VISA rev­enue in Zam­bia to drop as Na­tional Switch goes live

Zambian Business Times - - BUSINESS REVIEW -

Global pay­ments com­pany Visa, the sec­ond-largest card pay­ment com­pany to China Union Pay – CUP on a global level is ex­pected see a dras­tic drop in its rev­enues from the Zam­bian mar­ket.

This fol­lows the con­fir­ma­tion that Zam­bia will roll out its na­tional switch be­fore end of 2018. Dur­ing her 2019 bud­get pre­sen­ta­tion, Fi­nance Min­is­ter Mar­garet Mwanakatwe stated that “to fur­ther re­duce the cost of financial ser­vices and mod­ernise pay­ment sys­tems, the Na­tional Financial Switch will be op­er­a­tionalised”.

She fur­ther stated that “this will fa­cil­i­tate the in­te­gra­tion of au­to­mated teller ma­chines, points of sale ter­mi­nals, mo­bile and in­ter­net bank­ing trans­ac­tions be­tween par­tic­i­pants. The pro­ject is being im­ple­mented in two phases.

The Fi­nance Min­is­ter con­firmed that “the first phase will fa­cil­i­tate the set­tle­ment and clear­ance of Au­to­mated Teller Ma­chines and Point of Sale trans­ac­tions, and is ex­pected to go live by the end of this year 2018. The sec­ond phase will cover mo­bile pay­ments and is ex­pected to go live in 2019”.

The cur­rent set-up in Zam­bia be­fore the im­ple­men­ta­tion of the Na­tional Switch is that across banks Au­to­mated Teller Ma­chines – ATM and Point of Sale – POS trans­ac­tions are routed via mostly Visa lead­ing to a higher trans­ac­tion cost and even­tual forex out­flow even for lo­cal trans­ac­tions.

The im­ple­men­ta­tion of the Na­tional Switch will re­sult in all lo­cal trans­ac­tions being switched lo­cally with­out the need of Visa, Master­Card or any other global pay­ments com­pany.

This is ex­pected to re­sult in lower trans­ac­tion costs and some sav­ings in forex out­flows which would have ac­crued to erst­while VISA trans­ac­tions. Visa has the high­est card and trans­ac­tions pen­e­tra­tion in Zam­bia.

How­ever, Visa, Master­Card, China Union Pay and other in­ter­na­tional financial trans­ac­tions switch­ing com­pa­nies will con­tinue but only ap­ply when a card or trans­ac­tions is cross bor­der, that is when one trav­els out­side Zam­bia or comes to Zam­bia with a card is­sued from another coun­try.

The Na­tional Switch is also ex­pected to pro­vide a plat­form for fa­cil­i­tat­ing in­ter mo­bile money funds trans­fers and trans­ac­tions cur­rently be­tween MTN, Air­tel and Zam­tel mo­bile money ac­count hold­ers at a lower per trans­ac­tion cost.

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