Mobile money outstrips cheques in non-cash retail payments

For the first time, the usage of mobile money in non-cash retail payments has overtaken the traditional cheques, ushering in a new period of cashlite regime that can phase out the use of cheques in the country.

A Bank of Ghana (BoG) report on payment systems showed that while the volume of transactions on mobile money was 981.6 million, that of cheques was 7.3 million.

The Head of Payment Systems at the BoG, Dr Setor Amediku, said the strong appetite for mobile money usage was “a good development” that could help reduce fraud associated with cheque usage.

“Cheques are associated with a lot of fraud; so if our people can use mobile money to make payments instead of cheques, it will help to reduce fraud in the payment system,” he noted.

Dr Amediku told the GRAPHIC BUSINESS that the increase in the use of mobile money would now inspire the BoG to leverage the growth to digitise the financial sector to help reduce the rate of crime in the payment system.

With cheques still being the preferred medium for persons engaging in high-value transactions, Dr Amediku said it behoved the BoG to move from paper instruments to electronic instruments as people embraced mobile money for payments.

Regulation

Dr Amediku, however, expressed the need to regulate the digital payment system to prevent criminals from using such mediums for illegal engagements; and hinted that a bill was before Cabinet, which when passed would provide the legal basis to regulate digital payment platforms.

“When the Bill is passed by Parliament, the Fintechs (financial technology) will have to comply. There will be chaos in the financial system if we are unable to control who enters the market to provide any payment services systems,” he said.

Surge in mobile money

The surge in mobile money transactions necessitated the passage of the electronic-money Issuers and Agents Guidelines in July 2015.

Three Mobile Money Operators made up of MTN Mobile Financial Service, AirtelTigo Money and Vodafone Cash offered mobile money services during the year under review on account of Airtel and Tigo merger in November 2017.

The number of registered mobile money accounts as of December 2017 was 23,947,437 showing a growth rate of 21.34 per cent over the 2016 position of 19,735,098.

Correspondingly, the number of active mobile money accounts increased by 33.75 per cent from 8,313,283 in 2016 to 11,119,376. The active registered agents of the three mobile money operators (MMOs) in 2017 stood at 151,745 and showed a growth rate of 41.27 per cent over the previous year’s position of 107,415 while the total value of mobile money transactions of GH¢155,844.84 million in 2017 showed a 98.51 per cent increase over the 2016 position of GH¢78,508.90 million.

Growth across board

Meanwhile, according to the Payment Systems report, in 2017, all the major payment streams, including Ghana’s Real Time Gross Settlement (RTGS) system, Cheque Codeline Clearing (CCC) system, Ghana Automated Clearing House (GACH) system, National Biometric Smartcard Payment System - e-zwichTM, National Switching and Processing System - gh-linkTM, GhIPSS Instant Pay (GIP), Ghana’s Paper Payment Instrument Accreditation Scheme and the mobile money sector showed considerable growth in both volume and value of transactions compared with 2016 with the exception of Ghana Automated Clearing House (GACH) direct debit.

For instance, the Ghana Interbank Settlement (GIS) system which is Ghana’s Real Time Gross Settlement (RTGS) system, continued to provide a platform for high value payments.

The total volume of GIS transactions of 934,234 in 2017 recorded an increase of five per cent over the 2016 position of 889,709, while the total value of GIS transactions increased by 24.75 per cent to GH¢2.08 million in 2017.

The average value per transaction was GH¢2.23 million in 2017 compared with GH¢1.88 million in 2016.

The total volume of inter-bank cheques cleared during 2017 went up marginally to 7,334,460 from 7,309,406, while the value of cheques cleared increased by 17.83 per cent to GH¢179,555.47 million in 2017.