Lack of switch costs Eswatini E360m annually
MBABANE – Lack of technology used in contactless payments or credit card swiping is costing the country at least E360 million annually.
This means that in the last three years, Eswatini has lost at least E1 billion as a result of not having the technology.
Known as the payment switch, this technology is a tool that facilitates communication between different payment service providers.
According to mp2pfintech.com, the switch typically provides a merchant-driven rules-based authorisation and switching solution. It dynamically routes payment transactions between multiple acquirers and payment service providers.
Payment
It sits at the centre of the payment processing and dynamically acquires, routers, switches, authenticates, and authorises transactions across multiple payment channels.
Eswatini currently does not have this technology and for every swipe or contactless payment, South Africa gains a certain percentage as the technology is operated in the neighbouring country.
In a submission that was made by the Royal Science and Technology Park (RSTP) Chief Executive Officer, Vumile Dlamini, in Parliament before the Public Accounts Committee, he revealed that in 2019 alone, Eswatini lost about E360 million due to lack of this technology.
This issue came to the fore as Dlamini was making his submissions on initiatives that could see RSTP generating income and lessening its heavy reliance on government. The CEO stated that the entity was capacitated to have this technology but financial challenges were the main barrier in achieving this.
This is because for RSTP to have this technology set up, it would entail having the disaster recovery site, which the entity still does not have due to the current economic challenges that have seen the entity getting inadequate funding from government.
A disaster recovery (DR) site is a facility an organisation can use to recover and restore its technology infrastructure and operations when its primary data centre becomes unavailable. Dlamini said currently, the entity was building the secondary site of the disaster recovery and until it was complete, the entity was unable to fully implement its mandate and other entities were not giving them business due to the incomplete disaster recovery site.
He stated that currently, the institution had a primary disaster recovery and their current clients used them as their backup, but they could not offload all their data to them because of the incomplete disaster recovery site.
“One of the key initiatives that we should have started working on right now if the situation was permitting, is the issue of the switch. When one makes a transaction, it is approved in South Africa. We discovered that in the absence of the switch, we are losing about E360 million to South Africa, money that we should be benefitting as a country,” he shared.
Dlamini said the project was supposed to be 24 to 36 months, but when they got the budget from government for the project, it was inadequate and the implementation plan was disturbed so much that the project would now take longer.”
Technology
RSTP Senior Communications Officer Senzo Malaza also shared that as much as the entity had the capacity to have the technology, the biggest let down was the incomplete disaster recovery site. He explained the technicalities of the switch, sharing that it also required a merchant, which was any local bank and a regulator, which was the Central Bank. In the case of the country, EswatiniBank could be the merchant and Malaza revealed that they had all the requirements for the technology to be set up locally.
“In short, we have all that is required and we are well capacitated to have the technology at RSTP, but we need to complete the disaster recovery site,” he said.