Mobile Money penetration that has taken centre-stage in most African countries to facilitate trade and commerce, and creating more convenience is facing some challenges that need governmental intervention.
“Although Ghana has made great strides in opening up access to financial services through its financial inclusion policy adaptation programme, a sizeable percentage of the population still lacks either access or the ability to take advantage of what is offered.”
As a result, the Ghana International Trade and Finance Conference (GITFiC) has suggested to African governments, businesses, and individuals interested in adopting mobile payment systems, to find ways of encouraging consumers to accept mobile payment as a payment option.
That, they said they could do by adjusting their mode of payment from cash or cards to paying through mobile phones.
These recommendations, which formed part of a research carried out by GITFiC in Ghana and Kenya, indicated that consumers placed much emphasis on security as an essential factor in the acceptance of new technologies by consumers.
The study, which was led by Mr Gerald Ekow Woode, said due to that perception, businesses and all other agents involved in its implementation ensure adequate security measures to win consumer trust in the system and increase the chances of adoption and use of mobile payment systems as a payment method.
“Additionally, governments, businesses, and organisations should encourage the acceptance and use of the m-payment system to complement existing payment methods and augment consumers’ payment behaviour. Moreover, managers and marketers must recognize the implication of cultural values on intention toward M-payment system adoption.”
The research said the growing digital divide between the rural (or remote) and urban households in most developing countries was a greater concern for industry, successive governments, and policymakers.
“The lack of digital literacy causes such digital divide, which inhibits technological advancements, including the adoption and use of mobile payment systems and associated services by a wider segment of the population.
“With that in mind, industry, in collaboration with the policymakers and regulators, should adopt a pronged strategy. Industry should improve the digital literacy of the less privileged segment of society to promote inclusive development and the wider and more frequent use of mobile payment systems.”
The blueprint for e-payments is an initiative of the Smart Africa Alliance that aims to drive forward continental trade and digital commerce by unlocking the major challenges faced in making intracontinental cross-border e-payments.
Intra-African trade, in general, and e-commerce, specifically, is on the rise and it is expected to deliver immense benefits to African livelihoods and the overall economy.
Payment is evolving in Africa, not only through mobile payment platforms, but also through regional integration efforts in real-time gross settlement frameworks, which aim to drive down costs, allow payments in local currencies, and reduce transaction processing time.
Rising upon this context, Cocid-19 has further accelerated the need for innovative ways of deploying cross-border retail payments.
Ghana and Kenya have made significant contributions to the expected $15 trillion to $20 trillion in worldwide mobile financial services transactions in 2020.
Kenya and Ghana account for a large portion of the FinTech industry in Africa thanks to their relatively developed mobile payments industries.
But both nations had to overcome significant obstacles over the years to become the best in Africa for FinTech, avoiding a variety of legislative and network bottlenecks that posed a danger to innovations in their infancy.
According to the study, the payment system in Ghana had significantly advanced recently and was still developing to meet the demands of the nation as it develops.
In Ghana, Mobile Money (MM) is steadily replacing cash as the primary method of payment for the unbanked and underserved.
The fast expansion of mobile phone use, particularly in rural areas, is a contributing factor to Ghana’s quick development in MM usage.
Recent advancements in phone functionality, chip and mobile network technology, and improvements in Point-Of-Sale (POS) infrastructure are the foundation for the continental expansion of MM among the unbanked and underserved.
Ghana’s rise in mobile payments has been made feasible by the payment system’s inherent capabilities as well as developing trends that offer chances for increased digital growth.
To support the transition to a “cash-lite” economy, the nation has specifically developed essential foundational financial market and payments infrastructure, such as an Automated Clearing House (ACH), Real-Time Gross Settlement System (RTGS), Electronic Funds Transfer (EFT), GIFMIS system, Central Securities Depository with a trading platform, and ATM interoperability within the periods of 2012 – 2020. An interoperable switch that enables payments between financial institutions and mobile money accounts was recently established by the government (2021).
Mobile money is by far the most popular method of digital payment, both in terms of volume (981.6 million transactions in 2017) and value (GH155.8 billion).
In reality, mobile money transactions made up 90% of the 1% of digital payments by volumes that were made in 2016 as reported by the Diagnostic Report.
In terms of value, they made up more than 77 percent of the 37 percent of transactions at that time that were started by digital instruments.
However, it should be highlighted that most mobile money transactions involve domestic remittance transfers and airtime top-ups.
According to the statement, with the inception of the paradigm shift to a cashless economy in most of the developed economies, there was a need for any given nation to adopt automation of its payment systems.
In Kenya, it has been noted to increase convenience and reduce social ills such as corruption which decreases frictions in the economy.
The study said compared to its neighbours, Kenya had high financial service availability, which had been primarily ascribed to the acceptance of mobile payments there.
“M-Pesa is well known for its high penetration rate, which has not yet been effectively copied elsewhere. With a significant percentage of unbanked people, strong mobile penetration, the usage of USSD, the ease and comfort of the service offering, minimal KYC requirements, and, of course, Safaricom’s stranglehold on the market, Kenya looks to have become the spot for the big boom of mobile payments.”
It said Kenya served as the model for mobile payments. BAB reports that M-Pesa had 260,000 operational retail locations, over 136,000 agents, and 27 million registered users in 2017 alone.
Before 2015, more people had bank accounts than mobile money accounts, however, this ratio has since altered, with mobile money accounts outnumbering bank accounts by more than 30%.
“By 2016, 97 percent of adult Kenyans had a mobile money account, and nearly seven out of 10 had an account with a formal financial institution (bank and/or microfinance account).”
It is clear from banking and commerce as well as from the majority of mobile devices on the market that customer behavior is shifting away from traditional payment methods and toward more sophisticated online payment systems.
It said the use of mobile payment systems will increase to surpass or replace cash and other cashless payment options, as it is obvious that mobile devices had become an unavoidable part of almost everyone’s life and the opportunities this technology enables for online and offline payment regarding convenience and security.