Name
Global FinTech Guide
Country _ Name
United Rep of Tanzania
SectionTitle
Payment services
Body
FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.

For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.

Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.

Introduction

Attitude of the country towards modern payment services

The standard payment methods in most transactions are still mainly cash dominated. However, Tanzania has adopted a generally positive and proactive attitude towards modern payment services, recognizing their importance in driving financial inclusion, economic growth, and digital transformation. Contactless payments have become increasingly popular recently. Both financial institutions and non-financial institutions can provide payment services. However, this openness is balanced with regulatory caution to ensure consumer protection, financial stability, and compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) standards.

The Bank of Tanzania (BoT) is the primary regulator of FinTech and has embraced innovation in digital financial services (DFS), including mobile money, electronic payment systems, and Fin Tech. Key laws and regulations supporting modern payment services include The National Payment Systems Act, 2015, The Electronic Money Regulations, 2015, The Payment Systems Licensing and Approval Regulations, 2021, The Foreign Exchange Regulations, 2022 (for cross-border payments). Services like M-Pesa, Mixx by Yas,  Airtel Money, and HaloPesa are widely used for Person-to-person (P2P) transfers, bill payments, micro-loans and savings and government payments (e.g., TRA, police fines) which has increased financial inclusion especially in rural areas where traditional banking services are limited.


Legal affairs

Obligations and requirements to provide payment services or ancillary services described above

In Tanzania, payment services are regulated by the government via the Central Bank which introduced a Directorate of National Payment Systems in the year 2000 which is entrusted with the coordination of activities related to the modernization of payment systems. Following these developments, the Bank of Tanzania Act of 2006 was enacted to enable the Bank to regulate, monitor, and supervise the payment, clearing and settlement system in the country. Thus The Bank of Tanzania is empowered to regulate and supervise the payment systems services and products offered by both banks and non-banks institutions in Tanzania by the National Payment Systems (NPS) Act 2015 and the Bank of Tanzania Act 2006 to regulate and supervise the payment systems services and products offered by both banks and non-bank institutions in Tanzania.

Bank of Tanzania collaborates with various stakeholders in strengthening the safety and smooth run of the payment systems in the country. These stakeholders include: Financial institutions, infrastructural services providers like telecommunication companies, consumers of payment systems like individuals, companies and governments, regulatory authorities in the financial sector like the Dar es Salaam Stock Exchange, Providers of payment services like SWIFT, and operators of payment cards, the Capital Markets and Securities Authority, regional and international Financial authorities like the East African Community, International Monetary Fund and the World Bank.

Section 6(1) of the National Payment Systems Act prohibits any person from operating a payment system or providing payment services without a valid license issued by the Bank of Tanzania. The licenses are categorized based on the service provided such as Inter – Institutional payment, Intra – Institutions Payment or Payment System Data Management and Remittance such as licenses for Electronic Money Issuance, Money Transfer Services, Mobile Payments, Switching Services, Payment Gateways and Aggregators among other licenses.

Prospective service providers have to apply for three licenses or approvals. The difference between application for a license and approval depends on the nature of the institution. The institutions which are non-banks or non-financial institutions shall apply for licenses while banks and financial institutions shall apply for approval. The three licenses and approval are;

  • The payment system license or approval,
  • The payment instrument license or approval and 
  • The Electronic money license or approval.
The service providers are required to apply for the three licenses collectively. It is not permissible under the Act and its respective regulations for the service provider to operate with one license. Any body corporate incorporated under the laws of Tanzania to operate as a bank or a financial institution or non-bank or non-financial institution is eligible to apply for provision of payment system services.

In provision of payment system services, non-bank and non-financial institutions like Telecommunication Companies are obliged to separate telecom services from electronic money services, to set up a separate legal entity (in form of a trust) for issuance of electronic money; and in order to be able to issue electronic money, a trust account to be maintained by the trust entity must be opened for management of customers’ money. On the other hand, financial institution are required to obtain approval from the central bank to provide the services.

The central bank imposes minimum capital requirements depending on the type of service for mobile money providers and e-money issuers, the requirement is TZS 2 billion and above in paid-up capital and that providers must segregate customer funds in a trust account with a licensed commercial bank.

The fees for the licenses vary from one million Tanzania Shillings (approx. USD 430) up to five million Tanzania shillings (approx. USD 2,140) depending on the type of license. A licensee shall be limited to provide services only for the category of the license applied for.

The licensing and approval requirements by the BOT is provided for under the Payment Systems (Licensing and Approval) Regulations, 2015 and the Payment Systems (Electronic Money) Regulations, 2015.

In order to get a license, one has to apply through a prescribed Form No. A provided for under the Second Schedule to the Payment Systems (Licensing and Approval) Regulations, 2015. and for the application for payment systems’ license by banks and financial institutions accompanying documents as prescribed by the law including business plan for the intended payment system operations, process flow and system architecture, governance arrangements including internal controls, risks management,  accounting    procedures, administrative controls, operational  risks  management with  disaster  recovery plans and business continuity arrangements, that demonstrates that the arrangements,  control  and  procedures  are  appropriate, sound  and adequate, Customer terms  and  conditions  that  include  disclosure  requirements, complaints, disclosure and redress mechanisms.

As opposed to banks and financial institutions, the documents required to accompany the application for application for payment systems’ license for non-financial institutions are Memorandum and Articles of Association, copy of Certificate of Incorporation, specified shareholders particulars from authorities and parties themselves, names of shareholders, their certified copy of certificates of paid up capital or audited financial statements, certified copy of  tax  identification  number  for  a  new  company  and copy of tax clearance certificate for a going concern, certified copy of a valid network services and or application services licence from Tanzania Communications Regulatory Authority, proof of payment of a non-refundable application fee, documented procedures  and  policies  for  detecting  and  reporting  incidences  of  money  laundering  in  line with anti-money  laundering and combating the financing of terrorism laws

Proof of payment of application fee as well as proof of minimum capital that vary from license to license and any other information that the Bank may require are also a requirement.

Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area

The central Bank conducts an oversight function on the payment systems in the country to enhance safety and efficiency in the national payment clearing and settlement systems to mitigate risks in their design and operations.


Economic conditions

Market size for payment services and biggest payment service providers

The Tanzania's market payment functions mainly through Mobile Network Operators.

Mobile payment transactions in Tanzania increased by 26.73% to 6.41 billion in 2024, up from 5.06 billion in 2023, according to the Bank of Tanzania’s (BOT) Third Annual Payment Systems Report. The value of these transactions rose by 28.54% to TZS 198,859.29 billion compared to TZS 154,705.77 billion recorded in 2023. Active mobile money subscriptions reached 63.21 million, reflecting a 17.46% increase from 51.72 million subscribers in 2023.      

Mobile money agents increased by 18.97% to 1,475,281 in 2024, from 1,240,052 agents in 2023, helping facilitate liquidity management across the country. The report highlights significant growth in various mobile payment use cases, with Personal-to-Personal (P2P) transfers rising by 31.49% in volume and 38.66% in value. Payments to Business (P2B) transactions increased by 28.52% in volume and 45.76% in value. Mobile operators are expanding into virtual card services, with M-Pesa Limited, Mixx by Yas, and Airtel Money Tanzania Limited providing these services in 2024. Virtual card registrations grew by 60.37% to 820,832 cards, processing 4.51 million transactions worth TZS 220.15 billion in local currency and USD 187.33 million in foreign currency. The number of merchants accepting digital payments grew substantially by 101.99% to 1,327,803, with Electronic Money Issuers accounting for 89.58% of these merchants. Tanzania’s payment systems operated with 99.85% availability for key infrastructure, including TISS, TACH, and TIPS. The Tanzania Instant Payment System (TIPS) saw a 92.52% increase in transaction volume and a 143.02% increase in value, processing 452.5 million transactions worth TZS 29,820 billion.       

Major payment service providers are;

  • M-Pesa (Vodacom Tanzania), the leading provider with around 38–40% market share (~26–27 million accounts) with 90 million transactions per quarter.
  • Mixx by Yas (formerly Tigo Pesa), the Second-largest provider holding roughly 30–32% of the market (~20 million accounts) with between 80–88 million transactions per quarter .
  • Airtel Money, the third major player, with 20–31% market share (11–12 million accounts) with quarterly transactions range from ~90 million .
  • HaloPesa (Halotel), a smaller but growing, reaching 7–9% market share (~5–6 million accounts) . It has processes around 35 million transactions quarterly.
  • T-Pesa (TTCL) & Azam Pesa with T-Pesa holding 2–3% market (~1.4–1.5 million accounts); Azam Pesa is emerging with <1% share (~0.9 million accounts). Quarterly transaction volumes for T-Pesa is approximately 0.5 million and Azam approximately 5 million .

Additional comments regarding the economic situation for payment services or what FinTech’s must be aware of in this business area

There are reservations especially on electronic money issuance which is restricted to mobile network operators and financial institutions only.

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