The Reserve Bank of Malawi (RBM) says new regulation will now make it mandatory for all licensed businesses to deploy at least one electronic payment point in their premises.
But the Chamber of Small and Medium Enterprises fears the move will drive up the cost of doing business.
In an e-mail response, RBM spokesperson Mbane Ngwira, however, said the regulation is yet to be gazetted.
“We have come up with a regulation making it mandatory for all licensed businesses to deploy at least one electronic payment channel in their premises.
“In addition, we have issued the directive on the operation and authorisation of digital financial services in the country which we hope will spur competition in this space,” he said.
RBM statistics show that between January and March this year, 64.5 million transactions were processed in all the formal payment channels, both large value and retail, representing a marginal decrease of 2.3 percent from the fourth quarter of 2018.
Similarly, the corresponding total value of transactions declined by 5.7 percent to a total of K6. 8 billion.
In contrast to previous quarters, transaction flows in retail digital financial services (DFS) channels experienced a reduction in both total volume and value processed as they declined by two percent and three percent to K63.2 million and K771.7 billion, respectively.
However, when these figures are compared to a similar period in 2018, the total volume and value of retail DFS transactions showed significant upward movement as they rose by 60 percent and 86.8 percent, respectively.
While the development has the potential to improve cashless transactions and improve financial management, Consumers Association of Malawi (Cama) executive director John Kapito said poor connectivity could threaten success of the initiative.
“The biggest challenge we have noted is about connectivity and if you go to shops, they do not have enough devices. If they have them sometimes they make a lot of mistakes and consumers have been complaining.
“RBM has to invest more in consumer and operators training on how they can use the gadgets and the importance of cashless transactions,” he said.
Chamber of Small and Medium Enterprises executive secretary James Chiutsi noted that while there is need for ample time for implementation, many small businesses may not afford the cost of point of service systems, unless if they are offered better credit terms by suppliers.
Earlier, Finmark Trust, an independent non-profit trust, observed that Malawi’s number one priority of expanding the reach of digital payments has grown between 2015 and 2018.
It said that the population of Malawian adults with mobile money accounts has grown from 8.4 percent to 42.8 percent within three years to 2018 despite the target being 10 percent in 2017.