Collaboration rather the competition among stakeholders in the digital payments industry has been identified as the key to the success of digital finance in Ghana.
This emerged strongly at this year’s MTN Mobile Money Stakeholder Forum, which forms part of the 25th Anniversary edition of MTN Mobile Money Month, and was under the theme “Digitizing payments in Ghana: A collaborative effort need for success”.
The forum, organized by MTN MobileMoney Limited, was to take stock of how far Ghana has come with mobile money and digital payments and then chart a way forward to ensure complete success.
In a keynote address, Head of Payment Systems at Bank of Ghana (BoG), Dr. Setor Amediku noted that through the leadership of Central Bank, electronic payments have seen exponential growth in Ghana over the last ten years.
Outlining the successes so far, he said “Over the past decade, mobile money accounts have increased thirty-fold, to 44 million in June 2021. The volume of mobile money interoperability transactions have also increased twenty-four fold since its launch in 2018 to 10.3 million in June 2021, while GHIPSS Instant Pay volume of transactions has also increased significantly since 2016.”
He said beyond the outstanding performance of electronic transactions, new business models have emerged on the back of financial technology, providing a further boost to electronic payments.
Dr. Amediku noted that currently, financial technology companies (Fintechs) are collaborating with traditional financial institutions to provide innovative financial service solutions such as digital savings, credit, pension and insurance.
“Indeed, financial digitization has expanded to include products that support government revenue collections, utility payments, and disbursement of financial aid to vulnerable groups in society. Banks and other financial institutions have all intensified efforts to move operations to digital platforms to better serve customers,” he added.
Cash is still king
He however noted that in spite of the giant strides in Ghana’s financial digitization process, cash still remain king, despite the attendant risks with cash usage, adding that, this clearly shows that the adoption of digital payments still remains uneven and there is room for improvement to move the frontier towards financial inclusiveness through broad-based digital payments.
“To take advantage of the existing opportunities, BoG’s long-term strategy for the payment systems is to push for more collaboration among providers of financial digital products and electronic financial services,” he said.
Dr. Amediku noted that in some jurisdictions, such collaborative efforts have fostered greater economies of scale through resource pooling of infrastructure and minimized cost of testing new technologies, which have helped accelerate digitization of the value chain for both merchants and users.
He stated that under the current regime, “our consolidation of ATM networks, introduction of the Cheque Codeline Clearing, Instant Pay services, the mobile money interoperability platform, and the Universal QR Code services were all part of the collaborative strategy aimed at eliminating fragmentation and duplication.”
On his part, CEO of MTN MobileMoney Limited, Eli Hini noted that Ghana has come a long way with digital payments driven by solid regulations, huge agents pool, bank partnership, aggregators (Fintechs), merchant payments, interoperability as well as the GH QR, which ensures merchant interoperability.
He however noted that, compared to other jurisdictions, Ghana still has a big room for improvement, saying, for instance, that digital payments accounts for 96 per cent of all financial transactions in Norway and 91 per cent of same in Sweden, and that is because there is effective collaboration among the stakeholders to ensure reliability, trust, and ease of use backed by solid infrastructure and a national agenda.
The MTN MoMo Boss said the discussion around digital payments in Ghana should must move away from that of competition to partnerships because the enemy is not the players in the space, but rather cash, which still remain king because, in spite of the high cost of cash transactions, it is still very reliable so people still prefer that to digital payments.
Eli Hini said the digital payments industry in Ghana has done well in ensure reliability, safety, convenience and more, but at this stage deeper collaboration is needed to ensure a push towards a real digital economy, and that would depend on a number of accelerators.
He mentioned the accelerators as a strong national agenda, partnerships, regional trade, the telecom industry, reliable payment infrastructure, education, and trust.
Eli Hini observed that in terms of digitization being a national agenda, Ghana is on the right path, as the government has been in front of the drive towards a digital Ghana, adding that there is need to also move digital payments to the regional level to facilitate regional trade between Ghana’s SMEs, which constitute 70 per cent of the business community and their counterparts in the region.
He lauded GhIPSS for the interoperability and GH QR infrastructure, but insisted that there is need for a deliberate investment into more of such collaborative infrastructure to ensure reliability and convenience.
“The telecoms industry players must also work together to make access to reliable internet and smartphones easier and affordable to drive adoption of digital payment services, and there is also the need to build solid anti-fraud systems to boost public confidence in using digital payment platforms,” he said.
He believes a deliberate effective and regular public education on the advantages of digital payment over cash is also key to the success of digital finance in Ghana.
Eli Hini is confident that a dedicated focus on the proposed accelerators would in no time push Ghana to the level where the likes of Norway and Sweden are, where over 90 per cent of purchases are made online, and over 80 per cent of person to person payments are done via digital platforms.