Global payments company Visa, the second-largest card payment company to China Union Pay – CUP on a global level is expected see a drastic drop in its revenues from the Zambian market.
This follows the confirmation that Zambia will roll out its national switch before end of 2018. During her 2019 budget presentation, Finance Minister Margerate Mwanakatwe stated that “to further reduce the cost of financial services and modernise payment systems, the National Financial Switch will be operationalised”.
She further stated that “this will facilitate the integration of automated teller machines, points of sale terminals, mobile and internet banking transactions between participants. The project is being implemented in two phases.
The Finance Minster confirmed that “the first phase will facilitate the settlement and clearance of Automated Teller Machines and Point of Sale transactions, and is expected to go live by the end of this year 2018. The second phase will cover mobile payments and is expected to go live in 2019”.
The current set-up in Zambia before the implementation of the National Switch is that across banks Automated Teller Machines – ATM and Point of Sale – POS transactions are routed via mostly Visa leading to a higher transaction cost and eventual forex outflow even for local transactions.
The implementation of the National Switch will result in all local transactions being switched locally without the need of Visa, MasterCard or any other global payments company.
This is expected to result in lower transaction costs and some savings in forex outflows which would have accrued to erstwhile VISA transactions.Visa has the highest card and transactions penetration in Zambia.
However, Visa, MasterCard, China Union Pay and other international financial transactions switching companies will continue but only apply when a card or transactions is cross border, that is when one travels outside Zambia or comes to Zambia with a card issued from another country.
The National Switch is also expected to provide a platform for facilitating inter mobile money funds transfers and transactions currently between MTN, Airtel and Zamtel mobile money account holders at a lower per transaction cost.