Tanzania’s payments market shifts from cash and cards to mobile

By Vriti Gothi

Tanzania’s payments landscape is shifting rapidly, with mobile money providers taking the lead in driving financial inclusion and pushing banks toward greater digital innovation. At the Seamless East Africa event in Nairobi, South Africa-based Stanchion highlighted the country’s unique position in Africa’s payments evolution, where mobile-first solutions continue to outpace traditional banking offerings.

Dar es Salaam, Tanzania’s commercial hub, reflects the pace of this transformation. Once a fishing village and later a colonial administrative centre, it has grown into an economic powerhouse. Now, under the government’s Vision 2025 plan, the focus is on industrialisation, infrastructure investment, and digitalisation. GDP growth is forecast to reach 6% in 2025, with tourism, telecoms, and FinTech playing central roles.

Digital payments are already reshaping everyday commerce. With over 55 million mobile money accounts, nearly eight out of ten Tanzanians now use mobile platforms for payments, transfers, and retail purchases. The Tanzania Instant Payments System (TIPS), connecting 45 providers nationwide, processed more than USD 6 billion in retail transactions last year, underscoring its role as the backbone of interoperability. At the same time, the Bank of Tanzania has introduced policies eliminating consumer fees at point-of-sale terminals, a move designed to incentivise wider adoption of digital and card-based payments.

Yet it is virtual cards that are beginning to capture attention as the next wave of digital innovation. While 96 percent of the country’s 12 million physical cards are still used primarily for ATM withdrawals, virtual card issuance has grown sharply, with around 820,000 cards issued to date, worth nearly USD 85 million in transactions. Used for online subscriptions, business expense management, B2B payments, and cross-border trade, these cards are finding strong uptake among businesses and younger, digitally savvy consumers. Mobile operators, led by Vodacom’s M-Pesa, have been the first to capitalise on this opportunity, while FinTechs such as Miden and Fyatu are also entering the market. For banks, however, adoption remains at an early stage.

The regulatory landscape is evolving alongside these developments. Tokenisation and tap-to-pay services are on hold pending central bank approval for major wallets such as Apple Pay and Google Pay. Meanwhile, cryptocurrency continues to occupy a grey area, with courts recognising its legal use but formal regulations still in progress.

For Tanzania’s nearly 50 banks, the challenge lies in keeping pace with the agility of mobile operators. Stanchion believes that virtual cards present a practical entry point for financial institutions to close this gap. Its Payment Fabric platform enables banks to integrate seamlessly with card schemes, digital wallets, and legacy systems, allowing them to launch new digital products faster and at lower cost.

As the country accelerates towards its 2025 vision, mobile-first innovation and virtual issuance are shaping Tanzania’s payments future. With a youthful population, rising eCommerce demand, and growing openness to new technologies, Tanzania is emerging as one of East Africa’s most dynamic markets for digital financial services.