Traders lose money through cash handling
Written by: Daniel Tuyizere
Thursday, November 16th, 2017, 20:43
As part of the continuous effort to facilitate migration to electronic payments by businesses the national Bank of Rwanda in collaboration with the Private Sector Federation has launched an awareness campaign on e-payment adoption.
The one month campaign will take place across the country and held under the theme “Accelerating the move towards a cashless Rwanda through Public-Private Partnership.”
This comes after the Government of Rwanda along with the e-payment industry have undertaken initiatives to promote efficiency in payments as cash exposes government, merchants and businesses to direct, indirect and social costs.
The Governor of the Central Bank of Rwanda, John Rwangombwa, said that they spend almost Rwf.2 billion every year to print banknotes and coins while commercial banks incur around Rwf.15 billion related to cash handling, counting, processing and transporting.
Rwangombwa added that using cash fuels crimes such as robbery when cash is moving from one person to the other and sometimes facilitates tax evasion.
“Moving from cash to electronic payment can provide enormous direct advantages to consumers, businesses, governments and the population at large. It brings more money into the formal economy as it attracts more business activity, increases employment, and subsequently generates higher tax revenues,” he added.
According to a study carried by McKinsey Global Institute in 2016, effectively enabling digital financial services could boost the GDP of emerging economies by six per cent by 2025.
Benjamin Gasamagera, the chairman of PSF, called for removal of some charges equalling between two to four per cent of money given by clients while using POS (point of sale) which increases losses to traders and others fear to use them.
He stressed that when this money is removed, many traders will embrace the use of POS machines as the central bank has shown that payments using cash increases losses.
Studies have shown that traders loose about six per cent of their sales through cash handling costs, shortages, theft and counterfeit.
According to the central bank, POS increased from 99 in 2010 to over 1,700 in 2015.
During this year’s campaign, Rwanda Central Bank and Private Sector Federation will meet different segments of the private sector to brainstorm on how the can adopt more efficient payment methods and enjoy the benefit of a cashless economy.