BoT, UNDP to address crossborder e-payments challenges

DAR ES SALAAM: THE Bank of Tanzania (BoT) in collaboration with the United Nations Development Programme (UNDP) has intensified efforts to promote digital payment systems among cross-border merchants, aiming to reduce reliance on cash transactions in the region.

The initiative is part of a broader effort to strengthen digital transaction for micro, small and medium enterprises (MSMEs) engaged in cross-border trade within the East African Community (EAC) by addressing structural bottlenecks and improving the efficiency across borders.

BoT Deputy Governor (Financial Stability and Deepening) Ms Sauda Msemo said yesterday in a high-level national dialogue on responsible cross-border digital merchants’ payments that the move comes as most transactions at borders still conducted in cash despite increased access to financial services, largely due to lack of interoperability among payment systems.

“Digital payments for cross-border trade are critical as they enhance efficiency by ensuring payment certainty, improving security and saving time,” Ms Msemo said.

However, adoption remains low due to challenges such as high and non-transparent transaction fees and other lack of interoperability among payment systems and foreign exchange constraints.

“Through this dialogue, we aim to identify these barriers and come up with practical solutions to improve and scale up the use of digital payment systems,” said the Deputy Governor.

The dialogue staged focuses on reviewing findings from studies conducted at border areas of Namanga, Mutukula and Rusumo, as well as major commercial hubs such as Arusha, Bukoba and Mwanza to identify existing challenges and agree on priority actions and establish an implementation strategy for secure, affordable and inclusive digital payment solutions.

Tanzania has already developed digital transaction systems with a regional outlook but there still a challenge interoperability between the regional systems, calling for faster resolutions to make them work under one umbrella.

According to her, once integrated, the systems could enable member states to conduct transactions using a single currency framework, significantly lowering transaction costs.

UNDP’s Deputy Resident Representative Mr John Rutere said the dialogue aims to address challenges that continue to push traders toward cash usage instead of digital alternatives, especially among crossborder merchants.

“We expect this dialogue to produce an actionable plan to resolve these challenges,” he said.

He said that traders still face hurdles such as complex transaction processes and foreign exchange losses which often discourage them from using digital platforms.

However, the Tanzania Chamber of Commerce (TWCC) Chief Executive Officer, Ms Mwajuma Hamz,a urged that despite ongoing government and stakeholder efforts, small-scale traders particularly those operating at border areas don’t engage in digital payments due to fears over transaction authenticity, with concerns that confirmation messages can be falsified.

She said some traders worry that payment notifications may be fake, as there are cases of fraudulent transactions as a result, many prefer cash because it provides immediate assurance.