Malawi’s pioneer mobile phone network operator TNM Plc has clarified that charges to banks that use its network services are affordable and discounted.
The clarification follows a meeting between TNM Plc and Budget and Finance Committee of Parliament on 4 August 2021 at which the operator was invited to respond to allegations of exorbitant pricing for bank-related digital products and services raised by the commercial banks through the Bankers Association of Malawi (BAM) to the committee in April 2021.
TNM Chief Executive Officer Arnold Mbwana said TNM provides services to commercial banks at negotiated and discounted rates and that the lower cost was helping Malawi’s financial sector players reduce their cost of operating branch services in general.
To drive his point home on the cost of banking services in Malawi and the telco services that power digital related banking services, Mr Mbwana said that TNM’s current service charge to the banks is at a discount of up to 37.5%.
Mbwana said at the current rate, the TNM mobile network platform is helping banks reduce operating costs as they are able to reduce physical contact with customers at branches and other key points of service.
He said some of the rates such as SMS charged by TNM on banks are below the market premium, and which the banks could not provide at any cheaper rate using banking halls or any of their other technologies.
“It must be noted that digital banking goes a long way in reducing queues in the banking halls thereby enabling banks to cut on costs of constructing or renting new banking halls, branches and all the staff and utility costs,” he said.
TNM currently provides various network services to eight commercial banks, key of which are SMS and the USSD (short code) service.
“In case where the customers require to use online banking and mobile apps, they actually pay their own internet costs to mobile network providers to access the bank’s digital services online,” clarified the CEO.
Mbwana also pointed to the high tax burden and lack of relief thereon, regulatory levies and fees, distance from the sea, currency fluctuations and cost of international internet gateway as some of the factors influencing current pricing of mobile network services pricing in Malawi.
He therefore appealed to both Parliament and Government to exercise equity and flexibility in the implementation of taxes as one way of easing costs to the end user.
“While it would be expected that there will be more support towards digital financial services, especially during the COVID-19 pandemic, Parliament has recently passed the VAT (Amendment) Bill which specifically excludes banking services that are not licensed under the financial services laws, such as mobile money services, from VAT exemption, yet mobile money services serve the most poor and vulnerable of our communities. Does this support the financial inclusion agenda?” wondered the TNM CEO.
He further pointed out that taxes on mobile phone operators are punitive and loaded, which does not give TNM Plc breathing space.
Key taxes paid by TNM customers include excise on data, VAT on devices and data, media levy and spectrum fees among others.