The Tanzania Instant Payment System (TIPS) is accelerating the growth of digital payments in Tanzania and expanding financial inclusion in line with the country’s National Payment System Vision (2017-2028). Operated by the Bank of Tanzania, TIPS Tanzania provides a national, real-time payment switch that integrates banks, mobile-money providers, and other financial institutions into a single, interoperable ecosystem. This infrastructure is a key component of Tanzania’s broader Digital Economy Strategy (2024-2034), which targets universal access to affordable digital payments by 2034.
The foundation for Tanzania TIPS was laid in 2017 when the National Payment System Vision was launched to modernize Tanzania’s financial infrastructure. The vision emphasized creating a cash-lite economy, promoting interoperability, and ensuring affordability and accessibility for all population segments, including rural communities and micro, small, and medium enterprises (MSMEs). The Bank of Tanzania TIPS was developed over six years through detailed planning, stakeholder consultations, and phased onboarding of financial institutions. The BoT built and operates TIPS in-house, ensuring regulatory control and alignment with national objectives.
Previously, Tanzania’s digital payments landscape was fragmented, governed by expensive bilateral agreements between banks and mobile-money operators. TIPS Tanzania replaces these with a unified, low-cost infrastructure. By 2024, 45 digital finance service providers, including banks and mobile-money issuers, were connected to the system. The open-API model allows any licensed bank or non-bank financial institution to join, increasing competition and consumer choice. This inclusivity enables small-scale providers to participate on an equal footing, enhancing access to digital financial services.
The Tanzania Payment System is built for efficiency, scalability, and security. Transactions settle in real time through the BoT’s Real-Time Gross Settlement (RTGS) system, ensuring immediate payment finality. Key features of TIPS include:
- Alias-based transactions, allowing users to send money using mobile numbers or email addresses instead of bank account details.
- TANQR QR-code system, which simplifies merchant payments and peer-to-peer transfers, benefiting small businesses and informal traders.
- Request-to-pay functionality, enabling merchants and service providers to initiate payment requests for streamlined transactions.
- Same-day netting of interchange fees, reducing operational costs for participating institutions and making transactions more affordable.
- Embedded fraud detection utility, providing real-time monitoring to enhance security and build trust among users.
These features lower transaction costs and improve the convenience of digital payments, particularly for low-income individuals and MSMEs. Integration with the BoT’s RTGS gives regulators real-time oversight, aiding in the quick detection of anomalies and ensuring compliance with anti-money laundering and fraud prevention standards.
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Since its launch in 2024, the Tanzania Instant Payment System has demonstrated scalability and impact. By the end of 2024, TIPS had processed 453.7 million low-value transactions worth TSh 29.9 trillion (about $11 billion), with an average of 1.5 million instant payments daily. Despite this scale, the system was operating at only a third of its designed capacity, leaving room for further growth. TIPS is positioned as a critical infrastructure for Tanzania’s digital economy, with 63 million active mobile-money wallets in the country.
TIPS supports diverse payment use cases, including person-to-person (P2P) transfers, merchant payments, government disbursements, and bulk payouts like salaries and social welfare benefits. These capabilities reduce payment delays and leakages, especially in government programs. MSMEs and merchants benefit from TANQR and request-to-pay features, which simplify transactions and reduce reliance on cash.
The system’s affordability is a significant advantage. TIPS reduces fees by eliminating costly bilateral agreements and applying same-day netting, making digital payments accessible to low-income users. This aligns with the objectives of Tanzania’s Digital Economy Strategy, which seeks universal access to affordable digital payment services by 2034. The open-API framework further enables fintechs and non-bank providers to innovate and develop services tailored to local market needs.
Tanzania’s population of over 66 million is predominantly young, tech-savvy, and mobile-first. The integration of mobile-money services with banks through Tanzania TIPS enhances interoperability, especially in rural areas where formal banking is limited. This inclusivity empowers rural populations and MSMEs to engage in the digital economy, promoting entrepreneurship and economic growth.
Additionally, by supporting non-bank financial institutions, TIPS fosters a competitive environment that drives down costs and encourages service innovation. Features like alias-based transfers and QR-code payments are designed for users with low literacy, while the embedded fraud utility strengthens user confidence in digital transactions.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.