Challenges Impeding  Ghana’s Digital Payment Systems

Ghana cedi notes

Accra, October 18, 2017//-Rising competition in Ghana’s financial technology (fintech) space is driving innovation and increasing the number of use cases for digital payments in the country.

For instance, in September 2016, Ecobank Capital Advisors Ltd., a subsidiary of Ecobank, launched Ecobank TBill4All in collaboration with MTN Mobile Money. Ecobank TBill4All is a self-service digital product that allows Ghanaians to invest in 91-day and 182-day Treasury bills using MTN’s mobile money platform.

While payment aggregators, such as Interpay, Slydepay, and expressPay, FlexiPay and some mobile money providers also offer a platform for customers to conveniently pay school fees to many educational institutions in Ghana with their mobile phone.

Additionally, in 2014 the Ghana Education Service partnered with MTN to launch “Back to School,” a mobile payment product that allows for the payment of school, college, and university fees.

As of 2016, over 100 schools were using the “Back to School” service, and 5% of MTN mobile money customers used “Back to School” to make school fee payments.

The challenges 

Despite a significant growth in various digital payment methods such as cards, e-zwich, and mobile money in the last two to three years, there are several challenges that continue to impact the growth of digital payments in Ghana, according to Ghana’s Ministry of Finance and the UN-based Better Than Cash Alliance  recently  released a report titled ‘Building an Inclusive Digital Payments Ecosystems: The Way Forward’ documenting the country’s progress in creating an economy where everyone can pay and get paid digitally, instead of cash.

Slow adoption

It noted that; “despite the strong policy push by Ghana Interbank Payment and Settlement System (GhIPSS ) and the Government, the adoption of the e-zwich card has been modest outside of government-to-person (G2P) payments such as salaries and social transfer programmes”.

This is mainly due to the fact that merchant acceptance of e-zwich is low (with less than 1,000 active post of sale (POS) terminals currently) and there is not yet any interoperability with other cards or payment schemes.

Further, although GhIPSS is now rolling out hybrid POS devices, some banks find these to be relatively expensive, due in part to the associated high custom duties/taxes.

Banks are also less incentivized to invest in these hybrid devices

Banks are also less incentivized to invest in these hybrid devices, as the transaction charges they earn from a domestic e-zwich transaction (0.50 to 1 GHS) are much lower than those from an international scheme such as Visa/MasterCard. It is evident that both the payments industry and the general population are not currently coalescing around e-zwich, but rather preferring other digital payment options such as mobile money.

A second issue is systemic interoperability of the various payment providers. The growing number of payment aggregators such as expressPay, eTranzact, Zeepay, and IT Consortium have further improved Ghana’s payment infrastructure and, to a certain extent, facilitated interoperability.

These fintech companies have invested in developing platform infrastructure that supports card, mobile, and web (internet banking) payments and offers interoperable person-to-person (P2P) transfers and electronic payments for government services, utility payments, and merchant payments.

Some payment aggregators have also deployed technologies like Near Field Communication (NFC) to make electronic payments more convenient. However, at a systemic level, interoperability between the banks and the mobile money (MM) providers is yet to be achieved.

Recently, GhIPSS announced that bank and mobile network operator (MNO) interoperability will be achieved by November 2017 through the development of an interoperable switch.

The Bank of Ghana (BoG) is seeking to divest approximately 70% of its 100% ownership in GhIPSS to Ghanaian commercial banks while still retaining oversight. These proposed changes to GhIPSS’ shareholding have been questioned by some industry players.

Some MM providers are concerned that this could hinder their ability to connect to the new switch, both from a commercial and/or technical standpoint, as the commercial banks may try to prioritize their interests.

Moreover, some industry players also consider GhIPSS to be more of a competitor (e.g., for merchant acquisition regarding e-zwich) than a neutral payment and settlement platform provider.

The proposed change in ownership of GhIPSS and the concerns of MM providers may have significant repercussions on the feasibility of a truly interoperable payments platform.

Frontier Issues: Fintech Innovation

The financial services and payment landscape in Ghana is already facing competitive pressure from fintech firms such as aggregators expressPay and Zeepay. Although they are not financial institutions, these firms offer competitive services in the payment sector including bill payment, airtime top-up, merchant payments, and P2P transfers.

The BoG has seen the potential these companies offer in terms of increasing innovative product offerings, lowering consumer pricing, and augmenting access for poor populations, and has thus included provisions for regulation of fintech providers in the draft Payment Services and Systems Bill (PSSB).

Although the PSSB has yet to be implemented, the BoG has started the conversation with these entities, having requested that they pre-submit their applications for PSSB authorization, and providing no-objection letters for specific individual products.

The BoG sees fintech as having an important role in accelerating financial inclusion, as well as furthering women’s economic participation in the economy and growth of the economy in general. This approach toward innovation also reflects the Government’s general stance toward the adoption of digital payments.

Growing Mobile Money Fraudsters

Activities of mobile money fraudsters are growing in the country.  Criminals have invaded Ghana’s leading mobile money transfer platforms making it possible for some people to doubt the genuineness of the platforms which help to boost financial inclusion in the country.
According to Ghana Chamber of Telecommunications, mobile money operators in Ghana namely, MTN Mobile Money, TigoCash, Airtel Money and Vodafone Cash have recorded 388 money fraud cases in 2016 as against 278 in 2015.

Although the mobile money operators did not reveal the amount of money made away by the fraudsters, majority of these cases have been reported to the police for further investigations and closure. While some fraudsters involved in the some cases have been prosecuted.

To this end, telecom industry analysts warned that mobile money fraud which is rampant in Kenya, Uganda and Tanzania, is also rising in Ghana and it is here to stay because of the identifiable loopholes in the national identification system, greed and ignorance, among others.

Fake ID cards used for registration of mobile money accounts

The Cyber Security Advisor to the Government, Albert Antwi-Boasiako, noted that not all the national ID cards permissible  for the registration of mobile money account(s) are genuine.

Because of this it is difficult to trace mobile money fraudsters and other criminals in the West African second largest after Nigeria, he added.

In Ghana, the national ID cards which are permitted to be used for the registration of mobile money account(s) and SIM cards are a valid Passport, driver’s license issued by the Driver and Vehicle Licensing Authority (DVLA), National Health Insurance Scheme (NHIS) card, Voter  ID and National ID cards including passports.

But some criminals do cheat these agencies mandated to issue these national ID cards. So some of the ID cards used in the mobile money account registrations could be faked, according to cyber security experts.

The Head of Research & Communications at the Ghana Chamber of Telecommunications, Derek Laryea blamed the geometric rate of mobile money fraud in the country on customers’ greed and ignorance.

He told African Eye Report that some customers’ attempt to get more money to solve their pressing demands end up being cheated by fraudsters.

Mr Laryea noted that some customers are not aware of the existence of mobile money fraud in the country because of limited information and publicity.

Inadequate customer vigilance 

On his part, Manager, Mobile Finance Services Analytics, Budget & Reporting at MTN Mobile Money, Solomon Hayfordadded that inadequate customer vigilance and compromises, is among the contributory factor to the uptake of mobile money fraud in the country.

Poor customer recourse

The Head of Payment Systems at the BoG, Dr. Settor Amediku identified nontransferable fees, poor customer recourse, insufficient agent liquidity or float and complex and confusing menus as the major challenges to mobile money evolution in the country.

Addressing the challenges

He noted that in a bid to address the challenges of mobile money in the country, the Branchless Banking Guidelines was introduced by the BoG in 2008 which led to the introduction of a model known as ‘Bank-led and many-to-many model.

Subsequently, the Electronic money issuers and agent guidelines was introduced in 2015 which allowed nonbanking entities to use mobile money payment platforms to channel funds to individuals and businesses.

Dr Amediku caledl for nationwide rollout of National Identification system which is expected to take off in November, this year. It is one of the surest ways to speed up financial inclusion in the country. So, the central bank is lending its support to the upcoming national ID card rollout exercise, he added.

To make more people use mobile money, the Chief Officer of DreamOval Limited, DerryDeen Dadzie suggested that telcos should make on-boarding very simple and hassle-free for their mobile money customers.

Touching on how the mobile money operators are addressing the fraud, Mr Laryea said: “Mobile money operators are beginning to intensify mobile money  fraud education” to enable reduce or end the canker in the country.

E-money transaction 

Electronic money transactions especially mobile money are consistently growing as the total number of transactions keep increasing monthly. Latest figures from the Bank of Ghana (BoG) indicated that 21 million Ghanaians have mobile money accounts as against 11.4 million bank accounts.

By Masahudu Ankiilu Kunateh, African Eye Report





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