What you need to know:
- The Bank of Tanzania is introducing a new payment system that will create a common shared platform for payments from different channels including banking and non-banking financial systems.
- It will promote use of electronic payment and hence reduce cash usage in the economy.
Dodoma. The Bank of Tanzania (BoT) is expected to launch a new payment system to be known as Tanzania Instant Payment System (TIPS).
If all goes according to plan, the system will become fully operational beginning from January next year.
When operational, TIPS will have created a shared platform for payments that originate from and through different channels, including banking and non-banking financial systems. It is also designed to promote the use as a matter of course of electronic payment. In this way, the system will reduce to a very large extent the need to use cash for assorted transactions in the economy.
Preparations for the envisaged system were first put under way in June this year, and it is slated to be rolled over to financial products and services providers in January next year, a mere fortnight away.
But, the system will formally be launched in a brief ceremony in June 2020.
The BoT acting director for National Payment System, Ms Lucy Shaidi, said the system enables instant payment in real time.
The system operates in such a way that when the payer initiates payment, all concerned are informed within a few seconds whether or not the payment has successfully reached the payee’s account.
“The aim is to ensure that customers of all payment services in the banking and non-banking sectors are on one platform,” she said – adding that the system will operate in card-based payments, mobile banking, e-money schemes and internet banking.
The central bank official further explained that the relatively innovative system aims to promote interoperability of digital financial services amongst payment service providers by implementing an efficient interoperable platform that can be readily accessed equally by service providers.
The system is a person-to-person transfer pay to mobile phone number or bank account, as well as government-to-person or business payment batch file with disaggregation by platform.
“The system is cost and time effective, as well as fast and secure. For service providers, it is a single-point of integration which greatly reduces operational costs,” Ms Shaidi explained.
Currently, the country uses the Tanzania Interbank Settlement System (TISS), and the East Africa Cross-border Payment System (EAPS), she said – stressing that the cost of making transactions via these two systems is very high.