In the first part of this article, we explored the technological advancement in the payment industry and its effect on doing business. In this second part, we will address the rate of adoption of emerging payments by Ghanaians, issues of security and the future of digital payment systems. The inevitability of technology and the unique position where most African’s first telephonic devices is the mobile phone has given the ordinary citizens an immense tool to enable them to adapt to emerging technologies in a very simple and cost-effective manner.
The level of adoption of emerging payments in Ghana is very impressive so far. However, there is a need to deepen the payments ecosystem and the ability to connect vendors at various levels across the value chain to the payment platforms to enable citizens to minimize the need to convert electronic value to cash to complete payment cycles. To achieve this, Banks, Telco’s, and FinTech’s need to invest smartly to reduce the overall cost of transactions, security, intuitiveness, user experience and ease of access.
When well adopted, emerging collections and payments solutions can improve business efficiencies, reduce costs and improve client relations, all of which ultimately improve the Return on Equity (RoE) for businesses, whether SMEs or Large Corporates. The cost of manual transactions are multiples of the cost of same using emerging payments. Let me give you a simple example; MobyCash has helped clients get value for amounts collected at their premises instantly, which means they can place their orders immediately and in cases where clients have overdrafts, their cost of borrowing is reduced through the instant value received.
With increased technological mediation in payment systems comes concerns about data security and privacy. Fraud has been identified as the greatest barrier to the adoption of emerging payments across the world. These issues, together with anti-money laundering (AML) and Terrorist Financing, remain key concerns when dealing with emerging payments. That is why it is critical to ensure that these are well-regulated and are being conducted by entities with proven track record and expertise, who adhere to the highest levels of client confidentiality and who invest in ensuring that the clients’ security is their topmost priority. Strict adherence to AML, data protection, anti-fraud and terrorist financing guidelines and principles are at the core of the integrity of the financial system and these must be guarded very closely. It will, however, be incomplete without highlighting the need for public education on the need to be careful of who we deal with generally and who personal data is shared with.
Trends in emerging payments are bound to grow with more technological advancements. We are entering an era where we will see widespread integration of enterprise resource planning (ERP) systems of Corporates and SMEs directly to banks via dedicated secured lines. Cryptocurrency and the use of Blockchain – Bitcoin, Libra (Calibra) technology are very likely going to revolutionize the payments industry in the coming years augmented by the use of Social Media as an emerging payment tool – WeChat, WhatsApp, Facebook, Instagram etc.
I see the future of emerging payments in Africa to transcend national borders. With renewed focus on African Continental Free Trade Area (ACFTA), as well as the discussion on the adoption of single currency, such emerging payments platforms will become critical. Initiatives like the Pan African Payments and Settlement System (PAPSS) just like the Single Euro Payment Area (SEPA) aimed at supporting intra-regional payments will be critical in innovating platforms for emerging payments. The regulators must be very busy in making sense of all these and providing a framework to regulate same.
By Musah Abdallah
The writer is the Head of Transactional Products & Services at Stanbic Bank Ghana