors like digital infrastructure maturity, user trust, regulatory support, and interoperability of payment systems (technology).
