Cash crunch strains Zimbabwe's electronic payment facilities

A cash crunch has triggered a surge in the use of plastic money and overwhelmed point of sale (POS) terminals in retail outlets and wholesale shops.

The traffic jams at the retails outlets' electronic payment facilities has created a nightmare for operators and customers alike, with intermittent system breakdowns caused by congestion, electricity outages and an unreliable telecommunication network.

“It's a very serious challenge,” a banker told bizcommunity.com. “The POS systems are overwhelmed and it's a disaster because of the sudden surge in demand.”

Bizcommunity.com witnessed long queues of people trying to make payments through the POS facilities at most grocery shops in Harare's central business district, as well as in busy pharmaceutical shops and clothing outlets.

Some shop managers have created till points for people with cash, but these were either small or without customers.

The difficulty with payment cards is it takes time to process a transaction, and the faulty telecommunication system was resulting in many transactions being declined.

One banker, trying to explain the concept, said: “It goes through a switch, then to the bank which first checks if there is money in the account before relaying the information back to the POS facility at the shop then gets back to the bank to process the transaction.”

Cheques checked

Most retail outlets were declining cheque payments; cheque cards bore very little limits because they were not being reviewed in line with escalating inflation, which breached the 14 000% mark year-on-year for October.

One banker said because of the cash shortages, the Real Time Gross Settlement (RTGS) system was also getting overwhelmed.

“You've to understand that most companies are not accepting cash, so people are resorting to electronic payment systems because of the scarcity of cash,” he said, indicating that there were more than 75 000 RTGS payments per day.

Most customers are using debit cards for purchases in grocery stores, drug shops and clothing outlets. Most banks abolished credit cards – issued to allow cardholders cash advances from their accounts and to pay for merchandise at retail outlets – due to the high cost of money in the country, where interest rates for consumptive borrowing have crossed 900% per annum.

It was not immediately clear why the RBZ was starving the market of cash, but its governor, Gideon Gono, recently said financial institutions were receiving “significant cash inflows from their customers” but stashing them in their resident vaults and not at the central bank.

Financial institutions, Gono said, had “become key grey market deal facilitators”, fuelling black market activities.

One banker said they were getting “too little cash” from the central bank for their normal banking requirements.