POS Glitches Frustrate Customers

There is evident frustration as customers in one of the major retailers mill around a till operator, desperate to pay for groceries.

The point of sale (POS) system is reportedly down, and most of them do not have the cash.

In fact, one of the customers, Tendai, was hoping to get “cash back” after the transaction to get money for bus fare back home. With the system down, he feels hopeless and dejected; there is no cash at the bank and he may have to go around the many other supermarkets in town trying his luck.

Zimbabwe’s cash crisis has caused great inconveniences to the public, with an intermittent breakdown of payment systems currently being promoted by Reserve Bank of Zimbabwe (RBZ) creating desperate situations for customers.

The liquidity crunch, blamed largely on a hard currency regime adopted in 2009 to stem a hyperinflationary crisis, has resulted in widespread cash shortages which have forced Zimbabweans to resort to increased use of electronic payment systems.

But months after the adoption of various electronic payment platforms, glitches have frustrated users, undermining confidence in the systems.

The RBZ, which in November introduced a local currency to help improve liquidity, has been aggressively promoting the use of cashless payments in an economy where consumers were used to cash transactions.

The transition to virtual payment systems like POS terminals and bank transfers has not been smooth, as banks had not prepared the necessary infrastructure before going on a plastic money offensive.

Over 32 000 POS machines are in the retail sector, against a target of 50 000 gadgets. Retailers say there is need for more POS machines around the country.

Although an estimated 70 percent of transactions have gone through the POS system, buyers have borne the brunt of malfunctioning systems, with POS machines not working for various reasons.

The POS system works within the confines of the local broadband services which when disrupted would be a great inconvenience to the customers.

The broadband support system has fallen short of expectations as the network often stutters at crucial moments. Retailers blame telecommunications networks, who provide the backbone for the alternative payment facilities.

Although the POS platform has become common on the market, with growing use at musical concerts, hospitals, and fast food outlets and even in churches, their usage has not been smooth.

IT expert, Shingi Muringi, said POS connectivity was normally obstructed when banks congest the POS platform, which predominantly use ZimSwitch, an electronic funds switch which also processes automated teller transactions.

“The challenge is that banks rely on Zimswitch, the main hub trusted by the RBZ. If it is overloaded, the system will collapse,” said Muringi.

Muringi alleged that shrewd retailers were also sabotaging the drive towards a cashless society by disabling the POS network only to milk the public of their scarce cash supplies.

“Instead of demanding cash from the public, they just disable the POS network. This is done by shrewd retailers who want cash sales, so they sabotage the POS when they want cash,” said Muringi.

POS machines work with the local network, with a sim card slotted into the machine for data reception. Most POS machines in Africa do not use Wi-Fi.

In some instances, customers have left supermarkets dejected after the POS machines malfunctioned, while at service stations, motorists have been stranded after being told that the system is down.

Customers are forced to pay in cash if the POS machines are down.

But many will not have the cash.

It has often been said that banking is about convenience. Not in Zimbabwe.

A snap survey on the market reveals that retailers prefer cash sales to virtual transactions.

This has bred a three-tier system of payment on the market where different payment systems attract different pricing.

Bank transfers are reportedly attracting a premium, while payment in hard currency attracts a reasonable discount like 20 percent.

Bond notes have also been a generally acceptable means of payment, but sources say customers buying properties and commodities like cars are paying hefty premiums when using bond notes, which are already trading at 1,10 to the greenback on the black market.

So instead of improving convenience on the market, the scramble for cash has continued, with bank queues continuing to swell.

When the RBZ forced a reduction in bank withdrawal charges, customers were hopeful that the POS system would be cheaper and more convenient, easing transaction challenges.

The Consumer Council of Zimbabwe (CCZ)’s executive director, Rosemary Siyachitema, said although POS transactions were a convenient means of payment, they had been unreliable.

“It is a convenient method of payment which is used world-wide as more people are discouraged from holding cash all the time,” she said.

Siyachitema said malfunctioning POS machines due to lack of connectivity had become a challenge.

She said rural businesses were risking losing business to their urban counterparts due to lack of connectivity.

“The only sticking issue is to do with connectivity. Once you are in the rural areas, the issue of connectivity is a challenge,” Siyachitema said, adding that rural folks had been left out of the plastic money revolution, with a survey revealing great need for financial literacy.

“People out there would like to hear more about plastic money. They feel there are more POS machines in urban areas than in rural areas. There is still a lot to do in terms of financial literacy. We need to bring financial literacy so that all of us can be part of the system,” said Siyachitema.

Retailers Association of Zimbabwe (RAZ) president, Themba Ndebele, said his members had been transacting using POS machines since dollarisation and had not faced challenges using the payment platform.

“All the major retailers which are part of my association have been using POS machines, so it’s not something new to us. We have technical back up and huge IT departments that are always on standby in case we lose connectivity,” said Ndebele.

He said RAZ members were not charging premiums for sales done through POS terminals.

Ndebele said: “Our members do not engage in three tier system of pricing. We don’t run tuck shops and all our systems are connected to ZIMRA through the fiscalisation gadgets.”

But the Confederation of Zimbabwe Retailers (CZR), whic represents smaller retailers, admitted that the situation required urgent attention.

CZR president, Denford Mutashu, said: “The three-tier system of pricing is a market scenario that needs redressing. We want to see the system end because it is not best practice. These are symptoms of a bigger challenge because some manufacturers demand cash and some retailers demand cash from consumers.”

Ndebele said the smaller retailers had been facing challenges with their POS systems, with Mutashu admitting that some retailers did not have the payment machines, hence demanded cash.

“Issues of malfunctioning POS machines are not really very prevalent, although we have had issues to do with connectivity. We have had retailers who don’t have POS machines, but we have been going around the country with the RBZ promoting the use of plastic money,” he said.

The RBZ believes that there should be 50 000 POS machines in the retail sector; the number of POS machines currently in the market are not enough to cater for the growing needs.

Those in the rural areas travel long distances to access retailers with POS machines, with banks being urged to increase the reach of the payment platform.

With connectivity a huge challenge, the scramble for cash continues as witnessed by swelling queues at most banks.

Some banks are reportedly charging retailers between US$35 and US$50 to rent the machine a day.

This could not, however, be independently verified with the banks

Another challenge of the slow uptake of the POS system is that a greater part of the rural population is not banked, hence cannot access funds from the banking system.

Calls for banks to come up with measures to include the rural folk into the financial services sector have largely gone unheeded because of the costs involved.

Lack of confidence in the banking sector has resulted in less Zimbabweans being banked, hence militating against an ideal cashless society.

By Nyasha Chingono