Lipa ChapChap: Exim Bank Spearheads Tanzania's Cashless Revolution

Lipa ChapChap: Exim Bank Spearheads Tanzania's Cashless Revolution
Source: Swahili times

Tanzania is undergoing a remarkable transformation. Driven by technological advancements, government initiatives, and a growing appetite for convenience, the nation is rapidly shifting towards a digital, cashless economy. At the forefront of this change are innovative financial institutions leveraging technology to enhance services and promote financial inclusion. Exim Bank Tanzania has recently made a significant stride in this journey with the launch of 'Lipa ChapChap', a groundbreaking digital payment solution poised to reshape how businesses and individuals transact.

This move comes at a critical time. The Tanzanian government, under the leadership of President Samia Suluhu Hassan and through the proactive measures of the Bank of Tanzania (BoT), has consistently emphasized the importance of a digital economy. Initiatives aim to boost transparency, improve efficiency in revenue collection (e.g., via the Government Electronic Payment Gateway - GEPG), and critically, extend financial services to previously unbanked and underserved populations. As Dr. Charles Mwamwaja, Commissioner for Financial Sector Development, noted, embracing digital transactions is crucial for Tanzania to keep pace globally and foster broader economic participation. Exim Bank's Lipa ChapChap enters this dynamic landscape not just as a new product, but as a powerful catalyst aligned with these national ambitions.

Introducing Lipa ChapChap: 'Maliza Kirahisi'

Launched with the fitting slogan 'Maliza Kirahisi, Lipa ChapChap' (Finish Easily, Pay Quickly), this service is designed for simplicity and speed. At its core, Lipa ChapChap utilizes QR code technology. Customers can make payments instantly by scanning a merchant's unique QR code using their mobile phone, eliminating the need for physical cash or even traditional card swiping.

This isn't merely about convenience; it's a strategic move reflecting Exim Bank's commitment to digital transformation, innovation, and crucially, financial inclusion. As Andrew Lyimo, Exim Bank's Head of Retail Banking, stated during the launch, "'Maliza Kirahisi, Lipa ChapChap' is a testament to our commitment to innovation and convenience... Our goal is to create a cashless ecosystem that benefits both businesses and customers.”

Unlocking Benefits for Tanzanian Businesses (Especially SMEs)

Small and Medium Enterprises (SMEs) form the backbone of Tanzania's economy, yet they often face challenges with traditional payment systems, including the costs and risks associated with handling cash. Lipa ChapChap directly addresses these pain points:

  1. Zero Cost for Merchants: Perhaps the most compelling feature for businesses is that accepting payments via Lipa ChapChap is entirely free for the merchant. This removes a significant barrier for SMEs looking to adopt digital payments without incurring additional operational costs.
  2. Universal Interoperability: Lipa ChapChap enables businesses to accept payments from customers regardless of who they bank with or which mobile money operator they use (like M-Pesa, Tigo Pesa, Airtel Money, etc.). This seamless interoperability, a key feature of Tanzania's advanced digital payment ecosystem thanks to initiatives like the Tanzania Instant Payment System (TIPS) and earlier MNO agreements, ensures businesses don't miss out on sales due to incompatible platforms.
  3. Enhanced Cash Flow & Efficiency: Real-time digital payments mean funds are received instantly, improving cash flow management compared to waiting for cash reconciliation or cheque clearance. It streamlines the entire transaction process.
  4. Reduced Risk: Handling cash inherently carries risks – potential theft, counterfeit notes, and errors in giving change. A Visa report highlighted that 93% of Tanzanian SMEs expressed concerns over cash handling, with robbery (77%) and employee theft (62%) being major worries. Lipa ChapChap mitigates these risks significantly.
  5. Increased Sales: The same Visa report found that over 30% of cash-only SMEs lose potential sales because customers don't carry enough cash. Offering a convenient digital option like Lipa ChapChap helps capture these sales.
  6. Improved Record Keeping: Digital transactions create an automatic electronic trail, simplifying bookkeeping and potentially making it easier for SMEs to access formal credit facilities in the future.

Empowering the Customer Experience

For the end-user, Lipa ChapChap offers a modern, secure, and convenient payment experience:

  • Speed and Simplicity: Payments are processed instantly with a quick QR code scan.
  • Security: Digital transactions reduce the need to carry large amounts of cash. Silas Matoi, Exim Bank's Head of Alternative Digital Channels, emphasized this, stating, “Security is at the heart of digital transactions, and Lipa ChapChap provides instant transaction confirmation, ensuring both customers and merchants enjoy a worry-free experience.”  
  • Convenience: Payments can be made anytime, anywhere, using just a mobile phone.
  • No Surcharges: Reinforcing the Bank of Tanzania's directive against imposing extra fees on digital transactions, customers using Lipa ChapChap (like other card/POS payments) should not face additional surcharges from merchants.

Driving Financial Inclusion and National Goals

Lipa ChapChap is more than a convenience; it's a tool for economic empowerment. Tanzania has made significant strides in financial inclusion, largely propelled by the mobile money revolution that started with services like M-Pesa in 2008. By 2017, financial inclusion reached 65%, and digital credit services further boosted this.

Lipa ChapChap contributes to this by:

  • Catering to All Businesses: It provides a viable, cost-effective digital payment solution for even the smallest vendors, bringing them into the formal financial ecosystem.
  • Promoting Cashless Transactions: It aligns perfectly with the BoT's push towards a "cash-lite" economy, which enhances transparency, improves tax compliance, and boosts overall economic efficiency. Studies, like the Visa report, suggest wider digital payment adoption could increase Tanzania's GDP by 1-2% annually.
  • Leveraging Interoperability: Built upon Tanzania's successful mobile money interoperability framework (a world-leading initiative established between 2014-2016), Lipa ChapChap reinforces the benefits of a connected financial system.

Exim Bank's Vision: A Future Forged in Digital

The launch of Lipa ChapChap is a clear signal of Exim Bank's strategic direction. The bank has consistently invested in its digital capabilities, recognizing that the future of banking is customer-centric, technologically driven, and increasingly borderless.

Key aspects of Exim's strategy include:

  • Digital Transformation: CEO Jaffari Matundu highlighted strategic investments in digital transformation as core to the bank's strong 2024 performance (Total Assets reaching TZS 3.1 trillion, Loans growing 19.1%).
  • Technological Infrastructure: The bank upgraded its core banking system in recent years to provide a more resilient and robust foundation for innovative services.
  • Customer Centricity: As noted by PwC Tanzania, customer expectations are shifting. Exim aims to meet these through personalized services accessible via diverse digital channels, while balancing digital efficiency with human support.
  • Strategic Partnerships: Exim collaborates with entities like the Zanzibar eGovernment Agency (eGaz) to digitize government payments and support Zanzibar's Digital Economy Blueprint.
  • Expanding Digital Ecosystem: Andrew Lyimo emphasized the focus on expanding the digital banking ecosystem to enhance customer experiences and drive financial accessibility across Tanzania.

Stanley Kafu, Head of Marketing and Communications at Exim Bank, summed it up: "As a forward-thinking financial institution, we are committed to leveraging technology to deliver innovative and customer-centric solutions. 'Lipa ChapChap' is proof of our dedication to driving digital transformation and financial empowerment... we are not just offering a product—we are shaping the future of banking services."  

Conclusion: More Than Just a Payment App

Exim Bank's Lipa ChapChap is a timely and significant development in Tanzania's financial evolution. It directly addresses the needs of businesses and consumers, leverages the nation's advanced interoperable payment infrastructure, and aligns perfectly with the government's vision for a digitally empowered, financially inclusive future.

By offering a secure, free, and universally accessible payment method, Exim Bank is not only enhancing transaction efficiency but also lowering barriers for SMEs and individuals to participate fully in the digital economy. As Tanzania continues its journey towards becoming a cash-lite society, initiatives like Lipa ChapChap will be crucial in accelerating progress, fostering innovation, and ultimately, contributing to sustainable economic growth for all Tanzanians. It's a clear indicator that the future of payments in Tanzania is fast, simple, and digital.