Uganda Revenue Authority introduced a 0.5% tax on mobile money withdrawals, the new tax that was introduced caused a lot of uproar and criticism from customers using mobile money
One of the telecommunication giants, MTN Uganda, had to slash the rates for customers withdrawing funds over the mobile money account. In a circular, MTN said the slash in mobile money fees is necessary, with the new prices taking effect this month.
The new rate schedule will see clients withdrawing slightly large sums of money pay a lot less in fees. Nevertheless, the new charges will see MTN charge every customer sh13, 000 and sh1, 000,000. Those withdrawing between sh30, 001, and sh45, 000 will pay sh, 350 previously demanded. MTN did not detail what's behind the reduction in fees, but the changes are expected to shore up its transaction volumes in Uganda.
The notice report that a local news agency captured reveals 0.5 percent tax for transaction value be charged on all transactions urging customers not to pay any mobile money agent after transaction fees are deducted directly from customers mobile money account.
Meanwhile, Uganda Revenue Authority (URA) data indicates that the levy on mobile money contributed a deficit of sh59.99 billion in the financial year of 2019/2020. URA attributed this to the fact that high-value customers were alternating withdrawing their funds, mostly from banking agencies rather than mobile money. It is also attributed that the 0.5 tax charges discourage many people from using the service.
Besides, other clients adopt mobile money as a mode of payment for services, such as e-commerce, and as a means of depositing and receiving payment instead of withdrawing for cash. The URA, tax, and high fees by telecom firms made it too expensive for high-value clients to withdraw money using their platforms. Even though the volume of mobile money transactions across networks grew to 3.1 billion compared to 2.5 billion in 2018/19, representing a 22% increase. This is according to the bank of Uganda's annual report for the 2019/20 information.
Furthermore, the value of transactions processed on the mobile money platform increased by 19.10% to sh79.7 trillion compared to sh66.9 trillion in 2019. In contrast, the number of active users for mobile payments increased by 12.9 percent to 17.5 million in the year under review from 15.5 million in the previous.
In contrast, the telecom giant's move to cut the fees for withdrawing through mobile money account will positively impact Uganda's overall business model, such as the iGaming industry, the preferred medium of payment for betting enthusiasts in Uganda. This development by MTN will further encourage customers to continue using the MTN mobile money service in Uganda and part of the report saw the brand experienced a decline in numbers of users.
Over the years, mobile money has been the first choice for Ugandans and a medium of payment methods in Africa. It is fundamental to the exponential growth of iGaming betting and gambling in Uganda in recent years, especially during the related lockdown amid the Covid-19 pandemic. It is expected that the strategy adopted customers' behavior would shift their attention back to the MTN mobile money service, which experienced a decline in numbers of users and in general.
Written by, Adeleye Awakan: An Author, iGaming and gambling industry, AI, Blockchain, Fintech, researcher, and consultant with over five years of experience in the Africa iGaming industry. Connect with him on LinkedIn: Adeleye Awakan: Skype: live:a2b5e96b401c7985: Email:firstname.lastname@example.org.
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