Repost of an article dated June 2019
Firstly I must lay bare my bias against any monopoly. Whether it is Ecocash accounting for 95% of all P2P payments or Zimswitch acting as the sole hub for interbank POS switching and settlements, Powertel (eSolutions) who were the only ZESA token retailers before Ecocash muscled its way in, or in this case Paynet holding the sole dependency for Payroll and Bulk interchange outside of singular RTGS transfers. Given, these Fintechs exist to make business and they have done so admittedly well. In fact, Paynet has the business prerogative to demand profitability and to be paid in real currency. However, I, like any Fintech practitioners am at odds trying to reconcile how these monopolies were allowed to exists and entrench themselves to such dependability levels. Where are the antimonopoly policies? Even beyond the regulation shortcomings, Systems Thinking should have and must still trigger the same question of whether National Payments risk policy has provided for sufficient fallback mechanisms to exist within the Digital payments ecosystem. How does one company have the leverage to wake up one day and pull the plug on the livelihood of millions of people and there is no recourse?
The power of monopolies
Circumstances have enabled these huge monopolies to determine the course taken by a whole national economy. Numerous times Ecocash went down and crippled normal business. The ZESA token system has gone down countless times. Zimswitch has faired well employing stiff penalties to participants for any form of downtime but who is to say disaster will not strike unexpectedly some day. After all, the Liquid Telecom link has been dropped numerous times literary grounding the internet and such dependent and related services. Are the Regulators in a position at all to rein in saboteurs should they come in the form of any of these monopolies? Have they established antimonopoly and competitiveness fluid continuity in the case of failure of any of these? How does a platform provider such as Ecocash have the sole mandate of developing fringe solutions to its own platform? Ecosure, Kashagi, Ecocash Save, Ecocash Ta!, Scan and Pay, Ecocash Payroll, Ecofamer…?
Lack of Fintech alternatives
Opportunities have existed for Fintechs to solve everyday challenges and will continue to do so. The transport system in this digital age does not have a transit pass in the form of a value store prepaid card and NFC technology. Stadium ticketing has only just recently been introduced. Agritech solutions for tobacco farmers swindled every season at the auction floors. Councils still struggling to merge billing and payments systems like Ecocash. Alternatives for Bulk Payments, Payments switches, Billing systems, Point of Sale technology and so forth are still required. We exist in an economy where the bulk of payments are conducted through digital means but we have no peripheral budding solutions plugging onto this backbone. No Insuretech to speak of and yet insurance is a thriving business especially in motor-vehicle and the medical fraternities.
It is true that those huge monopolies that have established themselves in the market have no appetite for any relationships and enjoy lax regulation at the same time. Interoperability has been a continuous whore for regulation and startups alike. APIs to any of the major platforms are gold. One has to engage in hookish-crookish tactics to be allowed connectivity to major platforms. I have dealt with many Fintechs who have bemoaned the lack of accommodation for their startup solutions with stories ranging from lack of Seed Financing, to ideas being “stolen”, to absolute ringfencing of the market through bullish anticompetitive means. The government does not have a sustainable incubation mechanism to nurture budding startups outside of a few Hackathons by Telone and Potraz and the umbrella Small to Medium Enterprises Ministry.
The laxity of regulation
It is my conclusion that the Risk Policies are clearly insufficient, Antimonopoly Policies need to be fine-tuned and the whole Digital Payments ecosystem needs to create an enabling environment to breed solutions that consolidate the gains that have been brought about by the current economics. A situation where a sole service provider is depended upon by a whole banking sector is not only unhealthy in terms of the inconveniences caused in the case of service unavailability but poses what could be described as a credible threat to economic stability. Banks and any other sectors need to invest in backup and alternative mechanisms that are beyond regulation but are hinged on providing better, more economical solution and superb customer experience.
Image courtesy of Tenor.