BoT bets on competition to lower mobile money cost

DODOMA: THE government relies on competition—not price controls—to bring down the cost of mobile money, even as transaction fees remain a concern for users.

Minister for Finance Ambassador Khamis Mussa Omar told the National Assembly yesterday that the Bank of Tanzania (BoT) has licensed 113 payment service providers as of March 2026, to boost competition and improving efficiency in the country’s electronic payment systems.

The approach signals the government’s preference for a liberalised market model, despite calls from lawmakers to impose fixed caps on person-to-person transaction fees.

Responding to Kinondoni MP Tarimba Abbas, Omar said regulators are instead focusing on targeted interventions, such as fee caps on interbank transfers and transparency requirements, while allowing providers to compete on pricing.

“The Bank of Tanzania continues to assess transaction costs and take appropriate measures to reduce charges without compromising system stability,” he said.

The central bank has already moved to contain costs in key areas.

In April 2024, it capped interbank transaction fees via instant payment systems and the Tanzania Automated Clearing House at 2,000/- per transaction.

A year later, it introduced further reductions on transfers between mobile wallets and bank accounts through the Tanzania Instant Payment System, including a 5,000/- ceiling on high-value transactions.

Still, the absence of a universal price cap means users remain exposed to varying charges across providers a sticking point for policymakers concerned about affordability.

Omar said both senders and recipients continue to be charged because both benefit from the service, pushing back against proposals to eliminate fees on one side of transactions.

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Instead, the regulator is betting that increased competition combined with mandatory disclosure of charges will pressure providers to lower prices over time.

The strategy highlights a delicate balancing act: expanding financial inclusion and keeping costs low, while preserving incentives for private investment in digital infrastructure.

With mobile money now central to Tanzania’s economy, how quickly competition translates into cheaper transactions will determine whether the country’s digital finance push delivers meaningful gains for consumers.

The MP also proposed that the government consider eliminating charges on one side of transactions, suggesting that only senders be charged while recipients withdraw funds free of charge.

In response, the minister said both senders and recipients are currently charged because both benefit from the service, but assured Parliament that the proposal has been noted for further consideration.