By G.D. Zaney, Esq
As part of efforts to reduce the cost of doing business and improve revenue collections in the country, the Bank of Ghana (BoG) has set the year 2024 as a deadline for the country to move towards using less cash in financial transactions.
Indeed, a 2016 BoG Report had revealed that the use of fiscal cash as the medium of exchange was on a continuous decline due to the increase in the use of other sources of payment , including cards, mobile money and the Ghana Interbank Payment and Settlement Systems (GhIPSS) Instant Pay.
Mobile Telecommunications Network (MTN) Mobile Money (MoMo), the first electronic money transfer service in Ghana, is the best example of mobile financial services and is one of the main architects of the drive towards a cash lite economy as envisaged by the Bank of Ghana.
MTN MoMo is a secure electronic service that enables MTN MoMo wallet holders to store funds, send and receive money, make payments and do a number of other transactions simply using their mobile phone.
MTN MoMo service as a source of payment had begun ten years ago when MTN explored the area of using the mobile phone as a tool to undertake financial transactions.
The service was launched on July 21, 2009 under the leadership of MTN Ghana’s then Chief Executive Officer (CEO), Brett Goschen, after discussions with critical stakeholders.
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From less than 100,000 subscribers after 6 months of launch, registered subscriber numbers have reached the 14million milestone over a 10-year period― and with the increase in numbers came the change in technology partners. Thus, from Fundamo, MTN “ported” to Ericsson seamlessly in October 2015 and got an International Standards Organization (ISO) accreditation in the first quarter of 2016, the first in the industry.
With 9 partner banks in 2009, MTN MoMo now has 18 partner banks, with the 19th on the way.
Apart from the local partnerships, MTN also forged partnerships with International giants like Google, Western Union, World Remit as well as International agencies such as the World Food Programme (WFP), United Nations High Commissioner for Refugees (UNHCR) and the Global System for Mobile Communications, commonly referred to as GSM Association (GSMA), originally known as Group Special Mobile, among others.
A decade after its launch, MoMo has become the foremost financial Services platform in the country, with about six major categories of financial transactions― Saving, Investing, Payments, Shopping, Insurance and Loan acquisition―and other sub-services.
MTN MoMo has also partnered several organizations to rollout key social empowerment projects over the decade including helping digitize the Agriculture Value Chain through mAgric, Point of Sale (POS) in partnership with several banks and scaling up female participation within the MoMo merchant space.
Consequently, as at the end of November this year, MTN had over 140,000 active Mobile Money agents and 5,000 mobile agents/canvassers, most of whom, prior to the introduction of MoMo, had no meaningful employments.
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Today, in a matter of seconds, customers can send money across the length and breadth of Ghana. Customers can receive and store money, pay a bill, get a loan, insure, buy Treasury Bills, pay employee salaries, airline tickets, school fees and other goods and services as well as transfer money to and from their bank accounts, all using MoMo.
In the near future, it is expected that customers will be able to pay their taxes for their small businesses through MoMo, Government can broaden the tax net using MoMo and goods can be purchased from neighboring countries using MoMo.
The ‘People to Government’ and ‘Government to People’ transactions via MoMo is expected to increase the efficiency of collections/payments.
To stamp out fraud and protect the cyber security space, a lot of effort and progress have been made. Currently, MTN is partnering the Ghana Police to set up a forensic laboratory to facilitate and accelerate investigations and interventions on MoMo-related fraud.
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Capitalizing on the economic growth potential of MoMo, would, however, require several strategic interventions.
There is the need for Government to support the growth of Fintechs as the next wave of development, since without the innovation Fintechs provide, the industry will be completely incapacitated.
The National ID system needs to be completed to support the national digital agenda as well as contribute to the management of Cyber fraud in general.
The emergence of MTN MoMo and other new payment streams, institutions such as financial technology companies and the general acceptance of electronic money have necessitated the enactment of the Payment Systems and Services Act, 2019 (Act 987) to provide the legal and regulatory framework for the orderly development of the payment system.
And to operationalize Act 987, the Bank of Ghana has increased the minimum capital requirements by 300 percent to GH¢20 million from the initial GH¢5 million.
The law also provides all permissible activities and fees for all categories of payment service providers and financial technology companies.
G.D. Zaney, Esq is a Journalist and a lawyer