Restrictions to curb further spread of Covid-19 have increased consumer uptake of digital financial services (DFS), the national payments systems report for the fourth quarter of 2020 from the Reserve Bank of Malawi (RBM) shows.
The adoption of the services, according to consumers, has been accelerated by the Covid-19 pandemic which is restricting physical transactions, including business hours, as a way of curbing the spread of coronavirus.
In the fourth quarter of 2020, the RBM report showed that the volume of retail DFS transactions rose by 14.7 percent to 149.5 million whereas the value of transactions increased by 6.2 percent to K2.1 trillion. during the same period.
Relative to the corresponding period in 2019, an improvement was
observed in the performance of DFS transactions as the volume rose by 66.9 percent whereas the value increased by 52.6 percent.
The RBM report explains that the outturn reflects increased customer preference for DFS channels owing to their convenience and efficiency as opposed to cash and other paper-based payment instruments.
“The trend largely reflected the seasonal increased economic activity associated with the festive and end of year period,” reads the report.
Commenting on the issue, Consumers Association of Malawi executive director John Kapito admitted that there has been huge consumer demand for DFS due to the nature of the Covid-19 pandemic.
He attributed the trend to issues to do with physical distancing, self-isolation and working from home which have contributed to the high use of the digital financial instruments.
“As we experience more lockdowns, we expected the mobile money operators [MNOs] and the Reserve Bank of Malawi to consider removing some of the charges that consumers pay to transact,” said Kapito.
Information and Communication Technology Association of Malawi president Bram Fudzulani said the pandemic has proved that digital financial inclusion is crucial on cash out services.
He attributed the increase and growth in digital financial services transaction to the policy interventions the central bank introduced in the first quarter of 2020 that saw financial service providers reducing transaction fees by 40 percent.
Said Fudzulani: “There is an opportunity here and I hope policymakers are following these statistics to come up with policies that work for the masses, if we talk about financial inclusion strategy as a country.
“Transacting electronically has a lot of benefits besides the fact that consumers reduce the risk of moving with huge sums of money which brings inconvenience”.
Last year, RBM in collaboration with MNOs scrapped off user service fees while commercial banks slashed the fees to enhance DFS transactions.