There are many reasons why EcoCash will succeed in the current cash-shortage crisis. EcoCash is modeled around the mobile money framework and it is simply a payment solution that enables Econet customers to complete simple financial transactions such as sending money to loved ones, buying prepaid airtime, paying bills to various organisations, withdraw money, make online payments, save money, link to a bank etc.
Although EcoCash mobile money transactions are carried out electronically, the service still largely depends on cash that is funded into customer's wallets to enable the cashless transactions to take place. But however, with the current cash-shortage crisis, which has seen banks which are the institutions mainly responsible for injecting cash into the economy reportedly limiting clients to a mere $US50.00 or $US30.00 withdrawal per day overlooking the needs of the customer, and also cash transactions within the country's cash flow economy both in the formal and informal sectors remaining at a very low level since last year in April in 2016.
Banks, save stations, schools, traders, and other service providers are no longer depending on cash transactions in conducting their business. It becomes eminent to question whether a payment solution like EcoCash will be successful in providing it's intended primary services and also be able to live up to its goal which to help "create a cashless economy" that is meant to serve in the development of the country.
With that in mind, here are five reasons why EcoCash will succeed in the current cash shortage crisis.
The Support Framework of 'Plastic Money' by the local Government
Some of EcoCash services fall under the 'plastic money' category of transaction mediums and it has recently become the government's 'second biggest' measure after bond notes that are meant to ease the challenges of liquidity. It has a debit card and a virtual master card which allow users to transact in much like the traditional banking system where customers can withdraw money from ATMs or make payments on point of sale machines etc. The government has since started urging the general public to embrace plastic money ever since shortages started to occur in the early months of 2016 and remarkably the finance minister Chinamasa in the same year during a parliament discussion on the crisis said that there was a need to adopt point-of-sale machines in order to pave way for an increase in the conducting of cashless transactions. And along with his viewpoint, there has been numerous campaigns urging the general public to embrace plastic money.
The government has since established mobile money rules and regulations that are kept in check by POTRAZ (Postal Telecommunications Regulatory Authority of Zimbabwe) and the body has since realized the potential of the industry as can be noted in its mobile money reports that based on four different quarters of a year.
EcoCash is guaranteed competitiveness and profitability with regard to recognition and the favorable rules and regulations as compared to banks other mobile money transaction platforms. Prior to the cash crisis EcoCash had always managed to remain the country's leading mobile money transfer service in the country and as according to the POTRAZ October quarterly report EcoCash carried 98.5% of all mobile money transactions, as compared to its closest mobile money service providers competitors which include Net one wallet and TeleCash.
World widely, comparing with where there is little or unfavorable government support in the policy framework, mobile money solutions have failed. For instance, in India the attempts to popularize mobile money sail along with the wind because the government refuses to recognize the services in the main currency system, instead mobile money is only recognized as an alternative currency which was not to be taken seriously at all. But besides here in Zimbabwe, where there has been government support policy framework, the services have managed to become significant- for instance in Kenya, 93% of the public use M-pesa for most of their daily transactions disregarding transactions in cash during the process.
Adoption of a change of value system
Enough said of the growth of technology in the recent years, and it is amazing to take note that the value of money is no longer being kept hidden behind closed doors like those of a reserve bank, no does it require a backing front an 'Afrimex bank' back up or any form of bullion kept somewhere private as in the gold standard ages.
One of EcoCash main mission is to drive the national economy into a cashless state. Let's say it's established according to way mobile money operates, it wouldn't not make sense that the same service claiming to be cashless has its real value stored in cash value. So what the goal implies is that EcoCash will engineer its own way of creating value for electronic money for exchange with other local and international currencies. And the currency will be regulated by the government through POTRAZ and that means EcoCash will simply be a third party provider of a digital currency in the economy.
EcoCash for quite a while has been linked to the growth the virtual currency Bitcoin which operates almost similarly to mobile money but without depending on cash as the starting point for transactions to take place but a value system enabled by digital systems. And it is the main virtual currency behind the possibility of changing the storage of value of money from 'physical' places into digital ones through complex computer programs which have taken the world by storm, and it has been a proven success in the developed since it came around in 2010.
Bitcoin as I speak now is now recognized as a formal currency in a number of countries including here in Zimbabwe, and it is reported that in the UK one in seven people use Bitcoin or some other digital currencies as well as crypto currencies as their main transaction currency. Also, world widely, besides where its value is stored, Bitcoin also simply operates as an e-transaction method. Its users can send money from their mobile phones, use debit cards and master cards, a little more like with mobile money. And it has been linked mobile money services in quite a number of countries and in my predictions which are based on EcoCash link to the service will soon materialize into the full adaptation of the system.
EcoCash will simply take advantage of the country's emerging exceptionally skilled programmers and also leverage on the economic policy making influencers to help change the government's stance on the use of such a system (noting that the government had earlier on rejected the use of 'e-monies' due to the currencies' strong ties to pyramid schemes that took the country by storm last year).
Convenience offered by the EcoCash way of transacting
EcoCash according to economic analysts came as a solution to the challenge of sending money in between long distances. That was before it adopted other transaction services like merchant, linking to bank accounts etc. And that is why in it first stages of inception in 2011 it closely worked with Diaspora services which carried out most of the remittance transactions within the country and abroad. Locally, it largely replaced the inconvenient and insecure traditional ways of sending money like using post offices, using 'other people', and relying on bank transfers. Prior to that, those levels of convenience and security that were now being offered by transferring money using a phone was obviously unprecedented and that alone explains why the service was quickly adopted and almost became the mostly relied amongst the ways of sending money from one person to another. And people nowadays no longer go through the traditional ways of sending money. Despite the cash-shortage crisis (which only means people don't have a reliable access to cash when they need it, even when they have money). People still send money in between long distances. And as can be noted through transactions made through the transfer service as reported by POTRAZ in its 2016's last quarterly report which reviewed a survey carried out amidst of the cash-crisis, EcoCash cash ins which are allow the customers to fund their accounts to send money to faraway recipients increased in numbers by 2.3% (US$10. 377 712).
Other forms of conveniences, that its customers will continue to rely on include, linking banks account for timeless banking, paying service providers bills, buying from merchants etc. And also those with foreign links will still send and receive money using EcoCash with its services like EcoCash Diaspora , or linking to the e-payment systems like Pay pal to make international online payments for services and goods. Also small value services like purchasing airtime, and saving will remain-relied upon.
The Agent's-Merchant's Push
EcoCash has 25, 145 agents operating all over the country and to public knowledge, they have benefited from the business of transacting money in between EcoCash users in a time where the employment rate in the country is very high (infinitely estimated at 80% ever since 2008). And merchants who had experienced low business conversions due to in availability of a transaction medium have embraced the merchant service and to some extent are back in the full swing of business swing due to EcoCash' publicity of the service which enables customers to pay for services or goods to traders using money available in their mobile wallets.
Also, while EcoCash customers had complained of cashless agents who are plighted by the shortage, or who hold on to cash in regard to the 'bond note panic', they have since adopted profiting methods like adding 10-15% fee that is deducted from what the customer will cash-out. For example, if a customer wants US$10.00 from an agent, they have to cash out an amount of US$11.00 and leave the agent with US$1.00 as it is 10% of US$10.00. And on top of that the agent will still receive EcoCash cash out fee which is US$0.30c from the customer’s wallet and in total the agent would have earned US$1.30 from just a ten dollar transaction. That had helped the agents survive in the business as well as stay profitable despite the customers bemoaning the situation. And as for merchants, there is a rapid and significant growth in numbers due to advantages of using 'plastic money' for business in time where customers can hardly access their cash to buy goods or services. Point-of-sale machines have been adopted for use with the EcoCash debit cards and master cards which are now easily attainable by the public.
Leveraging on the top earning industries
Companies, organisations and other huge systems in the economy both from the formal and informal sectors have adopted EcoCash newly found payroll and bulk payment service. The service is meant for bulk payers which are defined as organizations that make bulk payments of money to recipients using EcoCash as a platform. Recipients use their mobile numbers as accounts for receiving money, and the service is said to be ideal for payroll administration, aid distribution etc.
The service will cut out banks as the main as the major payment option due to the convenience and the lower prices of transactions offered by EcoCash services in general. As companies in the country are some of the biggest earners of foreign currency (which is low hence to some extent the cash crisis), which is then distributed into the economy by various means, recipients of the payments would be coerced to receive their remunerations in their EcoCash accounts and eventually carry out trade using the service. Also the service will be welcome by the members of the businesses in the informal sector who make up a significant figure out the 70% of the country's unbanked population as that will help them in things such as loan applications and through all the way of formalization of their businesses through the credible registration processes that are done at EcoCash accounts registrations.
To conclude, EcoCash will be successful due to the support framework enabled by the government, possible adoption of a change of value system, customer's continued reliance on convenience offered by its services, the agent's and the merchant's push to its services, and its ability to leverage on the earning sectors among other various reasons.
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