Telecoms battle for customers 

The two major telecom companies in Uganda – MTN and Airtel – are fighting for the souls of Ugandans by dangling cashless merchant payment platforms in the form of MoMo Pay and Airtel Pay, each promising better rewards.

With the merchant payment platforms, users can now electronically pay for any commodity/service. With this payment platform, no charges are levied against any transaction.

Speaking on the sidelines of the just-concluded annual Bankers Conference, Richard Yego, the managing director of MTN Mobile Money Uganda, said the merchant payment solution was a way of mitigating the unending attacks on business operators by assailants looking for hard cash.

Yego added that MoMo pay would help business owners and operators to access affordable credit lines from MTN.

“When we collect money electronically, we can collect data about the merchant’s activity. With this data, we can develop a scorecard that we base our decisions on to reward merchants with lines of credit. We can easily predict what amounts to give them because we can predict what the merchant can afford to pay back,” he said.

To entice more merchants to onboard on the Momo Pay merchant platform, Yego said they had capped all the transactions charges at one per cent across all sectors.

“For the merchants in the informal sector like boda bodas, salons and market vendors, no transaction charges will be levied. We want them to collect their money free of charge. This is the only way we can attain a cashless ecosystem.”

Yego added that they had enabled assisted payments for the merchants to make assisted payments like school fees and utility bills.

“We pay the merchant four per cent for the value that we have transacted. We want to push to a period where the merchant is asking for the Momo Pay service instead of the client asking for it.”

According to the third market performance report by Uganda Communications Commission for the three months ending March 2023, the mobile money industry recorded 1.44 billion mobile money transactions, up from 1.40 billion transactions at the end of December 2022. The growth is linked to a spike in transactions like person- to-person transfers, utility and merchant payments, gaming and school fees payments.

MTN MoMo Pay currently has about 280,000 merchants, while Airtel Pay has approximately 480,000 merchants. Speaking to The Observer, David Birungi, the public relations manager of Airtel Uganda, said they had partnered with Dlight Uganda Limited to help Ugandans acquire phones on a hire purchase plan.

Birungi emphasized that the affordability of phones would ease digital financial inclusion since more people would be able to access their wallets on the phone. Gerald Orombi, the general supervisor of operations at the Liquor Shade, a bar located in Kisementi, said merchant payment platforms had made the movement of money easier and secure.

“Our clients no longer have to come carrying money in their bulging pockets. I can make payments easily. Almost 90 per cent of the clients now opt for one of the two platforms to make payments. I think as time goes by, we might be seeing less and less cash at the counter.”

However, there have been concerns from several waiters and waitresses that the level of clients who tip them for their service could drop. A waiter at a popular hangout who preferred anonymity said, “Most of us almost live off the tips. Now if every client is paying the money directly, to the company merchant code, it means we will be sent out of the system.”

Drawing from his experiences, Orombi said they had become deliberate at empowering waitresses and waiters at the liquor shade.

“The more sales they make, the higher their percentage. The waiters should become innovative. I also have an individual merchant code. Let them have their merchant codes where their tips can be deposited.”

Godfrey Muhindo, the safety and security operations officer at Total Kisementi, said the introduction of MoMo Pay as a payment alternative had influenced an increase in both the number of clients and their sales.

“Since we introduced MTN MoMo Pay, our sales have increased. Almost all the clients that we interact with here want to pay off their phones. We got to realize that most customers don’t like carrying cash since it helps the person spending to track their expenses.”

Muhindo noted that since pump attendants are not allowed to use phones, the relationship with customers sometimes is affected.

“The phone on which the money is sent is kept away in most cases. This means that I have to politely request the customer to tell me the transaction ID for the payment they have made. Some of the customers are rude and complicated, which is understandable because no one has the time for waiting.”

He recommended that MTN introduces scannable digital payment platforms with a provision for printing a receipt. This, Muhindo said, would allow them to maintain a duplicate of each payment made. Like Muhindo, Michelle Mutesi, the manager of Julie’s Restaurant located along Kira Road, said although the two innovations had encouraged seamless payments, the absence of the same service in her value chain makes the use of cash unavoidable.

“The money we receive via the merchant code is in most cases transferred to the accounts. Now you will go to the market yet the supplier/vendor doesn’t have a merchant code. I now have to incur the withdrawal costs. The system should be rolled out further downwards so that our suppliers in the informal sector can interact with us easily. We love it when it is cashless from the client to the last mile supplier.”

Prashant Chalke, the financial controller at Century Cinemax, said the introduction of the merchant payment platforms had provided an alternative payment platform to the traditional cash and visa payment systems.

“The bank network for the cards is down sometimes. MoMo Pay has come in to fill that gap. Since it acts as an extra wallet for customers, it eliminates the need to carry large sums of money and facilitates easy reconciliation of payments. It is much safer than a bank. It eliminates the risks of carrying hard cash.”

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