The Payment Systems Act 662 of 2003 set Ghana on a path towards a system of electronic transactions. The cash-lite initiative envisions a transition from a cash-dependent economy to one that is heavily reliant on bank cards, mobile money, internet payments and other forms of modern cashless transactions. Since the act was passed, the Bank of Ghana (BoG) and Ghana Interbank Payment and Settlement Systems (GhIPSS) have developed the infrastructure to deliver the settlement and clearing services required to support the transition.
However, the widespread adoption of cashless payments has not transpired. “Complex structured transactions and corporate finance structures will not be easily digitised, but we will in time see the digitisation of all standard services previously provided in a brick-and-mortar bank,” Frank Adu Jr, the managing director of CAL Bank, told OBG.
As with many African economies, Ghana is heavily reliant on cash. This is in large part due to the significant proportion of unbanked households. According to the World Bank, only 40% of the adult population had a bank account in 2014, while less than 20% had a formal savings account. It is also a result of limited identification infrastructure – while some West African economies, such as Nigeria, have rolled out biometric identification cards, Ghana as of yet has not – and a lack of point-of-sale terminals and ATMs.
According to BoG data, the value of mobile transactions has grown rapidly from GHS594m ($153.3m) in 2012 to GHS35.4bn ($9.1bn) in 2015. “The convenience of mobile money is rapidly overtaking the cost of mobile money,” Joe Jackson, director of business operations at Dalex Finance, told OBG. “Mobile money is not cheaper. Transaction costs are as high as 2% but the unlimited convenience means that it will continue to explode.”
While it has yet to match the heights of Kenya’s M-Pesa programme, this segment still has a great deal of room for growth: active mobile money customers account for just 3.9% of mobile subscribers.
Banks have also encouraged direct debit transactions and more sophisticated internet-based payments for mobile devices. Based on the ACH Direct Debit network developed by GhIPSS, the BoG is urging banks to expand customers’ access to direct debit systems for recurring payments. Since its introduction in 2013, use of direct debit remains low but has increased rapidly, rising from GHS22.8m ($5.9m) in 2013 to GHS70.1m ($18.1m) in 2015. Elsewhere, banks are moving into the internet payments space. For the middle class, banks have introduced products that link customers and online merchants through a secure financial transactions portal.
Although Ghana’s electronic payment system is still in its early days, cybersecurity has already become a concern. Albert Antwi-Boasiako, principal consultant at cybersecurity firm e-Crime Bureau, told Ghana’s Business & Financial Times in June 2016 that the banking industry is losing around $250,000 per week due to cybercrime. He said the industry must invest more to educate users of online banking, and should carry out thorough security assessments of banking apps and tools before rolling them out. “With customers not fully prepared for internet banking, there is a huge vulnerability or risk in the sector … the reason these cyber-related activities are growing at an alarming rate is that institutions haven’t made the necessary investment in cybersecurity,” he said. “On one hand there is an increment in the rate at which cybercrime is being committed in the sector, but on the other hand there is low investment in cybersecurity from industry players.”
Banks particularly need to conduct security assessments of apps and tools used by mobile payment service providers. Jackson told OBG, “Cybersecurity is a multi-layered, multifaceted beast. There are huge cybersecurity concerns and no one is doing enough.”