Rwanda: Moving Towards a Cashless Economy

Imagine going to a supermarket, or better, a local shop in your neighborhood, to make purchases or being able to pay your debts without cash but a weightless automated card.

It sounds far-fetched but this is what is happening in developed economies. The use of automated cards for money transactions is sweeping across the world so fast that in some places, it is now considered illegal to be found in possession with large amounts money.

With a simple bank ATM card or credit card in a wallet as a replacement for currency, an individual can go about their usual spending drifts, this time more conveniently and more reliably.

This is the dream that the National Bank of Rwanda has for the country- a cashless economy.

The central bank is spearheading process to transform Rwanda into a cashless economy and has implemented a number of significant structures, particularly, the Rwanda Integrated Payment Processing System (RIPPS), which supports banks in building strong backbones to sustain automated money transfers.

NBR also launched similar supporting systems as well as plans to integrate it to regional systems to make electronic money payments even more convenient for both nationals and foreigners.

A visit to Simba Supermarket pointed out quite a supplementary story; out of every ten clients, one will use an automated card to clear their receipts, and at Nakumatt, it is quite similar.

However there remains a big challenge- not all cards are accepted.

"We get several clients with MasterCard but we do not accept them because the systems we have in place do not accept MasterCard. We accept visa cards and other credit cards but not MasterCard," The Manager of Nakumatt, Stephen Makau said in an interview.

To improve the situation, several banks such as Bank of Kigali, Equity and BCR are in the process of upgrading their systems to accept MasterCard as well.

"We plan to launch MasterCard very soon. We have already acquired Visa specialty and are working closely with them to ensure that our ATM machines accept MasterCard and Visas," Rao Balivada, the Managing Director of Fina Bank, said.

However, access to banking services outside Kigali and the major towns is still very limited, according to BNR and the volume of none cash transactions exchanged is still low.

Although cash is predominantly the most important part of the formal payments system in Rwanda, the banking sector is rolling out to ensure that ATM services are available countrywide, and of June this year 232 ATM machines are dispersed throughout the country.

According to BNR statistics, 320,565 debit cards and 542 credit cards are in circulation in the country.

More importantly, ATM machines will not only be used for what we already associate them with traditionally. Banks that The New Times talked to express that depositing money will soon be part and parcel of ATM operations.

"We want to add value to our machines and to our services. By the end of this financial year, our ATMs will be upgraded to enable the deposit of cash," Jack Kayonga, the Managing Director of Development Bank of Rwanda, said.

Currently, only Bank of Kigali officially began the process, an innovation driven by stiff competition for clientele in the banking sector.

With such initiatives in place and service providers being able to accept all types of electronic cards, people in Rwanda will be able to use them at a wider scale, thus less liquidity in the economy.

With lesser liquid cash flowing in the economy, the value of the franc will be expected to increases and consequently, the economy will also turn out healthier.


The New Dawn

Rwanda: Moving Towards a Cashless Economy

The Rwanda Integrated Payment Processing System (RIPPS) supports banks in building strong backbones to sustain automated money transfers.