Paynet Zimbabwe sues BAZ US$100 million as banks dumps its services

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By Mary Taruvinga

PAYNET Zimbabwe, a subsidiary of Mauritian financial services provider, Payserv, is demanding US$100 million from the Bankers Association of Zimbabwe (BAZ) for loss of business.

Paynet, claims, BAZ engaged in uncompetitive practices and influenced its members, who owed the financial services provider some US$470 000 to breach existing contracts.

After a row over the mode of payment in which Paynet was accused of demanding foreign currency, government recently announced it was working on a new system to be known as Bank File Interchange System (BFIS) which will be collaboratively funded by all banks with BAZ as its custodian while riding on the ZimSwitch platform.

“BAZ actions were clearly calculated to eliminate the Paynet platform as a service provider to all its members, regardless of the particular financial institutions’ intentions preference, or competitive interest,” said Paynet in its claim against BAZ.

“Plaintiffs (Paynet and Payserv) deem the defendant’s conduct to be deliberately anticompetitive and destructive to the conduct and profitability (of) its business and its ability to freely and individually contract and negotiate directly with BAZ members.”

Paynet argues it has operated in Zimbabwe with its footprint in all major banks and government institutions.

“Many contractual arrangements between Paynet and members of BAZ were conducted on an evergreen basis. Plaintiff calculate that the adverse impact of the defendant’s actions at US$100 million,” said Paynet

Documents in possession of show that BAZ is being sued in its capacity as the syndicate representing the interests of registered banking institutions in Zimbabwe.

The plaintiff entered into separate contracts with BAZ members in terms of which the financial institutions contracted would use Paynet services on an agreed per transaction fee.

Paynet’s contracts with BAZ members are denominated in United Sates currency.

Upon payment by BAZ members for services rendered, the plaintiff would in turn remit to the license holder, Payserv, the fees in US dollars.

Court papers show that on or about May 15, 2019, Paynet wrote to all contracted financial institutions and attached an invoice which would become payable as at May 31 2019 in US currency to Payserv’s account in Mauritius.

The documents show that, Paynet in communicating its invoice, asked the contracted financial institutions to indicate their acceptance and intent to pay directly to Payserv Africa by responding to the email.

Follow-up communication was sent to all contracted financial institutions reminding them of the requirement to state their acceptance of the invoice and intent to pay, failure of which would result in the suspension of service to defaulting institutions.

Paynet said a number of contracted financial institutions indicated in writing that they accepted the invoice and intended to pay.

On May 31, 2019, in a meeting with an unidentified Payserv director, Reserve Bank of Zimbabwe (RBZ) John Mangudya, reportedly indicated he had no objections to Payserv being paid for services rendered by Paynet.

RBZ deputy director financial markets also attended the meeting according to papers before the courts.

Based on the undertaking by the RBZ, Payserv wrote to contracted financial institutions informing them of Mangudya’s undertaking.

It is claimed that notwithstanding the undertaking, BAZ allegedly engaged “in anti-competitive practices, actively preventing its members from free and constructive engagement with the plaintiffs.”

Paynet said BAZ was effectively instructing its members to breach their respective contracts and existing arrangements.