EcoCash has announced that they will be removing processing fees for cash transfers designated as COVID-19 relief funds.
The move seems to be a direct response to the government choosing to exclusively distribute COVID-19 relief funds through OneMoney, the mobile money platform that rivals EcoCash.
EcoCash has moved to remove all processing fees for cash transfers designated as COVID-19 relief, to enable the Government, Non-Governmental Organizations (NGO)s and any other relief organizations to freely give the support to vulnerable groups and communities at no extra cost for the transfers.
EcoCash Press Announcement
We criticised the government’s move to solely distribute these funds via OneMoney because that brought in too much friction into the equation and it meant beneficiaries would have to learn to use a new mobile money platform which simply doesn’t
The wording in the Econet press announcement will make it seem as though this was solely about the recipients but for them being a part of the distribution chain for these funds helps their business greatly as it minimizes the chances of their network effects being broken.
The danger posed by the government’s earlier strategy to distribute via OneMoney solely was twofold;
Firstly, OneMoney would grow their user base exponentially overnight. With relief funds being disbursed to as little as 450 000 people and as many as 4 million – if the government manages to distribute the funds to every individual they intend to reach.
OneMoney’s new user base would also discover that the mobile money service has lower charges compared to EcoCash and chances are that would prompt them to switch to OneMoney permanently weakening EcoCash’s network effects.
Network effects are super important to EcoCash and right now the reason every person chooses EcoCash is simply because everyone else they know uses EcoCash. This is why EcoCash feels the need to remove all these fees and protect the network effects that have made their mobile money service an impenetrable monopoly.
Is EcoCash’s involvement in this process a good thing? Ultimately it is. In my article questioning why the government would solely distribute these funds using OneMoney I outlined the perfect scenario;
If a recipient is already on OneMoney why not give them the money via OneMoney and if they are on EcoCash instead why not use that? Heck, even those on Telecash (0.7%) should be able to get relief funds on their preferred mobile money platform.
Propping Up NetOne At All Costs, Gvt To Distribute COVID 19 Funds Exclusively Through OneMoney
This is as good as it gets – citizens get their money using whatever platform they prefer. But don’t think for one minute that EcoCash’s decision to scrap fees for the processing of these funds is an altruistic move. It’s a business decision that protects the interest of EcoCash and also happens to provide less friction for consumers…
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2 comments
The government was not wrong in choosing OneMoney as a channel for distributing Covid-19 relief funds. After all they own the company. What they did wrong was making OneMoney the only channel that they will be using, why not include Telecash or discussing the possibility with Ecocash management as well. We can be certain that they never even considered Ecocash because the Ministry of SME’s would not have been able to resist the chance to publicly shame Ecocash for cynically trying to profit from Covid-19 relief funds, by not waiving their transaction fees. Since Ecocash has officially waived transaction fees the ball is now in government’s court on whether to expand the distribution channel to include Ecocash.
The gvts move is right, Econet should not be left as a monopoly the customers suffer. Look how its charging high processing fees per transaction.