Payments systems: The past, the present and the future - Springboard discussants share ideas

The more people are able to easily and quickly pay across different geographical, demographic and other institutional barriers, the more businesses can get done.

But where are we from, where are we today and where are we going with payment systems?

It is these questions that the Springboard, Your Virtual University, a radio programme on Joy FM used in last Sunday’s edition to answer.

The show, which is hosted by Rev. Albert Ocran, had the Chief Executive Officer of Nsano Limited, Mr Kofi Owusu Nhyira and the Chief Executive Officer of Dream Oval, Mr DerryDean Dadzie, who took listeners through the evolution of payment systems.

Defining what payment systems are, Mr Nhyira said, “payment systems must be discussed or understood with trade is mind so payment systems is the facilitator of trade and by trade I mean the expansive definition of trade to imply commerce.”

“If you are involved in any type of commerce, eventually payments would have to be made and whichever payment route you choose can be encapsulated under the theme of payment systems so basically, payments systems refer to the different types of payments where money can move from one point to the other,” he stated.

Mr Dadzie, however, said payment systems were not just driven by trade because it involved several transactions that had nothing to do about trading.

“It’s a transaction, it’s an exchange of value mostly in monetary term and in modern times we are looking at electronic payment systems but in previous times, we have had different types of payment systems so payment systems is really not just driven by trade but about transactions,” he noted.

Origin of payments

Commenting on the origin of payment systems, Mr Nhyira pointed out that “if you look at the concept of commerce which is the exchange of goods and services and in every dispensation, commerce takes a particular form and based on the form that commerce takes, its corresponding payment system evolves.”

“You can trace this to Mesopotamia where there was barter trade which was the first form of payment system,” he mentioned.

He said even though barter trade was not necessarily a payment system, the predominant commerce at the time required exchange of goods and services and that became the payment system.

From there, he said other types of commerce evolved and commodity trading started.

“So the currency or the payment system at the time became what is known as the commodity currency,” he stated.

“This then evolved to coinage where people started making coins and exchanging coins for various types of services and throughout all these phases of payments, you realise that there have been significant challenges with all the types,” he added.

He said various forms of payments systems had evolved directly proportionate to the type of commerce that existed in that era.

Suitable payment systems

Touching on what was the most suitable payment system, Mr Dadzie said predominantly, people were looking for a more efficient way to exchange value.

“In any era, the payment system is defined by the lifestyle of the people, the technologies of the time and the circumstances of the time. A circumstance could be war, disruption, or new way of life,” he said.

“Payment systems generally move with the trend so if we are in a digital age we are going to see that people would love to exchange value using digital means. If we are in the Stone Age, we will find out that people would love to exchange values using stones,” he added.

Trigger points for change

Mr Dadzie was of the view that the trigger point for the changes in the payment systems over the years had been speed and convenience.

“If you need to move money from London to Ghana and the existing one requires that it goes through a certain system that will take you one week and the service that you need is desired in one day you are going to keep questioning yourself about how to perform that transaction within a day,” he noted.

“The driver of every innovation is convenience and security. People always want to have money without the money losing value by the time it gets to them so if the mode of payment is not secured, the money would be sent but you would be hit by something like fraud,” he added.

He said the key driver was, therefore, what people are looking for and the new thing that the innovation was offering.
“It must cut down on the risks, reduce the time in sending and receiving and must be convenient,” he said.

Electronic payments

Commenting on the present payment system, Mr Nhyira said, “every time commerce changes, the payment system must follow suit.”

“We are currently in a dispensation where people are comfortable with shopping online and the people definitely will be comfortable exchanging value electronically,” he explained.

He said almost all retail outlet around the country were now displaying products online and introducing modes on paying them electronically.
“It’s a process that is building up gradually and we believe that eventually, people will  become very comfortable with the nature of commerce today and accept it,” he said.