Retailers and wholesalers shall sell any particular product for the same price irrespective of the mode of payment and desist from multiple pricing of goods on account of mode of payment (cash, Real Times Gross Settlement (RTGS) and Point of Sale or a combination of any two or more of them).



For the avoidance of doubt, retailers and wholesalers shall not charge any premium for the sale and purchase of their wares on the basis of mode of payment. Similarly any cash or quantity discount shall, in accordance with best practice, be granted in the normal course of business and not on the basis of the multiple pricing system.

Appendix



I had been meaning to include the following bits in the main body, but on second thought decided to put them into an appendix. What follows is a quick history of how each of the three tiers has developed.



First Tier



As readers will probably remember, a hyperinflation of the local currency finally ended with the populace spontaneously adopting the U.S. dollar in 2008. Deposits denominated in the local currency became worthless with banks only offering U.S. dollar deposits to their customers. Since then, Zimbabwean prices have been mostly been in set in terms of dollars.*



Second Tier



In 2016 a two-tier system emerged when U.S. banknotes and "plastic money" ceased being fungible (bond notes had not yet been created). The nation's central bank--the Reserve Bank of Zimbabwe (RBZ)--reopened for business sometime after the nation had dollarized. It began to offer U.S. dollar accounts, or IOUs, to local banks for the purposes of settling interbank payments, later forcing them to keep a certain amount of money on deposit at the RBZ. In theory, these IOUs were supposed to be fully backed and convertible into genuine U.S. dollars, a promise that has proven to be a tenuous one as the RBZ has been rationing access to U.S. dollars since early 2016.



This has left local banks in the lurch. Stuck with a bundle of more-or-less inconvertible RBZ IOUs, they now lack the resources to meet their depositors' U.S. dollar redemption requests. As a result, a nationwide bank run developed in early 2016 which led to the imposition of strict withdrawal limits. Ever since then, long queues at ATMs have been a perpetual phenomenon as bank customers, desperate for cash, wait--often overnight--to withdraw their quota of U.S. banknotes.**



With redemption now impeded, U.S. dollar deposits had effectively been decoupled from U.S. cash. By mid-2016 a black market of sorts had developed in which cash, the superior money, now traded at a premium to deposits, or plastic money. To cope with this lack of fungibility, retailers came up with an ingenious workaround; they began to set a cash price and a "plastic money" price, the cash price being lower.



Any retailer that did not set a lower price for U.S. dollars would not be able to "lure" U.S. dollars out of customers' pockets with the proper market reward. And without U.S. dollars, it would be difficult to import products from overseas to sell to customers. An alternative strategy to two-tiered pricing is to simply require U.S. dollars only, like here:









Third Tier



The third tier emerged when the RBZ introduced its own parallel issue of U.S. dollar banknotes, called bond notes, at the end of November 2016. This parallel currency currently comes in $1, $2, and $5 denominations, although the RBZ had earlier promised to introduce higher denominations.



In its initial announcement, the government had promised that bond notes would be fully backed and redeemable in genuine U.S. dollars provided by an international development bank, the African Export Import Bank. But this redemption promise is not being kept [



Although deposits and bond notes are both inferior imitations of the U.S. dollar they do not themselves trade at par with each other, bond notes being valued at a premium to plastic money. My guess is that this has to do with the fact that, till now at least, the supply of bond notes has been kept to ~$120 million, with the government reportedly unwilling to issue more. [



* Some prices were also set in rand, the South African currency

** The other way of emptying one's bank account, wiring dollars overseas, has likewise been constricted as foreign exchange is tightly rationed by the central bank. But this single-tier pricing strategy inconveniences customers with bank accounts and may attract the disapproval of authorities.The third tier emerged when the RBZ introduced its own parallel issue of U.S. dollar banknotes, called bond notes, at the end of November 2016. This parallel currency currently comes in $1, $2, and $5 denominations, although the RBZ had earlier promised to introduce higher denominations.In its initial announcement, the government had promised that bond notes would be fully backed and redeemable in genuine U.S. dollars provided by an international development bank, the African Export Import Bank. But this redemption promise is not being kept [ source ]. Those who want to redeem bond notes for U.S. banknotes have found that they face the same hurdles as those who want to redeem deposits. Thus, just as deposits have been decoupled from U.S dollars and fallen to a discount, so have bond notes.Although deposits and bond notes are both inferior imitations of the U.S. dollar they do not themselves trade at par with each other, bond notes being valued at a premium to plastic money. My guess is that this has to do with the fact that, till now at least, the supply of bond notes has been kept to ~$120 million, with the government reportedly unwilling to issue more. [ source ] Given the fact that many Zimbabweans do not have bank accounts and only transact with paper, the limited amount of bond notes that has been created is insufficient to meet the nation's demand for cash. So there is a scarcity premium built into the price of bond notes.* Some prices were also set in rand, the South African currency** The other way of emptying one's bank account, wiring dollars overseas, has likewise been constricted as foreign exchange is tightly rationed by the central bank.

Americans and Canadians take for granted that fact that while a multiplicity of dollar brands circulates in our respective nations, a dollar is always equal to a dollar. In the U.S.'s case, whether it be a VISA card, paper money issued by the Federal Reserve, or a deposit created by a either a big bank like Wells Fargo or a tiny one like Wisconsin Bank & Trust, a retailer will (almost always) accept each of these monies at the same rate.Compare this to Zimbabwe where a phenomenon calledhas emerged over the last few months. Retailers have begun to charge customers three different prices for goods and services depending on the brand of dollar being used: a paper U.S. dollar price, another in "plastic money" (i.e. local U.S. dollar-denominated bank deposits transferable by debit card), and the last price in terms of relatively new parallel paper money calledTo better illustrate three-tier pricing, here is a photo of a Zimbabwean store sign:You can see that the list of goods being sold is denominated in U.S. dollars, bond notes, and "swipe" i.e. plastic money. Under three-tier pricing, those who pay with U.S. dollars get the lowest price while anyone who pays with plastic money faces the highest price. For instance, the item labelled(cigarettes maybe?) retails for $9 in U.S. banknotes, $9.50 in bond notes, and $10 in plastic money. Given these rates, the shop estimates that a US$100 bill is worth $105 in bond notes and $111.11 in deposits.These rates are generous. There are reports (see here here , and here but there are many more examples) that bond notes and plastic money often trade at discounts as deep as 20-30% to U.S. dollars.Three-tier pricing may seem odd, but it is actually the market's natural response to a breakdown in the fungibility, or substitutability, of various types of money. While plastic money and U.S. paper money used to be perfect substitutes (i.e. they traded at par) from 2009-2015, over the last twelve months the quality of plastic money has rapidly deteriorated relative to U.S. paper dollars as it has become increasingly apparent that a bank deposit is a claim on the Zimbabwe government rather than on an actual U.S. dollar. Needless to say an IOU issued by the Zimbabwe government is not a very good claim to own.As for bond notes, a paper dollar look-alike originally issued by the central bank at the end of November 2016, they were supposed to be pegged 1:1 by equivalent U.S. dollars held in accounts at an international development bank, the African Export Import Bank. But this promise has proven to be a dubious one as the peg has not held. In this context, three-tier pricing is a way to recognize the fundamental breakdown in fungibility by rewarding users of the highest quality medium, U.S. banknotes, with the most advantageous price, and penalizing users of the lower quality mediums--bond notes and plastic money--with less advantageous prices. (To see why bond notes are worth more than plastic money, see the appendix below).This panoply of prices is quite embarrassing to President Robert Mugabe and his cronies as it makes the government look weak. They are trying to put an end to three-tier pricing by forcing retailers to set one universal price for goods. To this effect, recently-passed legislation says:The penalty for not accepting cash and plastic money at par is up to seven years in jail By forcing retailers to accept all brands of money in Zimbabwe at par, Mugabe is interfering with the market's natural response to a breakdown in the relative quality of different monies. His actions will inevitably set off a specific set of responses dictated long ago by: if the government specifies the exchange rate at which money must be accepted by the populace, then the good, or undervalued money will be chased out by the bad, or overvalued money.We know from its relative position in the three-tier pricing mechanism that plastic money is Zimbabwe's worst money. By requiring retailers to accept the two paper monies--U.S. dollars and bond notes--at par with the inferior money, plastic, Mugabe is forcing retailers to dramatically undervalue paper currency. As per Gresham's law, Zimbabwean shoppers who own U.S. dollars and bond notes will prefer to hoard and/or export them rather than spend them at artificially undervalued rates, using only plastic money to buy things. Thus the bad chases out the good. Media reports concur with this prognosis. U.S. paper money, which had already started to disappear back in November when bond notes were declared legal tender, is all but impossible to find. And now bond notes are getting more elusive too.To try and fix the very problem it has created, the Reserve Bank of Zimbabwe--the nation's central bank--has initiated a whistle-blowing campaign against cash hoarders. Good luck with that; cash is very easy to hide. If the authorities really want to end cash hoarding, they should re-legalize three-tier pricing. With the market sorting mechanism reestablished, the true value of cash will once again be recognized and banknotes will flow back into the market. Of course, these prices will only bring back the premium on U.S. dollars, making it terribly obvious to all how poorly the government's credit is esteemed by the market. Unfortunately, this is exactly why three tier pricing is unlikely to be legalized. This situation won't have a happy ending.