Mobile Money in Ghana

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Design World Consulting
Oliver N Bucyana ] Tudor Sikanartey
September 1, 2009
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www.designworldonline.org Design World Consulting [email protected]
INTRODUCTION
Recent developments in technology have brought about a shift from traditional ways
of doing business that the !ndustrial Revolution brought through industrialization, to
an economy based around the useful manipulation of information.

The outstanding aspect of the current `!nformation Age' is the ability of individuals
and businesses to use different media available to transfer information freely and to
have instant access to knowledge that could have been difficult or impossible to find
previously.

Today, the !nternet as a global system of interconnected public, academic, business
or government computer networks is by far the medium that is largely used
worldwide to transfer information and facilitate various services. !n developed
countries such as the United States, Australia and France, online services offered by
the government include payment of taxes, various application fees such as visa
application fees, booking appointments, voting, recruitment processes for vacant
positions etc.

One of the industries in which the !nternet has made a substantial breakthrough is
the financial sector with the upsurge in electronic payment systems, which resulted
in the creation of what could be termed ¨electronic/digital money". !n that respect,
the Bank of Ghana introduced a national biometric smartcard called !"#$%&'( that
enables users to pay for goods, services and perform banking transactions.
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www.designworldonline.org Design World Consulting [email protected]
TRENDS IN THE USE OF MOBILE PHONES
Typically, electronic means of payment involves the use of computer networks, the
internet and digital stored value systems. Electronic cash can provide many benefits
such as convenience and privacy, increased efficiency of transactions, lower
transaction fees and new business opportunities with the expansion of economic
activities on the !nternet.

This, however, requires huge investments in order to put in place needed human
resources as well as technological infrastructures that developing countries may not
be able to afford. Nevertheless, this considerable challenge might be bypassed using
relatively cheaper available technologies such as mobile telephony.

Statistics obtained from the National Communications Authority (NCA) and published
by Ghana News Agency (GNA) show that as much as 12.6 million people,
representing estimated 55¾ of Ghanaian population were using mobile phones in
Ghana as at the end of the first quarter of 2009. Recent projections put the figure at
1+ million. !f Ghanaians have been though not to be e-commerce, statistics in the
mobile market are showing alternative indications. !t therefore comes as no surprise
that some companies have taken advantage of the technology to cut down costs and
offer improved services to their clients.

Not long ago, mobile phones were used only to make calls and probably, text
messages. Today, in addition to the standard voice function, current mobile phones
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www.designworldonline.org Design World Consulting [email protected]
may support various additional services and this has shifted the mobile phone from
being a means of communication in business to a business tool in itself especially in
developing countries where other advanced means of communication are not
available to the average citizen. Today, new terminologies such as mobile banking or
m-banking, mobile commerce (m-commerce) and mobile business have started to
emerge in the business arena.

THE ICT COMPETITION AMOUNG BANKS
The financial sector in Ghana is indeed one industry which is gradually embracing
the use of mobile technology for everyday business transactions, a concept which is
known today as )*+%,!-+./0%/1 or )"+./0%/12-Nobile telecommunication giants
such as NTN Ghana, together with financial institutions within the country are now
collaborating in order to offer faster and more convenient services in financial
transactions.

An important ingredient in the m-banking competition in Ghana is the variety of
banking solutions being offered by the banks via the customer's cell phone. The CAL
Bank SNS Banking (which came 1
st
runner up !T and Electronic Banking) allows
users to top up their units from their mobile phone, do balance inquiry, statement
request, funds transfer between accounts, check the last 3 transactions and block
ATN cards in case of loss or theft. Zenith Nobile Banking, Ecobank SNS Banking,
GTBank SNS Banking, !ntercontinental's i-Nobile, UBA's U-Nobile also offers
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basically the same services, with few differences such as the number of the last
transactions.
-
345678-3498:-
The latest in the use of mobile application for business in Ghana is the 3;9-3*+%,!-
3*/!< launched by Ghana's leading mobile telecommunications provider, NTN. This
service is a result of a partnership concluded between the South Africa-based mobile
telecommunication company with 9 local banks
1
. This convenient service, which will
also be available on the !nternet in the near future, is expected to allow Ghanaians
to purchase credits or transfer and receive money using their mobile phones through
an electronic wallet, hence saving time for other activities. Subscribers to this service
are required to provide a valid !D and pay a registration fee of GH¢2, after which
they are given a NTN Nobile Noney-enabled S!N card. The good thing about this
new S!N card is it can still offer traditional mobile telephony features such as making
calls, text messaging, etc in addition to the Nobile Noney application. Funds
transferred from the Nobile Noney electronic wallet are collected by the recipient
from authorized operators in their vicinity countrywide. There is also a possibility to
transfer money from accounts of any of the 9 banks involved in this technology a
Noney Nobile account.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"
!CAL Bank, Ecobank, Fidelity Bank, GTBank, !ntercontinental Bank, Nerchant Bank, UBA, Stanbic and
Zenith Bank!
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www.designworldonline.org Design World Consulting [email protected]
NTN Ghana-however, is not the first provider of mobile phone payment systems in
the country. Afric Xpress, one of the pioneers in this industry, launched in 2008 a
service commonly known as &=&9>.<,- whose- long-term objective is `to turn every
mobile handset into an electronic wallet'.
The txtNpay technology uses an SNS-based application, therefore making it usable
on every network and mobile handset. The service enables its users to send money
to anyone with a mobile phone, pay bills, buy pre-paid airtime, check their bank
balance and purchase goods and services. Subscribers may transfer cash to their
electronic wallet or buy electronic cash from authorized dealers. Afric Xpress
strengthened their service with the fact that their service does not require a bank
account to be operative and their service can hence reach remote areas of the
country where banking services may .

497698-?@:389;A-
!;B./C.'&-6/&!B/.&%*/.,-7&D launched in Narch 2009 their services in Ghana and
offer a number of solutions that render electronic transactions more convenient. This
company claims to be the first */,%/! real-time payment system in Ghana. Their
system allows corporate or individuals account holders, to pay for goods and
services, transfer funds to any bank account, pay bills, and order products with
minimum stress. The system allows cardholders to use various channels to transact
among which secured transactions on the Web, mobile phones, point of sale (POS)
terminals, ATN, other mobile devices and bank branches.
-
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www.designworldonline.org Design World Consulting [email protected]
!"#$%&'()*+,-('./'0*&1'"23.4*-
!nterestingly, Zain subscribers in countries such as Kenya, Tanzania and Uganda
where the company has been operating for some time are familiar with #.%/-#.>, a
service that allows its users to manage their monies and perform basic financial
transactions.
This pilot project was so successful that Zain received two prestigious 2009 Global
Telecoms Business !nnovation Awards at a gala ceremony in London, attended by
industry leaders from across the globe. The recognition has consolidated the image
of Zain whose next stage is to launch it in other countries in Africa and Niddle East
under the coverage of Zain mobile network. !ndeed, the subsequent partnership
with the world leader in money transfer, Western Union, in order to deliver mobile
money transfer services is also an important development. Looking at how the
launching of Zain in Ghana has impacted the telecommunication industry and
enhanced the already tough competition, especially with the introduction of the 3.5G
technology, Ghanaians should look forward to another wave of change in
telecommunication landscape with the possible introduction of Zain Zap in Ghana,
which will be not only a contribution to the N-Business sector in Ghana, but will also
enhance competition in the already highly competitive market.
-
TECHNOLOGY ADOPTION
Several historical facts suggests that every major technological invention is likely to
encounter resistance from the people unto whom it is offered, for they are used to
the `traditional' way of doing business. A number of voiced opinions advise that
"#$%&'!(#)'*!%)!+,-)-! !""#$
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www.designworldonline.org Design World Consulting [email protected]
companies that are promoting N-Business should make their services free of charge
if they want to take over the current credit and debit cards to which Ghanaians are
already using. What should be kept in mind is that setting up all the necessary
resources and infrastructures require considerable amounts of investments.

According to NTN, reception within Ghanaian market has been good and the number
of subscribers has been steadily increasing, this is in spite of the transaction fees
which ranges between a minimum of GH¢1 and 2¾ of the amount being
transferred. The service at the moment is popular especially with those with
occupations that require them to travel often, as well as parents sending money to
their children who are in schools situated in different parts of the country.

THE BENEFITS
Consider a situation whereby a given business has to carry out a common payment
operation, such as bill payment or funds transfer, and that operation demands
transportation with all inconveniences attached to it. !f the same transportation cost
were paid to a service that would effect the same payment of behalf of the company
over the mobile phone instead, this more convenient method brings about saving
time and energy for other activities, in so doing increasing productivity by
performing two tasks instead of one at the end of the day! !t appears, therefore,
that using your mobile phone to make payments represents to a very large extent
`convenience taken to another level'.
"#$%&'!(#)'*!%)!+,-)-! !""#$
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www.designworldonline.org Design World Consulting [email protected]

Another important advantage of mobile banking is the fact that it drastically cuts
down the costs of providing service to customers. A study carried out by the
!nternational Data Corporation (!DC) on 1+ financial institutions in the US proved
that there is a substantial cut in customer care cost. This results from the fact that
mobile banking eliminates the need for costly call centres and frees up customer
service help desks, in addition real-time information is provided to customers and
employees. Using a mobile platform such as SNS for simple and repetitive tasks such
as reminders about payments due or balance requests can reduce the burden on !T
and personnel resources. This has also been found to reduce the cost and errors
associated with paper-base operations. Significant reduction in operational costs
means additional revenues that can be invested in other areas of the business.

From the consumers' perspective, mobile banking is relatively easy-to-use, and this
is another advantage compared to traditional means of banking as well as electronic
banking, given the fact that text messaging has become a common application of
mobile phones to the average citizen.

CONCLUSION
For businesses in the country, it is a unique platform to bring convenience in
financial transactions to customers, an area which before this period had been
beyond our domain for those of us in Ghana and most of Africa. For the consumer,
its time and cost saving elements cannot be overemphasised and the earlier we
"#$%&'!(#)'*!%)!+,-)-! !""#$
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www.designworldonline.org Design World Consulting [email protected]
adopt electronic ways of financial transactions, the better it will be for a whole
society that would see a transformation, resulting from the ability to cut down on
time lost accessing basic services among businesses and individuals.

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