Umoja Switch to Operate Throughout East Africa

The business community in East Africa has been assured of getting cash and perform transactions digitally, thanks to the initiative of ‘Umoja Switch’ across the region, which is Tanzania’s network of Automatic Teller Machines (ATMs) and Mobile Banking.

The region has in the recent years made huge gains in intraregional trade and increased movement of workers and families among member states but lack of a convenient and safe way to make and receive payments.

“But with the use of the Umoja Switch-shared network in the region, business people and other card holders will have assurance of getting cash and perform their transactions timely at any country within the region,” said the ‘Umoja Switch’ Chief Executive Officer, Mr Danford Mbilinyi.

He said in an interview that the initiative has been made possible after the integration of the switches across the four countries with the exception OF Burundi, in order to facilitate card-based payments across the region.

The switches are UmojaSwitch (Tanzania), KenSwitch and Paynet (Kenya), Inter-switch (Uganda) and R-Switch (Rwanda). With the shared network, business people are free of the risks of carrying hard cash from one country to another for conversion, which is thus replaced by an ATM card using Umoja Switch Automated Teller Machines (ATM).

Similarly, the switches allow traders to conveniently make transactions seamlessly in real time and in their respective local currency. Students studying in various secondary and higher learning institutions across the region will no longer have to carry hard cash, but only an ATM card, thus reducing the risks of losing money.

Mr Mbilinyi said also that initiative has enabled the banks under the shared network to lower the cost of implementing new switch by using the existing switches, which are already connecting financial institutions at their local countries.

He said the integration will in phase one facilitate cash withdraws on ATMs and check balance from the bank account to any ATM which belongs to those switches at any country.

It will allow the people from the EAC to withdraw cash on ATM across the region without incurring extra charges. The initiative comes in the backdrop of the successful launch of the East African Payment System (EAPS), a key achievement by the Monetary Affairs Committee (MAC) towards the integration of the EAC region’s financial sector.

The EAPS launched in December 2013 was intended to slash costs and time spent on execution of money transfers within the region’s banking sector and in turn, boost trade and financial flows considered critical for economic growth.

The EAPS has proved to be secure, effective and efficient funds transfer system that enhances efficiency and safety of payments and settlement within the EAC region.

According to Mr Mbilinyi, the move to spread the shared network brings more technological innovations to the partners on inter-operability, since they will be able to integrate more services for payments by using the same platform.

Furthermore, the integration will promote the security among the customers within the region, as well as the central banks in curbing the flow of dirty money which could hurt the economy of these countries.

Having operated in the country for over eight years, Umoja Switch is also rapidly expanding and improving its services across the already existing nationwide clientele, in line with ballooning the value of its monetary dealings.

To date Umoja switch has managed to network 27 banks and currently boasts undertaking billions of transactions through 200 ATMs, thus considered being a major stride when compared to only 1.2 million transactions when first came into operations.

He said after introducing Umoja cards in Kenya, Uganda and Rwanda, the next step will be the initialisation of Union pay card of China to be launched in the country through the Umoja Switch, implying that the Union pay cards will also be applicable in Tanzania via ‘Umoja Switch,’ system.

In this outstanding performance, many other big banks including local and international in the country have shown great interest of joining the Umoja Switch set-up due to its economic advantage.

Umoja-Switch was set up to provide electronic payment transfers to its members, but due to tremendous increase of member banks, the consortium changed the structure and became a company, but which is still owned by member banks.

The business community and the public in the EAC region are encouraged to use this opportunity benefit from the immerse attributes including safety and efficiency to boost the regional trade and intraregional payments.

Originally published on DailyNews Tanzania