Tanzania: Digitization of 'Bodaboda' Payment Platform Enhances Financial Inclusion

ACCESS to formal financial services for the motorcycle transport operators commonly known as 'Bodaboda' that will ultimately push up financial inclusion has been made possible, thanks to the partnership between NMB Bank and Mastercard digital payment platform.

According to Bank of Tanzania (BoT), the use of mobile money services has contributed to increase the country's financial inclusion, which the central bank's internal study shows has currently crossed 70 per cent from 65 per cent in the last two years.

The second National Financial Framework 2018/22 shows the reduction in the usage of informal financial services to 7 per cent in 2017 from 16 per cent. Ten years ago, 85 per cent of the world's transactions were in cash and checks, and 2.5 billion people were unbanked.

Furthermore, over 1.7 billion adults worldwide do not have a bank account, but among them, 1.1 billion have a mobile phone.

The free mobile payment solution, Mastercard QR Cashless Pay platform is expected to accelerate safe digital payments and financial inclusion among bodaboda riders.

NMB is planning to reach over 75,000 in one year alone and plan to reach at least two million Boda Boda drivers in few years.

Over 1000 bodaboda riders have been trained so far on the use of the Instant QR payment on mobile highlighting on its simplicity, convenience and other benefits. The Minister of State, Prime Minister's Office responsible for Policy, Parliamentary Affairs, Labour, Employment, Youth and the Disabled Jenista Mhagama said at the launch of the platform that the bank's move will help to formalize the Bodaboda business.

"What you are doing today, has the government's go ahead as it will help especially the youth to take their job seriously and develop themselves while making a positive contribution to the country's economy," she said.

Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighbourhoods where no bank had ever established a branch.

Digital financial services show great potential to give previously 'unbanked' people the ability to save, make payments and access credit and insurance allowing them to manage an irregular income stream, plan for the future, recover from economic shocks and natural disasters and find new ways to earn a living.

Developing countries are capitalizing on the widespread use of mobile phones to bring all people within reach of lifechanging financial services and out of poverty.

Mastercard QR is a modern, secure and easy digital payment solution, which allows customers make payment by scanning a QR code or a merchant pay number using the USSD option on their mobile phone.

The Mastercard QR Cashless Pay Solution will not only make payment more convenient for bodaboda customers who can now use their feature or smartphones to pay their fares, but also enable the riders save and track their income as payments are made directly into their NMB Account.

On his part, NMB Bank's Acting Managing Director Ruth Zaipuna said the move aims at helping boda-boda riders enjoy banking services while enhancing the safety of their money as well as their own security.

The service will first be launched in Dar es Salaam and then rolled out in Mwanza, Arusha, Ruvuma, Dodoma and Mbeya in the coming weeks.

This payment solution, Mastercard QR, will assist bodaboda riders in growing their business whilst reducing the cost and risks of handling cash.

It will also allow bodaboda riders to be in complete control of their payments thereby increasing efficiencies in payment.

For NMB, digitization of Bodaboda payments is a key component of NMB's drive to enhance financial inclusion among the communities and customers.

"With Mastercard QR, we are providing an ef ficient means for Bodaboda riders to receive payments from all MNOs (Mobile Network Operators) and commercial banks customers that are Mastercard QR enabled. We all understand the obvious security risks that come with handling cash," said Ruth.

Area Business Head for Tanzania and East Africa, Mastercard, Frank Molla said the platform offers convenient, secure and hassle free rider - passenger experience through our cashless proposition.

Mr Molla further said "Mastercard is always working with partners to provide solutions that enable consumers enjoy seamless access to payments and a superior experience.

"We are proud to have partnered with NMB in leveraging our technology to launch Mastercard QR in this integral aspect of the transport sector. With a significant number of people using bodabodas daily, introducing a seamless cashless solution to the riders provides substantial impact on driving inclusive growth as well as building a digital economy."

To pay for a bodaboda ride, the passenger simply scans a QR code on NMB mkononi app and can also pay with a feature phone by dialing *150*66# to access the NMB Mobile menu, selects payment services and selects Mastercard QR.

The BoT said recently that digital payment system has enhanced regulatory capabilities by providing transparency and enabling the bank to better performs its oversight responsibilities while ensuring the systems safety.

The statistics show that 96 per cent of adult population possess mobile phones and can access financial services. The electronic payment system has supported efforts to create cashless society, which is most secure and cost effective.

Before the use of mobile money services were introduced, there were less than six million adults with bank accounts.

But, mobile money services have increased users of financial services, accelerating economic growth. Studies are currently underway to explore ways on how best the payment system can be used in various products.

According to BoT Monetary Policy Statement 2019/ 20, the utilisation of interoperability capability in mobile money services rose to 146.5 million transactions involving 4.88tri/- in the April-July period last year from 80.7 million transactions worth 3.30tri/- during the corresponding period in the 2017/ 18 fiscal year, representing the 81.6 and 47.7 per cent rise in volume and value, respectively.

The interoperability of mobile financial services has contributed to overall growth of total mobile money transactions by 15.4 per cent in volume and 15.6 per cent in value during the period under review.