Merchants and service providers in Rwanda are opting out of MTN mobile money codes to receive payments citing high charges that they say are eating into their profits.

The merchants have instead gone back to cash transactions at points of sale despite a push by the country to adopt cashless transaction platforms to curb exchange of hard money in the wake of the Covid-19 pandemic.

MTN last year expanded its mobile money infrastructure by introducing the Momo pay code system to all businesses and services, where merchants only have to punch in a code to transfer or receive money.

The code, however, comes with a charge of between 0.05 to five percent on the amount paid for every item sold, which traders say is burdensome and untenable.

At the Green Foods Supermarket in Giporoso, when I ask for the code to make a payment, the attendant tells me to instead withdraw the money from a nearby agent so I can pay in cash.

Burden of charges

I ask to at least pay directly to the business' mobile money account, but she still declines. The business can’t handle the high charges on mobile money payments, she says.

“We find the Momo pay code charges really high and hurtful to business. The wholesaler passes the charges cost to us retailers and many retailers also have to pass it onto customers.

My customers refused to pay for these charges” said Jeanne Batamuriza, a retailer in Kigali.

A retailer pays Rwf1,000 worth of MTN mobile money code charges on every sack of Tanzanian rice that he/she buys at Rwf20,000 from wholesalers, which is the equivalent of five percent of the total cost.

On that sack a retailer gets Rwf3,000 in profit. If the Rwf1,000 code charges are deducted from this, a retailer remains with Rwf2,000 worth of profit, which means MTN takes up to 33.3 percent from the profit in mobile money charges.

“MTN levies such a high charge on every item in the shop, and at all transactional levels of every item.

 When you look clearly it's like we are working for MTN all in the name of cashless transactions. Our margins have shrunk significantly,” said a retailer in Kanombe.

Many business operators have opted to being paid directly on their mobile money accounts, after which they push the money to their bank accounts since banks waived charges on push and pull bank-to-mobile money transfers.