InnBucks: generating “interest” from money in a cashier’s till

InnBucks, Simbisa’s financial services arm, has cut its service fees for transactions from 5% to 3% for amounts over US$5. More importantly, Innbucks is saying that it has set the price for sent amounts under US$5 to 1%. This second provision is very interesting because it suggests that they have, through data on their end,…

InnBucks, Simbisa Brands, airtime

InnBucks, Simbisa’s financial services arm, has cut its service fees for transactions from 5% to 3% for amounts over US$5. More importantly, Innbucks is saying that it has set the price for sent amounts under US$5 to 1%.

This second provision is very interesting because it suggests that they have, through data on their end, seen that customers are sending low values at high volumes. Additionally, this could also imply that InnBucks is tired of fighting the other local remittance services in the values category (typically at US$10 minimum) and now wants to play the volumes game.

The only unfortunate thing about all of this is that the 2% Intermediary Money Transfer Tax still applies to these transactions. So in truth, its down from 7% to 5% for sums over US$5 and the send fees for amounts under five bucks might actually be 3% which might seem bad at face value by I think InnBucks has a clear plan about the position it wants to occupy in the market.

The Gist
  • Simbisa is generating interest from money sitting in a till and turning those tills into ATMs
  • They are now positioning themselves to get small dollar transactions
  • An InnBucks API would blow EcoCash out of the water
  • Simbisa operates in 9 countries across Africa, if it takes its wallet-based remittances business outside of Zimbabwe, it’s game over…

Wallet-based remittances are the new bank accounts

Don’t let anyone fool you, InnBucks is effectively a bank at this point and they are doing so through the licence of Ndoro Microfinance which was recently announced by the Competition and Tariffs Commission (CTC), the Simbisa-owned service acquired.

The C Suite over at Simibisa is filled with some seriously slick operators because they have realised that there is a huge unexploited opportunity in Zimbabwe’s financial services market. What I mean by this is that they are leveraging the cash business they have through their fast food chains to solve a financial services problem.

The math for this is really simple because no other company can confidently guarantee cash-out services more than a company which receives USD in cash from hundreds if not thousands of Zimbabweans every day.

And with trust in the traditional financial institutions not looking like it’s on the rebound, Simbisa’s InBucks can continue to carve out chunks out of the market and properly compete with EcoCash in Zimbabwe’s fintech space.

If you really think about it, you as an InnBucks customer are allowing each and every till that is under a Simbisa Fast Food Chain to be an ATM. What this also means is that Simbisa can generate revenue from money that would otherwise be useless. Maybe I need to repeat that, Simbisa is, as near as makes no difference, generating “interest” on money sitting in a till which is absolutely insane to think about.

It’s a wild business model and kudos to them for figuring it out. The only thing missing right now are the figures to see how much InnBucks is moving month on month. Those numbers would really change the complexion of perception of Simbisa’s impact on Zimbabwe’s fintech market.

People! It gets deeper than that!

Remember those transaction charges I mentioned earlier? Well, InnBucks, as previously mentioned, is looking at the game a whole lot differently. They want to tap into the small transactions being made on their system. It’s not hard to imagine that they saw the data on their side and said

We need a slice of that pie and in a big way!

If all of this is confusing, turn the clock back to when InnBucks launched and we saw a deluge of e-commerce and other businesses say that they will are also taking InnBucks as a form of payment. How many of those transactions do you imagine were low value but high volume?

Now, Simbisa is effectively taking a hit to facilitate the passage of those small fraction values under five bucks at 1% (plus the 2% tax if it applies at that threshold). And it’s important to reiterate that the informal economy in Zimbabwe is dealing in small denominations and fractional values.

They are only forced to price up because there is no way that they can ask someone for fifty US cents because those denominations don’t exist in Zimbabwe. Moreover, the conversion to ZWL and then the rate calculations that come thereafter are a headache, and if you are not careful, you could easily get the short end of the stick.

The only thing left for Simbisa to do now is to give merchants, both online and physical stores, an API or a method to recieve payments. This would be a GAME CHANGER, not the riff-raff that is touted as such by companies who are trying to reinvent the wheel or buy a wheel and bedazzle it and call it innovation.

InnBucks is in a real position to take on EcoCash in a way that the mobile money operator has never been challenged before. Telecash, OneMoney, ZIPIT Smart and the rest have failed to beat Strive Masiyiwa’s most successful enterprise in Zimbabwe (yes I said it).

The ceiling of what InnBucks can do is insanely high because if you look at the way there are so many offline vendors for big companies and online EcoCash API-dependent startups who are forever reeling from only being able to receive ZWL payments. These entities face a very difficult problem mainly when they deploy agents across the country, and that problem is remitting the money back to HQ.

InnBucks if they decide to go the API and merchant facilitation route could offer these entities an easy way to collect all the end-of-day transactions in cash into a central wallet through its extensive network across Zimbabwe. The company recently announced that it is spending US$15,5 million to add more outlets across Zimbabwe and spend up to US$23 million to open stores across Africa (this will be very important in a bit)

If InnBucks goes cross-border its game over

Sometimes I forget that Simbisa Brands is a pan -African company, they have fast food franchises in nine African countries (Zambia, Zimbabwe, Kenya, DRC, Ghana, Malawi, Namibia, Mauritius and Swaziland). Now imagine if Simbisa gets an Authorised Dealer Limited Access (ADLA), Microfinance or equivalent licence for InnBucks in those countries!

They won’t only be leveraging on the Zimbabwean diaspora in those countries but they would need to find specific pain points in those markets individually. Taking on a company like Mpesa in Kenya would be a tall order but in the grand scheme of things they would have a remittance or payments network comparable to Mukuru.

Moreover, they could just do what Mukuru is doing and slap their livery on a bank card and get people to start swiping. While their customers are doing that they will be charging transaction fees for the service… What Simbisa could milk out of InnBucks might potentially be the next fintech sensation not only in Zimbabwe but in Africa…