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TIPS: Tanzania Instant Payment System

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TIPS: Tanzania Instant Payment System

TIPS: Tanzania Instant Payment System

What is TIPS?

Tanzania Instant Payment System (TIPS) – A national retail payment infrastructure that offers low value instantaneous / real time payment transactions across different Financial Services Providers.

Instant Transfers/Payment – The payer (sender) and payee (receiver) accounts are debited and credited within few seconds, and both sender and receiver are notified immediately, and the service is available 24×7.

Financial Services Provider (FSP) – A Payment Services Provider who offers transaction accounts to consumers, businesses and government agencies. Transaction accounts here include bank accounts and wallets.

The Central Bank demanded interoperability amongst Digital Financial Services Providers since 2014.

• Commercial banks and e-money issuers achieved interoperability through bilateral arrangements.

• However, it was observed that this interoperability model has several challenges including:

✔ Liquidity management for Financial Services providers

✔ Operational inefficiencies and management

✔ Limited scalability in adding use cases

The Bank developed a business case which revealed

• Interest of a national real-time retail platform is highly evident among stakeholders

• Strong support from banks and EMIs to have the switch operated by the Bank

• Strong support for an interoperable domestic card scheme to use the same infrastructure

• Growing demand of real time/faster/immediate payments

• Tanzania National Financial Inclusion Framework 2018-2022

Payments Landscape

•Large Value Payment Systems

•Tanzania Interbank Settlement System (TISS) – The Bank of Tanzania RTGS system

✔ Operates 24 x 7 all days of the week

✔ All real time payments but primarily large value payments

•Retail Value Payment Systems

•Tanzania Automated Clearing House (TACH) – the ACH system processing cheques and direct credits (EFTs)

•TACH

✔ Operates from 08h00 to 17h00 with 5 sessions from Monday to Saturday (Saturday is half day)

✔ Limit of TZS 20 million

•Tanzania Instant Payment System (TIPS) – the RTP system processing low value instant transfers and payments

•TIPS (on project mode)

✔ Operates 24 x 7 all days of the week

✔ Limit up to TZS 10 million

TIPS OBJECTIVES

VALUE PROPOSITION