Running cashless economy: Ghana’s dream dogged by security gaps

Fraud on the internet is believed to be one of the major challenges slowing down the outburst of electronic payments in the Ghanaian economy.

Ghana was recently rated among some of the African countries with the highest internet fraud activities, according to US-based internet fraud detector, iovation.

As the country deliberates on how to make the electronic payment system a key part of the financial sector to drive a “cash lite” economy, there are concerns of security on the payment platform.

The high demand for cash to pay for goods and services is said to be reducing the life span of the currency and increases the frequency and cost of currency printing.

Experts also say the large volume of currency in circulation also greatly hampers the implementation of effective monetary policy.

Furthermore, cash attracts robberies and other social vices including corruption and a “cash lite” society is the answer in reducing these attractions, and it is believed it would make governments’ efforts to fight crime easier because of the ability to track payments from the source to the destination.

With the support of Standard Chartered, the Bank of Ghana has kick-started a National Payment Strategy workshop bringing stakeholders such as banks, mobile money operators and policy makers as well as key government agencies.

Speaking at the first day of the three-day event which started June 19, 2013, Finance Minister, Mr Seth Terpker noted that the rapid rising of internet fraud popularly known as “Sakawa” has hampered the operations and use of electronic payments in the country since many people have become aware of the fraudulent act.

“The heightened awareness of the internet fraud (popularly called Sakawa) has caused aversion in the use of electronic payments,” Mr Terpkper lamented.

He added that businesses are also concerned about issues of reliability and availability and confidence in electronic systems.

According to the Bank of Ghana (BoG), since the launch of the first Ghana National Payment Systems Strategy in 2000, major payment infrastructure has been developed such as the Ghana Interbank Settlement System, E-zwich, Cheque Codeline Clearing system (CCC), Ghana Automated Clearing House (GACH), Gh-Link and SWIFT Sanctions Screening Engine.

But the Finance Minister indicated that businesses “lack information on the electronic payment products in the country and the legal basis of these products”.

Highlighting further on the low usage of electronic payment, Mr Terkper said the lack of inexpensive interfaces and accounting solutions is preventing “many MSMEs from plugging into the electronic payment infrastructure in Ghana”.

Mr Terpker also alluded to the fact that since in a country like Ghana where mobile telephone services have not been reliable, people may be deterred from using the mobile phone to make and receive payments.

Comparing to other jurisdictions, Mr Terpker indicated that the transformation of Kenya’s payment landscape through the adoption of M-Pesa, a mobile payment service, is revolutionary and worth emulating.

A fifth of Kenya’s GDP is estimated to flow through the M-Pesa alone, Mr Terpker said citing official publications on the mobile development.

He added that in Tanzania and Uganda, the success story for mobile payments is the same.

“It is up to us in Ghana to make our customers prefer electronic payments to cash by designing and delivering payment products that satisfy their existing and future payment needs,” Terpker told stakeholders in Accra.

The challenge that needed to be dealt with, according the Finance Minister, is how to encourage the patronage of alternative payment channels.

“What then is the way forward? The way forward starts with…sharing information and exchanging views with colleagues from different parts of the world is necessary to craft and implement a strategy to address the barriers to electronic payment system usage in Ghana so as to transform our payment system from cash-based to ‘cash lite’”.

Terkper stated that stakeholders including government need to coordinate a change across public agencies with different objectives, establishing clear objectives for government e-payments, and pushing for the use of electronic payments.

About 13 years down the line, the strategy workshop underway in Accra is sought to draw up a new National Payment Systems framework as the numbers of electronic payment platforms in the country keep rising with the advent of mobile money systems.

Dr Kofi Wampah, Governor of the Bank of Ghana (BoG) said “to enable the orderly continued development of the payment systems, it has become imperative to draw up a new framework.”

In this regard, the central bank says it will promote the development of a framework that will offer a suite of payment and settlement products, streams and services to meet the various needs of the public.

Ahead of the workshop, the BoG conducted a survey in Accra, Kasoa, Tema and Nsawam on the usage of electronic payments. It targeted both the corporate and non-corporate consumers of payment and settlement services, streams and products available currently.

Interestingly, the findings of the survey on the part of corporate consumers, revealed that the corporate sector who should be the champion of electronic payments rather makes and receives local payments mainly through cheques.

“More than half of the corporate sector (56% – 62%) do not receive or make payments through electronic channel,” Dr Wampah said with the rest of the corporate (38% – 44%) making and receiving payments via electronic channel do so through internet banking.

The corporate sector, according to the survey cited the challenges of security, reliability, accessibility and charges associated with the use of electronic payments.

For the non-corporate the findings showed that the mode of receiving payments is mainly cash and bank transfer as payments done were also mainly through cash.

The survey highlighted that majority of respondents (71%) were satisfied with current payment systems but cited delays as the reason for dissatisfaction with the cash payment process.

Dr Wampah believed that the country can create a truly integrated, efficient and scalable payment infrastructure that is both secure and safe.

Ghana is fast experiencing the use of mobile money. MTN, Tigo and Airtel are three telecoms operators running the services on their platform.

The Ghana Interbank Payment Settlement System (GhIPSS), a 100% wholly-owned subsidiary of the central bank is hoping to bring interconnection into the mobile money sector.

By Ekow Quandzie