The reversibility of money is a cornerstone of a functional financial system. In traditional banking, a customer can dispute a transaction, reverse a mistaken payment, or recover funds sent to a fraudster.
In the United States, the Truth in Lending Act (TILA) and the Electronic Fund Transfer Act (EFTA) provide robust consumer protections that guarantee the reversibility of money. Americans enjoy the luxury of a financial system that protects them.
Meanwhile, local consumers are left without a crucial financial safeguard that is desperately needed in the modern digital economy.
As it stands, a Tanzanian mobile money user can only rectify a mistaken transaction if the recipient has not yet withdrawn the funds or transferred them to another account. While Vodacom’s M-Pesa offers a superficial semblance of reversability, the practical application of mobile money reversal in countries like Tanzania has severe limitations that must be addressed.
Consider day-to-day utility bills. Consumers regularly use mobile money to pay for electricity, fines, or airtime. During these transactions, it is easy to mistype a digit and buy far more than intended.
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Imagine the financial shock of an ordinary citizen accidentally purchasing Sh100,000 worth of airtime instead of Sh10,000. Currently, recovering those funds is an administrative nightmare, if not outright impossible.
Digital wallets
This issue amplifies as East Africans increasingly interact with global online marketplaces via digital wallets. Take Kikuu Market, a popular Chinese online mall operating in Tanzania, Kenya, Uganda and Rwanda.
A customer can order a good, but if they receive the wrong or a defective product, Kikuu’s refund policy kicks in. Kikuu uses “K-Pay,” a wallet that accepts deposits from all Tanzanian mobile money platforms.
However, once money enters the Kikuu ecosystem, it cannot be transferred back to the user’s mobile money account, even after a successful refund.
Because of this rigid irreversibility, a successful refund does not return a consumer’s liquidity; it merely turns their cash into a forced voucher. The customer is compelled to buy something else they might not want or need just to utilise their own money.
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Kikuu is just one example, and many other platforms operate under the same structural flaws. Without systemic reversibility built into mobile money, consumers will continue to trap and lose wealth in these digital wallets.
Economic toll
The problem of irreversibility is not just an inconvenience; it carries a massive economic toll, particularly regarding fraud. Sending money to scammers is a rampant issue.
In 2023, the financial toll from online scams stood at about Sh5 billion. This figure climbed to Sh5.3 billion in 2024, before reaching Sh4.7 billion in 2025, as reported in the crime reports of the National Bureau of Statistics (NBS).
Of these billions of shillings lost annually, less than seven per cent is ever recovered. Funds lost due to simple user errors or trapped in international online wallets are not even tracked under official fraud statistics. If quantified, the true economic drain on citizens would be significantly higher.
To protect consumers and build a truly inclusive digital economy, regulatory bodies and telecommunication companies must implement a robust framework for mobile money reversibility across three key areas.
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The system must combat scammers via identity-linked liability. When a scam is reported and verified, the system should allow the scammer’s account to be forced into a negative balance.
Crucially, this liability must not be tied merely to a SIM card or phone number, but to the user’s registered National ID number. If the fraudster abandons the SIM card and registers a new number, the negative balance should automatically port to their new account until the stolen funds are recovered.
Telecoms could also use this mechanism to recover losses from debtors who abandon SIM cards to evade loans.
Two-way comms
There must be two-way communication for utility and merchant errors. It is illogical to claim that an accidental overpayment to a utility provider like TANESCO cannot be reversed simply because it belongs to another company.
The digital highway must be a two-way street. Regulators should mandate APIs that allow companies to revoke token numbers or digital airtime, automatically triggering a refund to the consumer’s wallet.
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Financial regulators must establish clear compliance rules for international digital wallets operating in the region. For any external digital wallet to legally operate in Tanzania, it must possess the technical interoperability to push refunded money back out to local mobile money networks.
It is time for financial policymakers to ground their discussions in reality. Reversibility of money should stop focusing solely on the theoretical reversibility of quantum money and cryptocurrency, which are technologies that do not serve the everyday East African.
It is mobile money that runs the East African economy, and it is mobile money consumers who deserve to be protected.
Francis Nyonzo is a Fulbright Alumnus, an economist and theorist whose research interests span the digital economy, development economics, social justice, and human rights. He is available at francisnyonzo@gmail.com. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo. Do you want to publish in this space? Contact our editors at editor@thechanzo.com for further clarification.
