Mobile telecom operators with mobile money service have clinched a deal with their partner banks for them to pay interest on customers’ balances in their wallets.
This follows a Bank of Ghana (BoG) approval for mobile money operators to negotiate interest rates on the electronic money balances and pass on part to their eligible subscribers, starting from September 11.
According to the central bank, the total interest accrued on the float as of June 2016 reached GH¢15.19 million.
The interests would be calculated daily but paid quarterly.
The payments are to take retrospective effect, beginning January 2016. Consequently, interest payment for the first quarter of 2016 is to be effected on September 11, with the second quarter payment due on September,18.
Mobile money subscribers (customers) are entitled to at least 80 per cent or GH¢12.15 million of the total float balances to be distributed in line with paragraph 10(5) of the E-Money Issuers Guidelines (2015).
Airtel ready to pay interest
Already, Airtel Money, a sub-brand of Airtel Ghana, has expressed its readiness to pay interests earned by customers on their Airtel Money wallets, effective September 11, 2016, in line with the BoG directive for mobile money operators to pay interests on customers’ E-value.
The Head of Corporate Sales, Airtel Money, Mr Edmund Barwuah, said: “we are excited that the BoG has given the green light for us to pay interest accrued on the pooled E-money float for eligible customers effective the second week of September.
“Together with our partner banks, interest earned for the first half of the year will be paid to customers in two tranches, with the first payments made by 11th September covering the period January to March, and the second payments made by September, 18 covering April to June, 2016.”
He said as with normal practice, interests were computed on a daily basis and would be paid to customers per quarter or as directed by the central bank.
Explaining how the interest will be paid, Mr Barwuah said working with its partner banks, eligible customers would receive notification detailing interests earned on their Airtel Money wallet balances and the funds would be immediately credited to their wallets.
The Bank of Ghana issued the Guidelines for E-Money Issuers (EMI) in Ghana (2015) to regulate mobile money operations in the country.
The EMI guidelines direct banks to pay interest on pooled E-value deposits to telecom operators, who will pay them out to eligible customers.
The central bank and the stakeholders have had extensive engagement with the banks about the E-value deposits and paying OF interests on the E-Money floats. The BoG’s directive has, therefore, been communicated to all parties involved, operators and banks.
Who controls the float?
The telcos control the E-money balances but the trouble is whether if there is a purse of money the owner must have the interest on it or the technology enabler.
The President of the Ghana Association of Bankers (GAB), Mr Alhassan Andani, believes “this is where the issue becomes a bit problematic” and wants mobile money operators to be transparent in calculating and distributing the pro-rata share of the interest accruing on the aggregated funds to individual eligible subscribers.
He cited the analogy that if a customer of a bank had a unique current account with GH¢5,000 balance and the interest went to the account holder, the interest could also be easily and transparently calculated. But having elevated that account onto an electronic purse, the aggregation was done by a Mobile Network Operator (MNO).
“So if there are other ways the money sits on bank accounts, the interest rate calculation should be easy and transparent,” Mr Andani, who is also the Managing Director of Stanbic Bank, said, stressing that “the telcos need to be very transparent with this because individual bank account holders can easily understand and calculate their interests.”
Some subscriber reactions
Some subscribers believe MNOs should not pool people’s collective deposits and benefit from them.
A built environment practitioner, Mr Richard Kwawu, said if monies deposited in wallets of subscribers actually sat with the banks and the mobile operators only supplied the platform, then the transactions were between the customer and the banks.
“If such monies attract interest, then what business do the telcos have going near my interest,” the operations manager of a civil engineering firm asked.
Another subscriber, Mr Wisdom Ahadzi, agrees that banks should pay interest on the E-Value floats, but was concerned about transparency and public understanding of how the calculations would work out.
“My difficulty, however, is how long should it take at the bank to attract interest since it would be difficult to know how often customers would demand their balances,” he pondered.