E-payment instruments and their value
Over the years the market has undergone a metamorphosis in terms of payment instruments. In the olden days, barter system whereby goods or services were exchanged in payment for other goods or services. This enabled people exchange goods they didn’t need for those goods or services they needed most. If someone wanted a cow they could exchange it for maize, spices, salt and so on. The barter system enabled people to transact without necessarily using cash. However, such a system had its own disadvantages in the sense that it was difficult to find parties with mutual needs for goods and services. It was also difficult to find a fair unit of measurement for the exchanged items. These limitations as well as other challenges that people faced in the barter system were somehow reduced when cash was introduced as a means of payment.
Cash is perhaps the oldest payment instrument of all time and its usage is straight forward. Its usage does not require any codes or anything like that. However, cash is costly to produce and studies have shown that cash usage is higher in countries that are still developing like Malawi. Besides, cash can also be easily lost or stolen mainly when not kept in the bank. Cash can easily and quickly lose value in the case of devaluation. Unless it is an internationally recognised currency like the US dollar, cash is limited on how it can be used outside its own jurisdiction where it is commonly used as an acceptable means or a legal tender.
For instance, you cannot use kwacha in USA or any other European country since the kwacha is not as stable nor is it a well-recognised currency outside Malawi like the dollar. Some payment system expert once said a cash based society is a diminished society simply because the informal economy runs on cash outside of the banking and official economy systems. When cash remains outside the banking system the possibility of supplying productive capital to the economy is muted, government is deprived of tax revenue needed for investment and criminal activity can happen without any trail.
However, many people are not aware that there are other modern payment instruments that have emerged since the barter and cash systems. These modern payment instruments have far better advantages. It appears more advanced economies in the west and east have embraced all kinds of modern payment instruments while in Africa, there is still room for improvement. Some studies do suggest that cultural aspects that refuse departing from the status quo, ignorance and costs involved have made the assimilation of modern payment systems a slow process in Africa.
However, the consequences of sticking to the old ways of receiving and making cash payments is very evident in our banking halls that have long queues during month ends and festive seasons. Worse still is the fact that some banks have grown noisy while some look more like clinics on busy days. The slow uptake of these modern payment systems by customers has even made banks invest a lot of money in brick and mortar models in offering banking services.
Modern payment instruments include mobile payments services being offered by TNM Mpamba and Airtel Money. Mobile banking also involves usage of the mobile phone to access traditional banking services using the mobile phone. Internet banking is also another modern payment channel where customers can pay and receive money online. Using the modern payment instruments, customers can easily, expeditiously pay bills, transfer and receive money. These channels and many more, if faithfully utilised by more people would lessen traffic to the banking halls and would free banks of the need to employ more staff. Online services and mobile banking services would also afford customers the pleasure of undertaking traditional banking transactions in the comfort of their homes.
Unlike cash and the barter system, the modern payment instruments involve a small fee in their usage. However, the fee cannot be compared to the convenience, speed and efficient services these modern payment instruments offer.
In its effort to promote these modern payment instruments, the RBM hosted a financial literacy week from December 9 to 13 2012 at Comesa Hall in Blantyre where, among other things, the RBM promoted these modern payment instruments. The RBM also disclosed how it regulates these modern payment instruments to ensure they are safe and efficient for customers.
Telecommunication companies and internet service providers should not discourage people from using these channels by ensuring their networks are working all the time as their infrastructure enable these modern payment instruments to operate. Payment systems operators or providers have also a task to promote these instruments to the general public who for some various reasons are stuck excessively in using cash.
Changing mindsets of consumers who have used cash for years is not an easy task; it requires hard work and patience.
