Cashless transactions go up in first half of 2020

By Christine Kasemiire
Digital transactions also known as cashless transactions have recorded increased activity during the first half of 2020 compared to the same period last year, according to Bank of Uganda.
Data from Bank of Uganda attributes the increase to actions undertaken to mitigate the spread of Covid-19.
“The use of electronic banking and digital payment products also picked up further in the year to June 2020. This trend was partly driven by actions taken by financial institutions to promote the usage of cashless transactions as a measure to reduce the risk of Covid-19 transmission,” the report, which assesses the performance of the economy during the first half of 2020, reads in part.
In March financial institutions reduced the cost of online transactions as a measure to mitigate the spread of Covid-19.
According to Bank of Uganda, debit card, credit card, and point-of-sale transactions increased in both volume and value.
For instance, the report noted, the value of credit card payments rose by 19.7 per cent while number and value of point-of-sale transactions rose by 27.5 per cent and 14.5 per cent, respectively.
Internet and mobile banking activity also increased for the year ended June 2020 relative to the previous year.
The report also noted that the value of mobile and Internet banking transactions increased by 157.3 per cent and 52.9 per cent, respectively.
Active users on Internet and mobile banking platforms grew notably by 36.7 per cent and 46.9 per cent, respectively during the period.
The growth has been witnessed during the Covid-19 induced lockdown, which left many with no option but the use Internet and technology to communicate and transact, among other things.
For instance, while there was no increase in the 2.4 million debit cards used by customers from last year, the value of payments increased by 375.7 per cent in 2020 compared to June 2019.
While Shs670b was used for payments through debit cards in 2019, 2020 recorded a jump to Shs3.1 trillion.
Credit cards, which are not so popular in Uganda, also recorded a jump in payments as well as active ownership.
Active credit cards grew from 9,200 in June 2019 to 10,004 in 2020.
Volume of transactions conducted through point-of-sale increased from two million to 2.5 million sending Shs555.8b in 2020 compared to Shs485.4b in 2019. During the period, Internet and mobile banking also recorded growth.

Cyber security
The central bank in the report reaffirmed the need for commercial banks to strengthen their cyber security as the risk is heightened by increased digital transactions.
Measures implemented by financial institutions such as subsidizing the cost of transacting online during lockdown go to show that high cost of online transactions is one of the main inhibitors of adaptation to the innovations.
As a result, banks under Uganda Bankers Association, recently launched a campaign dubbed “No merchant surcharges”, with the aim of curbing institution of extra charges on credit, visa card payments or point of sale transactions by businesses such as restaurants and supermarkets among others.