Official ZESA Rates vs. Vendor Prices: Why ZESA Vendors Charge Extra for USD Payments

Have you noticed that a lot of ZESA vendors charge you more than the token amount when you buy using US dollars? For example, if you want to buy a ZESA token worth US$10 you have to pay the vendor US$12. What’s the extra US$2 for? Why are vendors doing this? Is this them being greedy? This might surprise you to hear but ZESA vendors have been doing this for years. The only reason you had not noticed before was because ZESA was priced in ZWL and the Zimbabwean dollar hid these charges. Now that the Zimbabwean dollar (ZWL) is gone the whole scheme has been laid bare.

Usually, airtime and ZESA vendors make their money through commissions. For example, when you buy a US$1 voucher for US$1 the vendor usually gets US$0.10 as profit. Mobile network operators sell these vouchers at a discount to the airtime vendors you see on the streets. So the vendor makes 10 cents every time they sell airtime worth US$1. Therefore whenever you buy airtime the vendor also makes about 10% in profits.

Unlike airtime vouchers, ZESA commission is meagre-the big online vendors you see make about 3%. In fact, for some platforms such as HotRecharge, the ZESA commission is 0%. This means that for every US$100 in sales you make as a ZESA vendor you make US$3 in commission. if you are a large vendor. Small vendors like the ones you see in the streets generally get about o%. For every US$100 they get US$0 in commission. So how were these ZESA vendors making their money before the currency switch to ZiG from ZWL?

How ZESA vendors have always charged you extra

Just to repeat what we have already said, ZESA itself typically offers a very low commission to its vendors, meaning the vendors you see selling ZESA don’t make much profit from simply selling the tokens. To make up for this, they often add a surcharge on top of the base price. This surcharge can be a fixed amount or a percentage of the total purchase.

During the days when ZESA tokens were sold in Zimbabwean dollars (ZWL), this was achieved by playing with the rates:

• The ZESA vendor would get the ZWL amount to use to buy tokens at a rate of say US$1 as to $40 000 ZWL.
• When they sold ZESA tokens to you they would use a rate of say $30 000 ZWL per 1 USD
• This would mean that they were making a profit of $ 10 000 ZWL per each US$1 you spent
• This translates to a massive 25% in profit per every US$1

25% is a lot of profit which explains why there was now a table on every corner selling ZESA tokens in Zimbabwe’s high-density suburbs. So what changed? Well, two things changed in last past couple of weeks:

• ZESA announced (more like just admitted), that their tariffs were now in USD. This means that the tariffs are based in USD and ZiG (formerly ZWL) tariffs would be calculated using the official rate of the day.
• Governor John Mushayavanhu killed the ZWL and replaced it with the ZiG. However, because the switch was hurried, most banks were offline last week and ZESA was now selling tokens in USD only.
• With electricity now being sold in USD, that 25% hidden charge you used to pay was now gone. When the banks came back online the rate was now suddenly 13.5 ZiG to 1 USD. ZESA vendors are now in a spot of bother.

Hence the extra charge

To solve their predicament ZESA vendors borrowed a trick favoured by DSTV agents. They decided to charge a surcharge on top of whatever you are buying:

• If you are buying a ZESA token in USD they will charge you between 10% and 20%. For example, if you want to buy a US$10 token you are asked to pay US$12. That US$2 extra is the vendor’s profit which covers bank charges as well.
• When you buy a ZESA token in ZiG, you are offered a rate lower than the official rate. So for example if the official rate is 13.40 ZiG per 1 USD, the vendor sells the tokens to you at a rate of 12 ZiG per 1 USD. They are making a profit of (31.4 ZiG less 12 ZiG). This method is very similar to the old way of hiding the surcharge. However, because ZESA now sells its tokens in USD, most people are hate to buy tokens in ZiG. They want USD tokens.

Is it fair?

Now is this fair? Well yes and no. These people have to make a living too and ZESA’s ecosystem is not the most lucrative. Most vendors do not even make any commission and for some the bank charges are more than the commission. By the way, banks also charge you this surcharge that vendors charge too! It is just that the extra charges can be so steep. They could stop at 10% but it seems everyone has their own surcharge.