The Chief Executive Officer of the Ghana Chamber of Telecommunications, Ing. Kenneth Ashigbey says there is need to craft a vision to fashion the interoperability discussion into a full merchant services strategy for the country.
Speaking at the launch Thursday of the much awaited Mobile Money Interoperability (MMI) service to merge the frontiers of the many splintered service providers and platforms, Kenneth Ashigbey said a fuller development of the service would enable businesses to accept payment for transactions through secure channels using customer’s credit or debit cards, enabled mobile devices or other electronic input devices.
Vice President Dr. Mahamudu Bawumia on Thursday launched the MMI service to allow the direct and seamless transfer of funds across mobile money operators, subscribers’ wallets and banks in the country.
According to Ing. Kenneth Ashigbey, bringing the MMI environment to achieve a fuller merchant services status would offer a broader category of financial services intended for use by businesses, including mobile money payment processing, credit and debit cards payment processing, check guarantee and check conversion services, automated clearing house check drafting and payment services, gift card and loyalty programmes, payment gateway, merchant cash advances, online transaction processing and point of sale (POS) systems.
“We need to have a strategic vision of transforming the Interoperability discussion into the Merchant Services Strategy, which is where the actual benefit of what we have launched today, resides,” he said, pointing out that the telecoms industry is committed to engage to make this happen.
Among other positives, he said interoperability is important because of its potential effects on consumers, businesses and the economy.
“The seamless transfer of money from one person to another across different payment systems underpinned by mobile money can help businesses to manage costs, increase efficiencies through shared infrastructure and to increase transaction volumes. Customers benefit from network effects and from reduced transaction costs. Governments can also be optimistic that interoperability can help advance financial inclusion due to the ubiquitous nature of mobile services and reduced transaction costs. It can also lower the cost of printing and managing cash,” he said.
Ing. Ashigbey however pointed out that while Ghana prepares for all the associated benefits that Interoperability offers, there are key issues that need to be addressed to further enhance the gains made within the digital payments ecosystem.
He said for instance that while the Ghana Inter Bank Payment Settlement Systems (GhIPSS) has an important role to play in enabling the financial sector scale up, it has become necessary to clarify its status GhIPSS as it is currently positioned as an offshoot of the sector regulator, an intermediary that facilitates payment for providers but sometimes plays as a competitor to payment providers.
“This then means there are times it can simultaneously supervise and compete with the sector players it intends to support. That is an inherent risk to the players with whom they collaborate and has implications for long-term partnerships and or commitment.”
In the same vein, he said with the launch of MMI, the GhIPSS nature and form of GhIPSS need to be looked at as Interoperability brings in a lot more transactions from mobile and other sources in addition to interbank payments and settlements.
Kenneth Ashigbey said mobile money offers a great opportunity to improve government’s revenue mobilization as well as bring a lot more transparency into and capture data of economic activity in Ghana. “However, usage and adoption of mobile wallets is not yet at the optimal level at which point broad base taxation could be effective. Today, remittance is the primary use case for mobile money. To put this in context, the finance ministry’s diagnostic report on payments in Ghana indicated that 94% of the total payment volume is between individuals and businesses or Merchant Payment as we describe it. Of this volume, 99% is being done in cash. Ergo, we have to invest our effort in ensuring that adoption of digital accounts is strong but most importantly, that usage of these accounts are for merchant payments, in order to effectively capture a broader base of transactions for tax policy decisions.
“Any effort to prematurely tax mobile money transactions will not only make it a cost prohibitive form of payment but also a disincentive for its adoption for use in making payments to small and large businesses. A careful study of global and regional lessons, coupled with a strategy to support industry to accelerate merchant payments will certainly deliver the broad base tax mobilization ambition of government. I will recommend to the government to consider using tax incentives for rewarding businesses, especially the Micro, Small and Medium scale businesses that will use the triangulate of financial inclusion, MoMo, Banks and E-zwitch for receiving and making payments.”
According to Kenneth Ashigbey, to truly transform Ghana’s largely informal to a formal economy, mobile money must become a central monetization mechanism that can be used to carry out a wide range of digital transactions across numerous sectors such as retail, utilities, health, education, transport, agriculture and many more.
“Our Government can benefit in multiple ways from using mobile money for government-to-person and person-to-government transactions. Accessing and paying for government services mainly through digital means reduces cash-handling costs, reduces security risks, minimizes theft of funds, enhances transparency whilst improving on our operational efficiencies. It is our hope that with the launch of today’s interoperability, government will use the rest of the year working with our members, GhIPSS and other Fintech’s within the industry to build a system that will enable all MMDAs and MDA to start the collection of rates, permits fees and other statutory payments through the financial inclusion triangle.”
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