Government has defended itself on the high charges while members of the public transact on mobile money.
“The tax on mobile money transaction is 0.5% on withdrawals. It means that if you are withdrawing 100,000 the tax charge is shs500 and shs10,000 it is shs50. On every mobile money transaction, there is a cost of 10% meaning if withdrawing shs10,000 there is shs1000 on withdraw and only shs50 is tax and shs950 is the charge which goes to the service provider,” Henry Musasizi the state minister for Finance said on Wednesday.
He was speaking during a stakeholders’ dialogue hosted by Airtel Mobile Commerce Uganda Limited (AMCUL) at Kampala Serena Hotel.
Members of the public have on several occasions complained and asked government to consider lowering money transfer charges, which they say are adding to costs of receiving money.
Many have attributed these high mobile money charges to the 0.5% tax that government introduced on every withdrawal.
Speaking on Wednesday, the State Minister for finance said the largest percentage of the charges goes to the service providers.
“We are asking them(service providers) that in order to promote financial inclusion and facilitate our people in the countryside to access financial services, is there a way this financial cost can be brought further down? I don’t want an impression that the mobile money charges are high solely because of the tax. It is not true. The tax charge only applies to withdraw. If I transfer money from your phone to the other, there is no charge. If you transfer electronically throughout the value chain, there is no tax anywhere,”Musasizi said.
The minister, however, challenged fintech sector players to come up with innovations and avenues that will help government and service providers bring down the cost of mobile money transactions.
“We are asking that in order to promote financial inclusion and facilitate our people in the countryside access to financial services is there a way this transaction cost can be brought further down. That’s where the debate should center.”
The Airtel Mobile Commerce Uganda Limited(AMCUL) Managing Director, Japhet Aritho said the engagement was meant to find solutions for achieving a progressive regulatory environment that benefits all stakeholders.
“A dialogue like this helps us to identify the gaps that need to be addressed in terms of regulation, improved services, and new industry developments, among others. We will explore partnerships that create opportunities for shared value from our different expertise that will grow digital and financial inclusion in this country. I believe the National Payments System is on the right trajectory of growth and depth,”Aritho said.
Currently, Uganda about 40.7 million digital wallets shared between 23 licenced mobile network operators and non-mobile network operators, transacting an average of Shs5.99 trillion in person-to-person.
According to BoU by June 2022, the volume of transactions had grown from shs3.9 billion to shs4.8 billion during the same period.
