CEO of Telecom Chamber’s Speech at the Launch of Mobile Interoperability

Mr. Chairman, His Excellency the Vice President of the Republic of Ghana, Dr. Bawumia, distinguished guests, the media, ladies and gentlemen.

Let me open by saluting this gathering which brings together not only leaders on the frontlines of adapting policy, regulatory and supervisory frameworks within the country to enable safe and sustainable innovation reaching the unserved and underserved, but also members of the development community, who recognize the contribution that the usage of formal finance can make to inclusive growth, allowing poor people to manage shocks, increase incomes, and build enterprises. As the chief servant of the Ghana Chamber of Telecommunications, an organization established to facilitate a responsible and inclusive platform, which delivers market development, this combination is inspiring to see.

About a decade ago, one of our members, with a unit headed by one of Ghana’s illustrious men, Mr. Ebenezer Asante commenced a service which will till date remains one of the biggest product to extend the reach of financial services in the last decade than brick-and-mortar banking has in the last century. An example is what the Mobile Financial System has contributed to the Insurance industry. It is estimated that it would take forty years to insure one million lives through traditional insurance channels, whereas with mobile technology, this time is reduced to just one year. By June 2015, more than 31 million policies had been issued through mobile insurance.(GSM Association, 2015) Ghana plays very well in this space with MTN, AirtelTigo and Vodafone all collaborating with Insurance Companies and Micro Insurance Firms to make this happen.

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H.E the Vice President, Mr. Chairman, mobile money is a growing phenomenon with the penchant to benefit a wide range of people, as well as the economies of countries. There is no denying the fact that mobile money transfer has fast established itself as a very convenient way to send and receive money. Its attraction lies in its simplicity and the ability to withdraw money even after working hours and also from very close vending outlets.

In 2015, the Bill and Melinda Gates annual letter cited mobile money as one of four top solutions to end severe poverty by 2030. Your Excellency, market figures clearly support the fact that mobile money is expanding financial inclusion. Today regular people can purchase goods and services, make remittances, pay bills, and securely store savings by means of just owning a mobile device. In addition, the money in the mobile is readily redeemable on demand for cash at approved retail agents and ATMs across the country.

A 2017 study on impact of mobile money on the payment system in Ghana by the Central Bank highlighted Mobile Money as one of the key drivers of the payment systems in Ghana. The report also states that, the number of successful mobile money transactions encourages customers to undertake future transactions.

Interoperability of our transactional platforms, indeed has been long coming and today we can be legitimately be proud of how far we have come on this journey working together with GHIPSS our market facilitator, electronic money issuers, commercial banks, regulators, policy makers all under the able stewardship of His Excellency the Vice President.

It has been a thorough back and forth process of building technical and technology processes and systems to developing rules dealing with participation criteria, governance, operational and technical requirements, dispute resolution, clearing and settlement, reporting, pricing principles and risk management. Your Excellency, the change in time schedule leading to this launch has not only assured us that the rules developed would permit the MNOs’ back-end systems to ‘talk’ to core banking systems, but also has assured the robustness of security protocols and the like.

Mr. Chairman, 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 and reduced transaction costs as well as can also lower the cost of printing and managing cash.

Your Excellency, while we prepare for all these associated benefits that Interoperability has to offer, I will like to bring to your attention four key issues that our members and industry is confident your very high office can support us all to further enhance the gains made within the digital payments ecosystem.

• GhIPSS has an important role to play in enabling the financial sector scale up, particularly the emerging forms of payments such mobile money. With it’s superior technology it has helped reduce cost and risk of payment across different platforms, to the ultimate benefit of financial providers and consumers. However, to ensure that this potential is realized within the shortest possible time, it will be necessary to have clarity in the status of GhIPSS as it’s currently position as an offshoot of the sector regulator, an intermediary that facilitates payment for providers and sometimes 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/commitment. We believe that the launch of interoperability offers us an opportunity to relook the nature and form of GhIPSS. The name GhIPSS, Ghana Inter Bank Payment Settlement Systems, need to be looked at. With Interoperability it is no more only Interbank payments and settlements that will be done, Interoperability will bring in a lot more transactions from Mobile and other sources. We believe in the same spirit that we have been able to successfully carry Interoperability, we will resolve with this issue collaboratively to the benefit of Ghana.
• Mobile Money offers a great opportunity to improve government’s revenue mobilization as well as provide a lot more transparency and 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 transaction 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 who will use the triangulate of financial inclusion, MoMo, Banks and E-zwitch for receiving and making payments.
• To truly transform our large informal to a formal economy, mobile money must become a central monetization mechanism that can be used to carry out huge 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 (G2P) and person-to-government (P2G) 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 todays 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.
• We to need craft a vision to fashion the interoperability discussion into a full merchant services strategy for the country. Merchant Services is a broad category of financial services intended for use by businesses. In its most specific use, it usually refers to merchant processing services that enables a business to accept a transaction payment through a secure (encrypted) channel using the customer’s credit card or debit card, NFC/RFID enabled device mobile phone or other electronic input device. More generally, the term may include:
  • 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 programs
  • Payment gateway
  • Merchant cash advances
  • Online transaction processing
  • 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. His Excellency, yes as an industry we are committed to engage to make this happen. The most pressing requirement is institutional capacity. Merchant services would require partnership with the best in the world. We would have to ensure mission-critical levels of system availability. We would also have to define self-service integration processes to all platforms through that single interface we have built. We still have some distance to go on final institutional arrangements and partnerships. However with the momentum and collaborative partnerships that we have started today we should be built upon to ensure that we craft a world class Merchant Service for the benefit of our people.

Whilst technologies and innovations are moving very fast, equally regulators, supervisors, payments overseers and standard-setting bodies have to increase their pace. We as an industry are prepared to work together with the regulators and other stakeholders within the payment systems ecosystem to minimize the risks and maximize opportunities for poor people who need the service the most. It is my sincere hope that today’s launch will further advance all our thinking regarding the future of the digital payments ecosystem and all of us will work together to completed the other phases of the interoperability project to make Ghana leap frog the development divide taking advantage of technology.

To conclude, I wish to reiterate that as a Chamber we are committed to building a closer engagement with Government whilst endeavoring to offer meaningful solutions by way of our platform usage to supporting Ghana’s digitization and economy formalization agenda.

God Bless our Homeland Ghana and make our Nation Great and Strong.

I thank you all!

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