Zimbabwe: Econet Offers Banks Poisoned Deal

JAN 21,2014.

THE HERALD.

Econet Wireless Zimbabwe is under pressure to revise its position regards to the opening up of USSD gateway amid indications banks are planning not to transact with its banking unit Steward Bank on the RTGS platform. The mobile phone operator is currently entangled in a bruising feud with banks over its reluctance to entirely open up its network to allow them to roll out mobile money services to clients.

Econet argues that the gateway to mobile phone users is not the network, but its mobile money transfer service, EcoCash, which all financial institutions are free to use.

However, Econet, after discussions with the banks and the RBZ's National Payments Unit, following pressure exerted on Steward Bank, agreed to open up the USSD gateway to the banks using an agreement crafted under Bank Electronic Airtime Retail (BEAR).

The agreement laid out the conditions for opening up the gateway including transaction charges and settlement conditions.

Well placed sources told Herald Business that bankers expressed concern over the structure, which they say is heavily skewed in favour of Econet. "In general the proposed agreement gives overwhelming powers to Econet to control the product form as well as the leverage to terminate the relationship at their convenience," said a source in the banking sector.

Under the agreement, Econet has the unilateral power to suspend or terminate services. It also accords the firm power to change tariffs at short notice, which would make future pricing structures of mobile banking products indeterminable.

Econet wants to charge banks US30 cents per transaction and had suggested daily settlements of amounts due. Econet went further and gave itself the right to approve advertising collateral to be used in communicating with subscribers. The company also wants to define or prescribe each bank's definition and packaging of mobile banking and content distribution services with regards short codes.

The agreement is for a year. However, some bankers have said that the duration of a year is too short for a channel of its nature and are suggesting a longer term minimum. Sources said Econet was questioned why it would bring in an agreement they had initially crafted in 2012 which was meant to push airtime sales through banks.

"There is no way any bank can accept the agreement in its current form. It has to be revised further. These conditions are just crazy and unacceptable to say the least."

The sources say the situation, if not resolved, promises to get messy, as indications are that the banks would stop transacting with Steward Bank on the RTGS platform. Steward Bank is yet to be given the go-ahead to use ZimSwitch.

The bank's application to join ZimSwitch was initially accepted by the board, but it was stopped by the bankers who felt parent company Econet was not being fair over its platform. According to Steward Bank communication to the Herald Business, ZimSwitch is in the process of completing the integration.