When the country’s biggest telecommunications service provider, MTN, decided to roll out its mobile money service in 2009, it knew it was about promoting a cashless and a very efficient economy.
Since its humble beginnings in 2009, MTN Mobile Money services has transformed the way in which people handle their finances, allowing people to transfer money, make purchases and pay bills with just a few taps on the keys of their mobile phones.
Available data show that the Service has recorded about 13.5 million transactions totalling over GH?300million, which represents over 265% growth in the value transacted. Currently, there are more than two million MTN Mobile Money subscribers.
MTN Mobile Money users can pay their DSTV, ECG bills and school fees, purchase Starbow airline tickets as well as pay for goods purchased at Melcom Plus, Max Mart, and other online shops such as Ghanabuys and Sellphone Ghana.
These services have been designed to create greater flexibility, accessibility and convenience for customers.
Further research also indicates that the continent in general is gearing up to embrace a cashless system very soon.
A joint research by Mckinsey and the Financial Access Initiative in 2009 reported that more than half of the world’s adults are unbanked; (2.5billion people) but two-thirds of the unbanked, 1.8billion adults, have access to mobile phones.
This growth (access to mobile phones), combined with the ability to deliver financial services telephonically, now makes it possible to tap vast markets bankers previously considered unprofitable.
According to another research report by Aite Group, mobile payments will reach US$214billion in gross dollar volume in 2015 — up from US$16billion in 2010 — which represents a 68% compound annual growth.
At a recent round table discussion on a cashless economy for Ghana, MTN’s Sales & Distribution Executive Mr. Ebenezer Asante noted: “As a growing economy we must focus on a structured programme to achieve the benefits of a cashless economy.
It will ensure a significant reduction in the cost of printing, replacement and transportation of cash along the value chain.”
He said: “Mobile Money services have transformed the way in which people handle their finances, allowing people to transfer money, make purchases and pay bills with a few key strokes on their mobile phones.”
Mr. Asante believes that a cashless economy brings about more benefits than an economy that thrives on cash.
A cashless economy will reduce the cost of printing currency notes, replacing them and transporting cash along the value chain from the Central Bank to banks to businesses and consumers.
“As an example, according to Nigerian Central Bank Governor, Sanusi Lamido Sanusi, the direct cost of cash management to the Nigerian banking industry is estimated to be N192 billion (approximately US$1.9billion)by 2012,” he said.
Another benefit includes the reduction in risks associated with transporting currency notes, both for banks and individuals (robbery, loss from fire or flood, etc.);
Also, increased service options for consumers, including efficiencies created when goods and services may be purchased and bills paid 24-hours a day, year round, without having to be physically present. Thus time, space and distance are no barriers for economic transactions in a cashless economy.
Furthermore, the net effect of the benefits is business and economic growth through e-commerce promotion, enhanced individual, business and national productivity; and with positive impacts on job-creation and its attendant multi-sectoral multiplier effects.
But the Consultative Group to Assist the Poor (CGAP) — an independent policy and research centre dedicated to advancing financial access for the world’s poor — says not a single country in the world, including the advanced economies, have been able to eliminate cash from their respective economies.
In the USA where 50% of transactions are cards, 29% are still cash; Australian cash-use was still at 64% of transactions in 2010; and UK cash-use is projected to drop to 45% in 2018.
“Let’s not have too high expectations of rapid change,” Technology Programme, CGAP, Mr. Peter Zetterli, said. He suggested a ‘Cash-lite’ system rather than a cashless system.
“‘Cash-lite’ is a more realistic goal than cashless. This is fine: the point is to offer alternatives that add value. Freedom from cash, not absence of cash! Offering alternatives that add value to people’s lives, the benefits of even partial transition can be substantial.”
He says a cashless society is a long way in the future. “Even in the most developed economies, not a single country has eliminated cash so far. So it’s true that cash use is falling in all advanced economies — but gradually. Cash will stay with us for the foreseeable future. Thus cashless is unrealistic for now; we should focus on cash-lite.”
Challenges and Way Forward
Even in the face of several benefits, building a cashless economy has also several challenges that try to derail its progress.
Policy — there is a need for clear policies to be followed to achieve the full benefits of a cashless economy, including a national policy that encourages more electronic-based transactions while discouraging physical cash-usage and circulation.
Mr. Asante cited Nigeria as an example when its Central Bank instituted a cashless economy policy to:
? Drive development and modernisation of Nigeria’s payment system in line with the country’s vision 2020 goal of being amongst the to-20 economies by the year 2020. According to them, an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
? Reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
? Improve the effectiveness of monetary policy in managing inflation and driving economic growth.
? Curb some of the negative consequences associated with the high usage of physical cash in the economy.
Infrastructure — Expanding the infrastructure and systems to the point where people are ready for a cashless economy and electronic transactions are truly ubiquitous and sustainable; so that everyone — retailer, service provider, consumer or business — can have the option of transacting electronically regardless of location, or even time.
This means that the technology coverage must be adequate, as well as other supporting structures such as energy availability for consistent connectivity and reduced downtime.
“In the long-term, we should be driving toward universal access and convergence to all forms of cashless mode of payments — All ATMs/ E-Zwitch/Mobile Money must cross-transact,” Mr. Asante added.
Security — In cultures where a cashless economy is well-advanced, system operators have learned that some of the pitfalls include inadequate security.
The need to have secure systems that allow citizens to transact without worry of identity-theft or other cyber fraud is critical, and so we must ensure our electronic transaction/payment systems and processes are truly secured.
Cultural resistance and Education — Since MTN rolled-out MTN Mobile Money, the telecom giant has experienced some resistance from prospective users, simply due to the fact that Ghanaians are used to a cash culture.
Mr. Asante said: “However, it has been our experience that once people start using Mobile Money they wonder why they did not start to do so sooner.
This tells us we must have a singular focus on educating people about the full benefits of a cashless economy — the benefits afforded them as well as the benefits afforded the country as a whole.”
This is something that must be done by all stakeholders, because as a country we all benefit.
He urged government to consider using its own purchasing power to radically promote cashless payments as a first step.
“MTN commits to continue its investments in this regard; to make Mobile Payments popular, acceptable and trusted nationwide. This is our commitment and we shall lead the way,” he said.
