Telecoms Barred From Running Payment Systems – Ghana Central Bank

Telecoms in Ghana

VENTURES AFRICA – Mobile Telecom companies in Ghana will not be allowed to lead the revolution towards electronic payment systems, the Bank of Ghana (BOG) has warned.

According to the Central Bank, telecoms will rather be encouraged to provide the infrastructure on which the new payment system will run. The regulator is of the view that allowing the telecoms, which are licensed to provide telecommunication services, to champion the switch from cash-based transactions to electronic will amount to giving them an opportunity to engage in an activity outside their core mandate, the bank revealed in an interview with the Daily Graphic in Accra.

“It is banks that are licensed to provide financial services; not telecom companies and that is why we at BOG think that the telecoms must not be allowed to lead the way in this drive towards electronic payment,” the Deputy Governor of the Central Bank, Mr Millison Narh said.

“They (the telecoms) should just provide the platform for the system to run on,” he added.

Mr Narh said this at a workshop on National Payment Systems on the theme ‘Driving efficiency and Value through Innovative Payment Systems’ organised by the BOG.

Electronic payment involves transactions through electronic platforms such as online, through the mobile phone or point of sale devices (POS). The Central Bank is tryng to encourage the public to embrace electronic payments as opposed to the traditional cash-based payments.

In Ghana’s telecom industry, mobile money – transactions through the mobile phone – is gaining acceptance. Patronage of the service has risen considerably and that has led to a steady increase in the number of transactions recorded by the various companies annually.

MTN, which introduced its MTN Mobile Money four years ago, announced in October last year that the platform had registered over two million subscribers with transactions on it expected to rise to some GH¢13.5 million ($6.7 millon), representing a 265 percent growth over the four-year period.

TIGO and Airtel, the two other telecom companies which operate the mobile money product in the country, are also seeing increased usage.

This BOG stance contrasts with that of Kenya where mobile phone companies are given a free hand to lead the revolution towards the new mobile payment crave. The lcal mobile money platform-M-Pesa- is highly successful and has become a rare African business success that is being replicated worldwide.

While noting the relevance of telecom companies in the switch from cash-based transactions to electronic, BoG’s Deputy Governor said the mandate between telecoms and banks is far too different and should not be mixed in the name of promoting a new payment system.

“It’s true we all want to promote electronic payment systems but we don’t want to do that using the wrong means,” Mr Narh said.

“Banks are licensed to undertake financial services and telecoms to do networking and so allowing the telecoms to lead that revolution means that they are being allowed to undertake financial services and which shouldn’t be.”

“We just want them (telecom companies) to provide the platform for the system and we will encourage them to do that,” he added.