Ghana’s mobile financial transaction business has made strides, with exponential growth both in volume and value since 2009, recording over 192% transaction growth as at August 2015, but surprisingly, it is driven solely by one service, Person -to-Person transaction (money transfer).
The rest of the mobile financial services are largely dwarfed by money transfer; all together, they contribute less than 15% of total revenue generated from mobile money in Ghana.
Unbelievably, 72% of Ghanaians subscribed to the mobile financial platform purposely to send or receive money, according to a CGAP survey conducted in August last year.
This is huge comparing to peer countries like Kenya (63%), Tanzania (55%) Rwanda (60%).
The big question is; could mobile money in Ghana be beneficial to achieving the cashless society if all it is being used for is cash in /cash out transactions?
Currently, four telecommunication companies in Ghana-MTN, Airtel, Tigo and Vodafone are involved in the mobile money business providing a broader range of services aside sending and receiving money.
These include to airtime top-up, data bundles top-up, paying bills online and in-store purchases of goods and services.
Though mobile finance has chalked immense success owing to its range of services, with a customer base growing at 83.05% to 13.1 million in 2015 and raking GH¢35.4 billion transactional value (according to Bank of Ghana) the truth is that, person-to-person transactions contribute more than 85% of total revenue generated from mobile financial services in the country.
According to the CGAP survey, in Ghana, Only 7% of active mobile money account holders save via mobile money and a mere 0.5% have taken a mobile loan.
Receipt of wages and government payments are both around 2% and even bill payment, which is one of the big early use cases is only done via mobile money by 5% of active mobile money account holders.
This poor uptake is largely blamed on lack of collaboration between the government and telecom companies and also, distrust in the services by Ghanaians.
The fear is that, a sector projected to more than double its current customer base will still be limited to Person to Person transfers in the coming years since others services possess bigger opportunities than money transfer.
For example, a good adoption of utilities payment will basically reduce energy, transport cost and more importantly long queues at various offices associated with physical cash payment.
Moreover, merchant payment which uptake has been worse in Ghana, even globally, contributing just 3.7% of total MM transactions as at December 2014, has greater potential than Person-to-Person transfer in achieving a cashless economy.
Whilst money transfer could be done once or twice averagely by a customer in a month, paying for groceries, food, clothes etc. in-stores and online is done daily.
Unfortunately, scarcely do we find POS devices for mobile payment in our shopping centers, pharmacies, restaurants and hotels. Meanwhile a fifth of Ghanaians have mobile money accounts for merchant payment.
POS terminal penetration in Ghana is very low, standing at 4.16 per 100,000 inhabitants according to a World Bank report
A visit to Koala Shopping Center and KFC Restaurant, all in Osu revealed that the on-premises retail payment (merchant payment) needed reinvigoration.
Mona, a cashier at Koala shopping Mall noted that “People don’t make payments with mobile money, even though the machine is functional, no one has ever requested for mobile money payment.”
At KFC, the assistant manager, Adams doesn’t even remember the last time he made a transaction with the POS device.
“It’s been a very long time” he says
It is learnt that customers do opt for cash payment instead, because of the cumbersome process for payment with a POS device in addition to poor service network.
Mr. Michael Amissah, Managing Director of BSP Company, a telecommunication and IT service provider, bemoaned that “going through a huge menu before making payment is way too complex. Nobody wants to spend time going through this process. It should be done with ease”
Though NFC technology has been introduced quite recently to ease the payment processes, that has done very little to boost mobile payment.
It is true the situation reaches far beyond Ghana’s boundaries, even in Kenya where mobile money is considered very successful; M-PESA is significantly driven by person-to-person transfer, about 80% contribution of total M-PESA revenue.
Safaricom has actually given momentum to other services like LIPA na M-PESA (payment service for corporate organizations and merchants), and M-Shwari, by addressing the high cost of sales terminals in the country, ensured easy merchant to merchant settlement and a short, flexible settlement cycle.
Consequently, in 2015, LIPA na M-PESA recorded 49,313 merchants active in 30 days and received a payment of kshs 11.6billion (US $114.4million) in march 2015 for goods and services.
M-Shwari on the other hand, saw an increase in net deposits to kshs 5.5billion in 2015 from kshs 3.5billion (2014).
Maybe some of these measures could be applied to the Ghanaian situation in order to succeed.
Additionally, experts believe, besides ensuring effective network availability nationwide, interoperability would also cause a change in mobile phone usage as Ghana chamber of communication has hinted of a possible integration of mobile money platforms in the near future
Kwame A. Akufo, Senior Manager of Advisory Services at PwC Ghana added that, allowing interoperability across networks without having to cash out first, in addition to other enhancements such as allowing mobile money users to earn interest on their money would contribute significantly to accelerating its adoption and use.
In other views, educating the general the public, especially the informal sector to see how easy it is to use these services and understand the convenience and the security it brings will ensure greater usage.
A recent study by Moody’s says authorities can facilitate the expansion of financial penetration by increasing volumes transacted across mobile phone platforms because it creates incentives for investment and reduces transaction costs as well.
“Government payment through mobile accounts, such as social cash transfer payment and civil servant salaries, is an example of how authorities can facilitate an increase in volumes,” the report said.
The Ghana government, as the largest employer, must however collaborate with mobile money operators to make payments of salaries/wages and other social support like LEAP through the platform.
Mobile financial services has the potential to effortlessly power the cash-light dream and more importantly, expand the economy when other services take off, because even with just person-to-person transfer dominance, the sector rakes billions of Ghana Cedis in a year.