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Digital payments down in first quarter

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NKUNGULA—Some challenges do not emanate from banks

Monitory digital transactions between individuals and institutions dropped in both volume and value in the first quarter of 2021, figures from the Reserve Bank of Malawi (RBM) show.

In its National Payment Systems Report, RBM shows that retail Digital Financial Services transactions declined in both volume and value by 3.7 percent and 8.5 percent to 144.0 million and K1.9 trillion, respectively.

The transactions, however, recorded an increase of 60.0 percent and 31.9 percent in volume value if compared to the first quarter of 2020, which the central bank attributes to continued adaptation by the public.

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“This observation shows that retail digital transactions continue to gain ground in terms of usage by the general public, largely owing to its convenience and efficiency as opposed to cash and other paper-based payment instruments,” the report reads.

The number of registered subscribers for non-bank mobile money services rose by 13.6 percent to a total of 8.6 million at the end of March 2021.

The report adds that internet banking usage dropped as the volume and value of transactions declined by 7.4 percent and 10.1 percent to 661,106 and K953.3 billion, respectively.

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Although many people are subscribing for DFS, its usage is not promising, which ICT Association of Malawi President Bram Fudzulani attributes to lack of trust in systems.

“There is a disconnect between the degree of innovation the banks want and what telecommunications companies and other service providers can give because sometimes you find that these technologies are not working; so, these frustrations go a long way in affecting consumer psychology,” he said.

Bankers Association of Malawi Chief Executive Officer Lynes Nkungula said if digital penetration will continue being lower, the country risks being left out as technology fast evolves.

“Banks will keep on striving to give satisfactory service to the consumers and we need to bear in mind that there is a supply chain that feeds into the final products. As such, some challenges do not emanate from banks,” she said.

Digital transactions are key not only for convenience but as a tool for financial inclusion since it does not require physical structures which are mostly located in town.

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