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Telcos, Banks urged to localize Mobile Money, e-payment systems
Posted on: 06-Aug-2012         Source: myjoyonline.com
Vice President of IMANI Ghana, Kofi Bentil has said telecom operators must make their Mobile Money systems suitable for the Ghanaian situation or else majority of Ghanaians will not use Mobile Money no matter how much the telcos advertise them.

He said the same goes for the banks and non-banking financial institutions which operator various electronic payment products and services.

Mr. Bentil said the Mobile Money and e-payment systems in Ghana are largely based on imported paradigms which do not suit the Ghanaian particular contest so they will remain niche products unless the telecom operators and financial institutions begin to take out some features and inculcate more friendly features that would suit Ghanaians.

He was speaking at a Roundtable Forum jointly organized by MTN Ghana and Joy FM to discuss how to move Ghana towards a cashless society.

A cashless society is a society where cash is rendered inferior because the financial systems automatically makes other payment options even better than the use of cash – but the Ghanaian society as it is now depends heavily on cash for financial transactions and no e-payment system has proven better than cash yet.

“A system that can be accepted and be used in Ghana must be open and easy to access and be versatile – you have to be able to pay taxi fares with it – you have to be able to shop and do several other everyday transactions with it – it must be better than cash and give people the confidence that wherever they go it will be accepted for payments,” Mr. Bentil stated.

He noted that 80% of Ghana’s population is in the informal sector where cash transaction is mainly preferred, and out of that 80%, there is a subset of 50%, who are illiterate and do not send text messages so they are not interested in the Mobile Money or any other electronic payment system because those services are mainly SMS based.

The IMANI Vice President also noted that Mobile Money and other electronic transaction systems, both banking and non-banking, are largely pigeon-holed because of the requirements such as registration and the need for one to be a customer of the telco or bank before being able to use the service.

Mr. Bentil said in some cases customers are unable to do electronic transactions beyond certain amounts, and even where some banks have issued credit cards, that could also be rendered ineffective outside of West Africa because credit cards from any West African country has been blacklisted as fraudulent.

“Whereas all those requirements and limitations are necessary within the regulatory framework they also constitute the bottlenecks that put those services into a pigeon hole and stifle the drive towards a cashless society because those in the informal sector will not register and will not subject themselves to any complex requirements and limitations when they can alternatively have direct access to their cash for transactions,” he said.

Mr. Bentil said until the telecom operators, banks and other electronic payment system operators adjust those services and take out the features which are unfriendly to that 80% of Ghanaians in the informal sector, the drive towards a cashless or cashlite society would remain a mirage.

“If we keep going at it the way we have for the past ten year we may only be able to achieve a certain level of cashless society in certain towns but we can forget about making the whole of Ghana a cashless society,” Bentil said.

Mr. Bentil noted that very often e-transactions systems have proven unreliable at crucial moments, saying that for the 80% of Ghanaians in the informal sector, there is zero tolerance for system failures because cash is reliable and once an electronic payment system fails them they revert to cash and never use that system again.

Fidelity Bank is one of MTN’s Mobile Money Partners, and the bank’s CEO, Charles Effah said that currently 90% of business transactions in Ghana is cash-based and even though the financial institutions are trying to change that, there are regulatory bottlenecks in the way of that effort.

He noted, for instance, that each telco is limited to having only three banks as Mobile Money partners, which makes it difficult for persons outside that ecosystem to access the Mobile Money service fully.

Mr. Effah said cost per transaction, improper security, and seldom unreliability of e-transactions are also de-motivators for most customers.

He said, moving forward, the regulatory environment should push towards an ecosystem that encourages sharing of technology and infrastructure between networks and financial institutions, more e-payment opportunities on the various systems, and for a situation that places a limit on how much cash one can take from the bank at a time to compel people to use e-payment systems.