Ms Alima Yahaya, 25, a head porter at Agbogbloshie in the Accra metropolis beamed with joy after sending GH₵100 (about $8.7) to her aged mother in one of the villages in the North East Region of Ghana.
She was very happy because her mother would receive the money after paying a 1% electronic levy (elevy) and a transaction charge.
Before, the advent of mobile payment, it was very cumbersome to send cash to relatives and friends living in the remotest parts of the country. Ms Yahaya and several of her colleague head porters and other several low-income earners could not transfer cash.
The posture of the commercial banks which were the only safest channels of sending money at that time was unwelcoming to these people. So, they used to rely on unorthodox ways of sending money to their relatives and friends.
For instance, they used to give money to known passengers, drivers, and driver mates to send to their relatives and loved ones, while the few educated ones sent money to their families and friends through the Ghana Post.
However, money sent by the postal services used to be delayed. It could take months for the recipient(s) to get the money. So, it was impossible to send money for emergency needs.
Whereas money sent by relatives and friends in urban Ghana through the passengers, drivers and driver mates in most cases were ‘diverted’.
Reminiscing her experience, Ms Asibi Ayine, a teacher, said: “On countless occasions, lorry drivers spent money I sent through them to my old dad in Bolgatanga in the Upper East regional capital”.
The story was the same for Osman Dakurah, a businessman and many other people living in urban Ghana.
He also collaborated that before he could remit money those days to his people up north, he had to go to any Apex Bank branch to send it through the nearest rural bank for them to go for.
The nearest rural bank to the community according to him used to open on only market days. “Image you were sending money to take care of an ill person, your guess is as good as mine”, Mr Dakurah lamented.
With the revolution of mobile money (MoMo) transactions in Ghana sparked by MTN Ghana, these challenges are things of the past.
“For those of us who had to send money across to help friends and family; pay for an item, fulfilment of our religious obligations and also gain access to money without visiting the bank, Mobile Money came in very handy to facilitate the process”, the former CEO of MobileMoney Limited, Eli Hini, who is currently with working MTN Nigeria said.
Additionally, mobile payments have eased the burden of sending money to people in faraway locations across the country.
As experts define it, Mobile money is the means of payment of money without the use of hard cash through mobile devices (mobile phones and tablets).
Airtime purchases, bill payments, insurance, and remittances are still the leading contributors to mobile financial services in Ghana and other African countries.
Mobile money platforms are serving a twin purpose of providing an engine for financial inclusion as well as an opportunity for service providers.
MobileMoney Limited, AT Money and Vodafone Cash are also serving as gateways for Digital Financial Services (DFS) providers to tap large unexplored market opportunities as most of the population is yet to adopt this technology.
By developing digital financial abilities, other companies are opening themselves up to other submarkets including micro-insurance, micropayments, and data-based financial services.
The growing popularity of mobile phones is a driving factor in increasing the number of mobile money users and changing the dynamic of digital financial solutions.
The COVID-19 pandemic which was a global health and humanitarian crisis was also an economic crisis although threw back many years of economic gains, accelerated the adoption of digital payments in Ghana and across the globe.
To this end, there had been a rush for digital payments and shun away cash-based transactions, which the World Health Organization flagged as a potential conduit for the spread of the deadly infectious virus at that time.
This therefore meant not just safer, digital payments to facilitate physical distancing during the COVID-19 pandemic but also, in the longer term, a shift toward financial inclusion, which could help get global economies back on track more quickly after the crisis, according to the McKinsey report.
BARRIERS
Elevy
However, digital payments which helped the world to facilitate transactions during those trying times have now become the favourite cash cow for governments in Ghana, Uganda, Tanzania, and others to milk.
Elevy which one of the barriers to digital payment adoption was imposed on Ghanaians immediately after the abatement of the pandemic crisis.
Slow adoption
Despite the strong policy push by the 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 because 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.
Furthermore, although GhIPSS is now rolling out hybrid POS devices, some banks find these to be relatively expensive, due in part to the associated high customs duties/taxes.
Banks are also less incentivised
Industry watchers noted that the banks are also less incentivised 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, especially mobile money.
Frontier Issues
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 sees fintech as having an important role in accelerating financial inclusion, as well as furthering women’s economic participation in the economy and the growth of the economy in general. This approach toward innovation also reflects the government’s general stance toward the adoption of digital payments.
Fake identification cards/ Digital ID System
Not all national ID cards permissible for the reregistration of mobile money account(s) and other digital payment systems are genuine, according to cybersecurity experts.
Because of this, it is difficult to trace digital payment fraudsters and other criminals in West Africa’s second-largest after Nigeria.
Reregistration of SIM cards
The recent reregistration of SIM cards in the country although a laudable one led to the deactivation of thousands of people from accessing mobile and mobile financial services. So, these people are cut off from the digital payments services.
Poor customer recourse
The 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.
Online/MoMo fraud
The increasing rate of online fraud and the fear of losing customers’ money, is one of the key barriers to digital payments in the country.
In recent times, cases of mobile money or bank fraud have tripled. Because of this several customers want to discontinue the use of digital payments, as it was disclosed at the 2023 MoMo Stakeholder Forum organized by MobileMoney Limited as part of its ongoing MoMo Season.
Knowledge gap
There is a huge knowledge gap in the country when it comes to the adoption of digital payments.
Financial literacy gap
The next barrier is the financial literacy rate: According to recent reports, Ghana’s financial literacy is 32%. Honestly, for financial products like digital payments, this is woefully inadequate.
Addressing the barriers
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 (EMIs) and agent guidelines were introduced in 2015 which allowed non-banking entities to use mobile money payment platforms to channel funds to individuals and businesses.
The nationwide rollout of the National Identification system is one of the surest ways to speed up financial inclusion in the country.
To make more people use mobile money, industry watchers have suggested that telcos should make onboarding very simple and hassle-free for their mobile money customers.
The mobile money operators are addressing the MoMo fraud with the intensification of mobile money fraud education to reduce or end the canker in the country. If these barriers are holistically digital payments would sustain its growth.
MoMo transactions in figures
Indeed, there is a growing usage of e-money among Ghanaians. The year 2022 recorded a value of GH¢1 trillion in e-money transactions and the volume of e-money transactions stood at 5 billion, according to the BoG’s recent report.
In 2021, the value of e-money transactions stood at GH¢ 978.32 billion while the volume of e-money transactions stood at 4.25 billion.
Details of these barriers and how to address them will be delved into during this MoMo Season which began in August and is expected to end on 30th September 2023.
