In recent years, Tanzania has experienced unprecedented growth of technological development and digital transformation. This has revolutionized the financial services especially in the payment mechanism. One of the notable changes is the use of electronic money (also known as e-money, e-currency or digital money). Among others, electronic money includes mobile money, virtual card, masterpass QR, payment-wallet, selcom, max malipo etc. Way back in the year 2015, the Government enacted progressive laws that enabled the regulation of E-Money. These include; –

  1. The National Payment System Act, 2015;
  2. The Payment System (Electronic Money) Regulations, 2015; and
  3. The Payment Systems (Licensing and Approval) Regulations, 2015.

Electronic money as opposed to paper-based money is a form of money that exist in electronic form. Section 3 of the National Payment System Act, 2015 (hereinafter “the Act”) defines electronic money to mean monetary value as represented by a claim on its issuer, that is electronically stored in an instrument or device, issued against receipt of funds of an amount not lesser in value than the monetary value issued, accepted as means of payment by persons or entities other than the issuer and can be redeemed in cash.

Section 25 of the Act provides the eligibility requirements for a money issuer to include corporate structure, permissible services and capital adequacy. A bank or a financial institution that intends to issue electronic money is required to obtain approval from the Bank of Tanzania (BOT) while a non-financial or non-banking institution is required to establish a separate legal entity by setting up a trust and thereafter obtain a license to issue electronic money as per Regulation 3 and 12 respectively of the Payment System (Electronic Money) Regulations, 2015 (hereinafter “the Electronic Money Regulations”).

Furthermore, a payment system provider is required to seek and obtain written approval of the BOT before making any changes to its shareholding structure as per Regulation 15 of the Payment Systems (Licensing and Approval) Regulations, 2015 (hereinafter “the Payment System Regulations”). Similarly, before entering into any merger or acquisition, a payment system provider is required to request a written approval from the BOT as per Regulation 44 of the Payment System Regulation. Correspondingly, a payment system provider shall notify the Bank of any changes to its non-shareholding directors as provided under Regulation 43 of the Payment System Regulations.

Notably, Regulation 25 of the Electronic Money Regulations states that the E-Money shall be issued in Tanzanian Shillings only unless approval is obtained by a bank to issue E-money in another currencyThis means that the issuance of electronic money in other currency is limited to a bank only and not other financial institutions or non-financial entity.  In addition to that, Regulations 34 and 35 of the Electronic Money Regulations set up the transaction limits for electronic money issuance basing on the electronic money holder. The limits are provided under Form F of the third Schedule to the Electronic Money Regulations.

Conspicuously, a payment system provider is required to place its primary data center in relation to payment system services in Tanzania under Regulation 43 of the Payment System Regulations.  Generally, the BOT is the overseer of the electronic money issuance in collaboration with the Tanzania Communications Regulatory Authority (TCRA) and other regulatory bodies.

It should be noted that on 18th December 2020, the BOT issued a circular restricting issuance of electronic money licenses to Licensed Mobile Network Operators (MNOs) in the country. However the circular pinpointed that the restriction will not apply to banks and NON-MNOs entities already issued with Electronic Money License from the bank. This means that the BOT going forward will only issue the Electronic Money License to the registered MNOs.

In summation, the use of E-money has been applauded for increasing financial inclusion by allowing the unbanked population to access payment systems and increase economic growth in the country. On the other hand, certain forms of E-money such as cryptocurrency are banned in Tanzania by the BOT public notice issued on a circular dated 12th November 2019. Given the growing popularity of crypto-currency globally, it is high time for the Government to devise mechanisms on how to best deal with or regulate such form of currency.

Dealing with financial services especially in the payment mechanism is a complex and technical process which needs the highest expertise and diligence. Victory Attorneys and Consultants are experts in this area for guidance and opinion to stakeholders in obtaining the licenses and compliance with the laws governing electronic money in Tanzania.


Authored by:

Fatma Haruna Songoro,
Victory Attorneys & Consultants,
IT Plaza Building 1st Floor,
Ohio Street/Garden Avenue,
P.O. Box 72015,
Dar es Salaam, Tanzania.
+255 752 089 685