Econet offers banks poisoned deal

Johannesburg Stock Exchange-listed group to offload Liquid Telecom 8,6pc stake to Econet

Johannesburg Stock Exchange-listed group to offload Liquid Telecom 8,6pc stake to Econet

Happiness Zengeni Business Editor
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.

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  • Heafy

    Stupid banks they should have their own apps for a start not this idea of riding on econet’s back, banks move with time,stop the old tradition of putting a deposit on a basic account have yo own apps on android and apple

    • L Makombe

      Heafy, the moment you call someone you also become stupid, because we are what we think and say. Econet is no saint, in the mobile sector, it bull dozes and now in the banking sector, it is also doing the same. What Christina values are they portraying. You only become a giant when you have others supporting you. What Econet is trying to prove by being monopolistic, boggles my mind. Do you know that Liquid in Harare is controlled from Cape Town and UK, and people want to believe that Econet and its subsidiaries are Zimbabwean and is championing the cause of the Zimbabwean people. Where does Econet’s money go? Where is Liquid’s money going. The bank can go ahead and engage other mobile operators for what ever applications they want. In this way, they will help these so called small networks to grow.

      • Peacemaker

        Econet is one of the largest taxpayers in Zimbabwe. FYI on where does Econet’s money go.

        • Jotham

          Tax payer , biggest tax payer . Some people are drunkards , vaswera vakadhakwa, vataura zvakadhakwa, vachinyora zvakadhakwa. Your comment is basically from a fool.

    • KARIMA

      Heafy, your post spectacularly displays your own ignorance. Research before waffling on every platform. For the record, Econet developed their eco cash product on the back of the successful launch of similar products by other banks. CABS texta cash, ZB’s E-wallet, Kingdom’s Cell card are by far older than ECOCASH. The problem here is on the use of the Unstructured Supplementary Service Data (USSD) platform, which is a protocol used by GSM cellular telephones to communicate with the service provider’s computers. The USSD platform is what banks are entirely dependent on Cellular networks. Econet is saying come through ECOCASH, their own product when banks want access only to the USSD platform. They are not seeking to ride on econet’s back. They are actually refusing. Moron.

      • Muchakundwa

        On the contrary, don’t show your ignorance! Banks worldwide have offered on-line internet and smart phone application for decades, long before Econet came on the scene, there’s nothing to stop local banks from doing the same, or buying ready made applications easily available.

      • Keith

        seems you are the moron why not correct him without insults??

      • Jotham

        Thanks for your comment . Econet is a company operated by thugs.

    • flyby

      sir your hatred for banks has affected your reasoning,do a little research before you suggest that all banks set up their own mobile phone networks if so then steward bank should set up its own”zimswitch” makes sense hah

      • Hearf

        Wake up the banks are lazy to with technology here in uk, barclays has an app that allow to send money to anyone with a mobile number the banks can copy that, we have paypal the banks can make zimswith an app etc, zim banks are ripping people u get charged to withdraw yo own money,is that fair

  • Tadiwanashe

    This is called disruptive innovation by Econet

  • Dee

    We understand that Econet is in business to make profits but some of it is so unrealistic us30c per transaction is a lot of money probably the highest inthe region and all these costs will go to the subscriber who is suffering to make ends meet. The banks would also need to add a proit margin for the deal to make business sense. One thing Econet should bear in mind is that nothing lasts forever not even their monopoly.Its just the current state of affairs but more players will come in and they want to come in. Seriously across the world mobile money is the cheapest yet most convinient way of sending and receiving money and countries like Kenya having above 75% of their GDP passing through it. Thats a lot and i think Econet is just missing out because of greed. Lets name a spade for a spade what is wrong is wrong.

    • Jolof

      Missing out on what 3 years ago were u able to send money kumusha via phone here? The banks didnot care about people of kumusha a market econet saw and arr providing a service, why those banks cant use othet 2 remaining service providers ? Something is attracting them to econet

    • Peacemaker

      How much does your bank charge you for just keeping your money there?

      • Name

        Wena we are talking of us30 cents per transaction here, not a monthly charge.

        • Truths Truths

          I am in South Africa; Cape Town in Particular and my FNB Bank charges me 6 rands per cell transaction. In general the networks charge 50c per text message. Do the maths. however a cell transaction is in reality a series of SMS’s including the automated responses which you must pay for. You initiate a transaction, Bank response, you clear Security protocol (pin) , bank responds and offers sub menus, you choose your transaction , bank verifies your entry by asking you to confirm , you confirm, transaction concludes; count the SMS’s. Now think of the security and encryption .