The automated teller machine (ATM) may have succeeded in making "bricks and mortar" banking almost an obsolete idea in many parts of the world but did not quite manage to attract Ghana's un-banked population. But where the plastic card appears to have failed, the mobile phone seems to be succeeding.

Today, telecom companies are offering the general public the ease and convenience of sending and receiving money through their cell phones.

"This is a revolution that is coming whether we like it or not and the banks know that mobile money is the next big thing. So the most important thing is for them to jump on board and take advantage of it. We telecom companies have built the infrastructure and so the banks can ride on our back," said Carl Niikoi Ashie, head of ZAP, Airtel's mobile money transfer service.

"We are working within the branchless banking regulations of the Bank of Ghana and so it is actually the banks which are having a free ride, as through the mobile phones, they now have several ways by which money can get through to the banks. So the mobile phone has become an extension of the bank's branch since all transactions can be made on it including checking account balances, statements and effecting fund transfers," Mr. Ashie added. Airtel was the first telecom provider to blaze the trial in the domestic mobile money transfer business, when it launched ZAP in 2009 to provide value-added service to its subscribers.
Then MTN followed and as the excitement caught on, Tigo joined in.

But it appears the remaining players in the industry, namely Vodafone, Expresso and the soon-to-be-launched, Glo, are reluctant to come to the party.  Industry analysts point out that the anticipation around the mobile payment system is over-exaggerated as the Ghanaian public does not seem very enthusiastic about it.

"Because we are still in the education phase, there are still individuals who are finding different reasons for not using the service. It is a gradual process and very soon it will be like what is happening in Eastern Africa, where mobile money vendor kiosks are everywhere," said Mr. Ashie.

"For West Africa, this is something new so it is now growing and it is something we are getting used to. It needs more education and trials by subscribers - that is when we will see a massive pick-up in numbers," he added.

The use of mobile phones to reach out to the un-banked is a familiar business model for banks.


According to Mr. Ashie, Airtel currently records about 40,000 payment transactions on its network every month and he sees this figure rising exponentially in the next few years as operators intensify education on the use of the various mobile money electronic wallets.


Philip Sowah, Country Manager,
Airtel Ghana

Long before the telcos launched their mobile money transfer services, many banks in Ghana were already doing SMS banking. Currently almost all 27 banks in the country have their own mobile banking products with varying features including credit top-up facilities, checking of account balances and blocking of ATM cards in the event of theft or loss.

Between the telcos and the banks, they have now created a somewhat collaborative relationship whereby the latter provides the former with several services such as "Know-Your-Customer" and identity checks on merchants, agents and even customers to enable the operators to know with whom they are dealing.

On paper, many agree that the mobile phone has the potential to make banking and financial services more accessible to the 80% of Ghana's 24.2 million residents who according to the Bank of Ghana do not have bank accounts. But the reality is that Ghana's economy is largely cash-based because many business people do not have confidence in issuing or receiving cheques for payment of goods and services.

To reduce the over-reliance on cash transactions, the central bank in 2008 introduced a biometric payment system called e-zwich to improve efficiency and security in the payment for goods and services. Then governor of the Bank of Ghana, Paul Acquah, described the electronic payment system as having been designed primarily "for promoting branchless banking and financial inclusion".

But nearly three years of implementation have not produced great results. Complaints from users about false negatives during the biometric authentication stage have been numerous. And merchants have also complained about poor patronage of the payment system and the inconvenience of having to power-up the e-zwich point of sale terminals which are rarely in use.

In spite of these challenges, the central bank's resolve to licence businesses under the branchless banking regulation remains unquestionable, as it is clear there is strong determination to deliver basic financial services to the country's large un-banked population.

There is something to cheer about though. According to Mr. Ashie, Airtel currently records about 40,000 payment transactions on its network every month and he sees this figure rising exponentially in the next few years as operators intensify education on the use of the various mobile money electronic wallets.

While the telcos continue to bank on the hope that confidence and trust in mobile phone transactions will grow over time, other companies such as Afric Xpress and e-Transact Ghana are also riding on the back of the popularity of the mobile phone, which currently has a penetration rate of 76% in Ghana, to promote electronic transactions such as the purchase of airline tickets, payment of utility bills and top-up credits. In addition, these companies also provide services such as money transfer, cash deposit, cash withdrawal and balance enquiry.

According to a January 2008 press release on the website of Juniper Research, mobile phone-led banking transactions were predicted to result in over 612 million cell phone users and over US$587 billion in transactions by this year.

Airtel now has five banks as partners to ensure the smooth operation of its ZAP, while MTN has roped in nine banks for the MTN Mobile Money service.

What appears to be missing is the critical mass of people to sign on to the mobile wallet payment system.

Though the telcos expect usage of mobile money transfer to increase, they are aware that the public has its own fears and concerns about the payment system and they seem ready to address that.

"Building up the trust of the people in the system is the main issue that we face. We can do a lot better in terms of the value and volume of people who use the mobile money electronic wallet," said Mr. Ashie.


Brett Goschen, outgoing MTN Ghana CEO