Mobile money catalyzed the financial inclusion revolution in sub-Saharan Africa, with registered mobile money accounts growing from 73 million in 2012 to 835 million by 2023. However, nearly fifteen years into the mobile money revolution, most mobile money markets are highly concentrated, with only two or three large providers with substantial market share. While more competitive than some of its peers, as of September, 2025, three of the six licensed E-Money Issuers (EMIs) in Tanzania accounted for 89 percent market share of mobile money service subscriptions (Table 1).

Table 1: Mobile Money Service Subscriptions in Tanzania

So why does this matter? Increasing competition can support greater product diversity, increase the quality of digital financial services (DFS), and reduce the prices consumers pay. This is particularly important in Tanzania, as a 2025 IPA analysis of sixteen emerging markets found Tanzania had the highest fees for cash out of mobile money, the second highest fees for on-network transfers, and the third highest fees for off-network transfers. (These high fees are in part the result of 18 percent VAT and 10 percent Excise Tax on mobile money transactions, although even without taxes Tanzania would still have the highest cash-out fees, and the third highest off-network transfer fees.)

However, this IPA analysis also found that on-network and off-network transfer fees had decreased by 58 percent and 42 percent, respectively since 2022. Our recent analysis also reveals encouraging signs of innovation and falling costs, and suggests several additional policy innovations which could deepen competition and further reduce DFS charges in Tanzania.

Increasing interoperability and reducing barriers to entry in DFS

In 2022, the Tanzania Instant Payment System (TIPS) went live, enabling consumers from EMIs and banks (and in the future fintechs) to send payments across networks. Increased interoperability could increase price-based competition in electronic payments by facilitating consumer switching, making it easier for consumers to switch to lower-cost providers.

DFS providers are also developing new business models that reduce the silos between banks, mobile money, and fintechs. In 2024, the aggregator Selcom acquired Access Microfinance Bank (Tanzania) Limited and subsequently launched a suite of DFS products to compete with mobile money. Selcom’s pricing model features free pricing for P2P payments within the Selcom network and 50 percent lower charges than other EMIs for most transactions from Selcom to other networks. Another Tanzanian bank is finalizing its Mobile Virtual Network Operator (MVNO) license acquisition, which will provide direct access to Unstructured Supplementary Service Data (USSD) infrastructure and allow it to build its own consumer base independently of other mobile operators, enabled primarily by interoperability through TIPS. As cross-product siloes reduce, so should costs, with increased convenience for consumers.

Competition challenges

While market trends point to more competition in the future, our research also identified structural barriers that limit competitive outcomes or contribute to high prices for consumers, which remain to be fully addressed:

1. Differentiated rules on agent networks and pricing for MMOs and banks: The lack of agent interoperability, separate rules for banks versus MNO agents and different pricing standards for mobile banking vs mobile money can create advantages for one type of firm over others.
2. USSD channel access and pricing: Mobile Network Operators (MNOs) and associated EMIs can exclude rivals from accessing USSD, the most common channel for DFS transactions, either by refusing access to the USSD channel or by imposing unfair terms of access. There has been at least one such complaint made by a DFS firm in Tanzania regarding and MNO in recent years. Further research on pricing of channel access, denial rates, and uptime performance could identify the prevalence of such barriers in Tanzania’s DFS market and whether policy remedies are needed.
3. Uneven bargaining power in DFS collaborations: Fintech revenue share arrangements with banks and MNOs can have as high as a 90/10 split in favor of MNOs. This may make it difficult for fintechs to achieve commercial viability.
4. Data sharing Limitations: Most incumbent providers' data is proprietary, and new providers and innovators often cannot access this data to develop or improve their products and services, even when the customer would like them to. Access to this data would help reduce costs through increased innovation and make products more competitive for consumers and small businesses.

Policy Recommendations for a More Affordable and Competitive DFS Market

Our analysis of Tanzania’s competitive landscape suggests several reforms to increase competition and reduce the costs of DFS:

1. Harmonize pricing policies across providers. Harmonized pricing rules based on activity, not provider type, will level the playing field and help consumers compare similar services. A first step in this could be harmonizing TIPS interchange charges between EMIs and banks, and digital payment pricing rules.
2. Consider new licensing windows for proportional regulation. Introduce proportional payment licenses tailored to fintech operations, adding new licence types such as payment initiation or payment aggregation licenses for firms that do not need a full payment service provider license for their services. Additionally, removing the 2020 prohibition for non-MNOs to obtain e-money issuer (EMI) licenses could make room for well-qualified and well-capitalized non-telecom companies to obtain EMI licenses, opening mobile money to broader competition.
3. Develop a roadmap for consumer-led data sharing. Consumer-directed data sharing between DFS providers would reduce information asymmetry and increase choice, particularly for mobile money users currently locked into MNO partner networks.

Tanzania has made substantial headway in leveling the playing field for providers in a traditionally concentrated market. Conducive policies and regulatory interventions, and the implementation of TIPS have already reduced barriers to entry for new fintechs and DFS providers. Policy innovations like those identified in our analysis of the competitive environment of DFS in Tanzania could help push even further towards greater competition in the market, and bring with it all of the associated benefits including increased consumer choice, better quality services and lower prices.

This blog is part of IPA’s blog series on the Tanzania Affordable Digital Finance Initiative (TADFRI), that seeks to reduce DFS costs for consumers through generating robust evidence for suitable policy development in Tanzania.