Tanzania caps transaction fees to promote digital financial inclusion

Bank of Tanzania (BoT) governor Emmanuel Tutuba confirmed this to The Citizen, stressing that the ceiling responds directly to public outcry over high transaction deductions.

“The policy was introduced with a clear objective and we remain firmly on course to achieve it,” he said.

Mr Tutuba expressed confidence that the reduction will encourage wider usage of digital payment platforms by lowering barriers for ordinary users, particularly in rural and underserved areas.

He said service providers are now required to align their pricing models with the new directive, ensuring customers are not charged beyond the set limit.

This is expected to not only cut costs but also enhance consumer protection, financial security and trust in digital ecosystems which are core pillars in BoT’s long-term strategy to modernise Tanzania’s financial infrastructure.

Delivering the Budget Speech in Parliament last month, Finance minister Mwigulu Nchemba highlighted the government’s ongoing initiatives to expand financial access.

Central to this is the rollout of the Tanzania Instant Payment System (TIPS), a digital platform designed to facilitate real-time, secure transactions across financial institutions.

He said to further ensure affordability for citizens, the BoT has introduced guidelines for reducing transaction costs between banks and mobile network operators, as well as from mobile networks to banks.

These costs, previously exceeding Sh12,000, have now be capped at Sh5,000. These measures are intended to protect consumers and make financial services more accessible and affordable.

These reforms follow years of frustration among citizens, many of whom abandoned mobile money services due to excessive fees.

The levies, initially introduced to boost state revenue, had the unintended effect of marginalising vulnerable groups such as small traders, farmers and students who relied heavily on mobile wallets.

The financial overhaul also includes the 2024 introduction of the “Guidelines on Fees and Charges for Banks and Financial Institutions,” mandating transparent pricing, fee justifications and the creation of Universal Savings Accounts free from maintenance charges.

A senior lecturer at the Dar es Salaam University College of Education (DUCE), Abel Kinyondo, explained that this is a standard expansionary monetary policy.

“To stimulate the economy, the flow of money must be encouraged. The recent cuts in deductions are intended to return money to the people, ensuring liquidity and circulation. With increased circulation, a ripple effect occurs, enabling individuals to spend more confidently and freely, without fear of using financial institutions, thereby enhancing financial inclusion,” he said.

Reports show that since July 1 this year, service providers have been sending SMS messages to customers informing them that starting from the 2025/2026 fiscal year, there will be new service charges following government reforms and service improvements.

“The good news is that the government has removed some transaction fees, so there are no longer any charges when depositing money into your account through the service provider,” read part of the message.

The messages further stated that for sending money via service providers to registered users, other networks, or bank accounts, the fees have been reduced to make everyday life easier for Tanzanians.

The Citizen conducted a survey to determine the new charges and discovered that while initially a customer was charged between Sh4,000 and Sh6,000 for sending Sh100,000 from one service provider to another, the charges have now dropped to Sh1,440.

According to the current charges, sending money from one service provider to another for amounts between Sh100,000 and Sh199,999 is just Sh1,440.

Meanwhile, before the new charges, a person had to pay as much as Sh7,500 to send the same amount (Sh100,000 to Sh199,999) from one bank to a mobile company, whereas currently it is less than Sh5,000.