Tanzania’s Big Moves in East Africa’s Digital Payment Revolution

Tanzania is leading a groundbreaking initiative that could transform how East Africans send and receive money across borders. The country has partnered with Rwanda to pilot a regional instant payment network that aims to make cross-border transactions as straightforward as sending money to a neighbour. This is about more than just technology; it’s about policy decisions that will determine whether Tanzanians can afford to do business across borders.

Today, sending money from Tanzania to Rwanda is extremely costly. Transaction fees can account for up to 44 per cent of the total amount sent. For a family sending USD200 back home, almost half is lost to charges. This makes Tanzania one of the most expensive countries in the world for remitting.

The figures reveal a stark reality. All remittance corridors originating in Tanzania incur a cost of at least 30 per cent of the amount sent. In contrast, other regions of the world experience transaction costs as low as 1%. The disparity is immense. For small traders, these costs are not merely inconvenient; they are expensive. They are also prohibitive. They render cross-border trade unviable for all but the largest enterprises. Consequently, they restrict markets to be small and fragmented.

Tanzania and Rwanda have begun bilateral talks on technical arrangements to connect their national retail payment systems switches. The initiative aims to link Tanzania’s Instant Payment System, known as TIPS, with Rwanda’s National Payment Switch.

Once operational, the system will enable people in both countries to transfer money directly from their bank accounts or mobile wallets. The transaction will occur in real time. No intermediaries. No delays. No excessive fees. This is significant because Tanzania already has the infrastructure in place. TIPS exists. Mobile money platforms are widespread. The policy question is whether these systems will remain isolated or become gateways to regional markets.

The Bank of Tanzania (BoT) is leading the integration. Fabian Ladislaus Kasole, Assistant Manager for Oversight and Policy at the National Payments Directorate, chairs the technical working group. His office is responsible for ensuring the system not only functions technically but also complies with Tanzania’s regulatory framework.

The meetings in Kigali from November 10 to 14, 2025, brought together central banks, payment system operators, and technical partners. They are addressing critical policy questions. How will legal frameworks align across borders? What governance structures are needed? How will consumer protection work when transactions cross jurisdictions? These are not minor details. They determine whether the system will actually serve ordinary citizens or become another tool accessible only to those with resources and connections.

Tanzania’s participation is crucial for several reasons. First, it is the largest economy in the East African Community by population. What works in Tanzania can scale across the region. What fails in Tanzania will likely fail elsewhere.

Second, Tanzania serves as a test case for policy harmonisation. The country has its own regulatory approaches, economic priorities, and political considerations. Making this system work requires finding common ground without sacrificing sovereignty. Third, Tanzania’s high transaction costs mean the potential impact is enormous. By enabling instant and affordable transfers, the project is expected to transform trade and financial inclusion, especially for small businesses and individuals.

The initiative is about more than just payments. It is about extending financial services to people currently excluded from formal systems. Tanzania has high mobile money penetration. But cross-border capabilities remain limited.

By establishing a direct pathway between national switches, the initiative is expected to reduce transaction costs greatly. Lower costs enable more people to participate. Small traders can access new markets. Families can support each other across borders without losing half their money to fees. This reflects a policy decision. Governments can either protect existing financial service providers and their fee structures or prioritise accessibility and inclusion. Tanzania appears to be choosing the latter.

This pilot is not an end in itself. The Tanzania-Rwanda model serves as a pioneering model for future expansion to all EAC Partner States. If successful, the system will be expanded to Burundi, the Democratic Republic of Congo, Kenya, South Sudan, and Uganda.

The EAC has eight Partner States. Seven instant payment systems exist in four countries: Kenya, Uganda, Tanzania, and Rwanda. The remaining countries rely primarily on private mobile money or banking platforms. Linking these systems would create a unified regional market for digital payments. For Tanzania, this means potential access to markets across East Africa. A business in Dar es Salaam could transact instantly with customers in Nairobi, Kampala, or Kigali. The policy implications are significant. Tanzania would need to consider how this affects monetary policy, capital controls, and financial sector regulation.

The project is supported by the Eastern Africa Regional Digital Integration Project (EARDIP), which is funded by the World Bank. This provides technical assistance and capacity building to help Tanzania and other countries strengthen their payment systems.

But funding alone does not determine success. The critical factor is policy implementation. Tanzania must ensure its regulatory framework can accommodate cross-border digital payments while maintaining financial stability and consumer protection. The program focuses on developing both cross-border and local digital networks to ensure rural and remote communities can access faster, safer, and more affordable payment services. This requires policy attention to addressing infrastructure gaps, promoting digital literacy, and ensuring equitable access.

The pilot faces several policy challenges. Regulatory harmonisation is complex. Each country has different rules on capital flows, foreign exchange, consumer protection, and data privacy. Finding common standards that work for everyone requires compromise and mutual understanding. Currency considerations are significant. How will exchange rates be determined? Will transactions occur in local currencies or require conversion? What happens when exchange rates fluctuate during a transaction? These are policy questions, not just technical ones. Governance structures need clarity. Who oversees a system that operates across borders? How are disputes resolved? What happens when national interests conflict with regional integration goals?

For Tanzania, this initiative represents a strategic choice about its economic future. The country can remain a relatively closed system with high transaction costs and limited regional integration. Or it can embrace open digital payment systems that facilitate trade and reduce costs for citizens.

The pilot will test whether Tanzania’s policy frameworks can support this vision. It will reveal whether existing regulations need to be updated. It will show whether government institutions can coordinate effectively with regional partners. Most importantly, it will demonstrate whether Tanzania can lead on regional integration while maintaining its own policy priorities and economic sovereignty.

The Tanzania-Rwanda pilot is a proof-of-concept. It is designed to demonstrate the technical and operational feasibility of a direct, functional cross-border payment switch within the EAC. Success will depend on more than technology. It will depend on policy choices about regulation, governance, and priorities.

For Tanzania, the opportunity is clear: lower transaction costs, greater financial inclusion, enhanced regional trade, and access to larger markets. These benefits are achievable if the policy framework facilitates them.

The question is whether Tanzania’s leaders will commit to the regulatory reforms and institutional coordination needed to realise this vision. The technical meetings in Kigali are merely the beginning. The real challenge is in aligning policies, harmonising regulations, and building institutions capable of supporting a genuinely integrated regional payment system.

Tanzania stands at a crossroads. The path chosen will determine not just how Tanzanians send money across borders, but how deeply the country integrates into the East African economic community. The decisions made now will shape the country’s economic landscape for decades to come.