Telecos must provide platforms for payment systems - BoG

BY: Arku Jasmine

Deputy Governor of the Central Bank, Mr Millison NarhUnlike Kenya, telecom companies in the country will not be allowed to lead the revolution towards electronic payment systems, the Bank of Ghana (BoG) has warned, adding that the telecoms will rather be encouraged to provide the infrastructure on which the new payment system will run. The bank 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 mandate and, therefore, illegal.

"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, told the GRAPHIC BUSINESS on June 19.

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

Mr Narh spoke to the paper at the opening ceremony of a three-day workshop on National Payment Systems organised by BoG with support from the Ghana unit of Standard Chartered Bank.

The worksop, which ended on June 21, was on the theme 'Driving efficiency and value through innovative payment systems' and was to collate expert opinions on how to move electronic payments in the country forward.

Electronic payment involves transactions through electronic platforms such as online, through the mobile phone or point of sale devices (POS). The new crave is currently gaining ground among the populace nationwide as many embrace it for its convenience compared to the traditional cash-based payments.

In the telecom industry where mobile money - transactions through the mobile phone - is currently the order of the day, 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, representing a 265 per cent growth over the four-year period.

The same trend applies to tiGO and Airtel, the two remaining telecoms that also operate the mobile money product in the country.

Notwithstanding the high patronage in mobile money services in Ghana, the figures are dwarfed by those from Kenya where the M PESA, the local name for mobile money, is reportedly patronised by nearly 30 million people.

There, mobile phone companies are given a free hand to lead the revolution towards the new payment crave.  

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.

It is, however, not clear if the telecoms will buy into that idea from the Central Bank given that most of them are already neck-deep in the mobile money revolution, something the BoG now says is a financial service and, therefore, not within the remits of the telecoms.

By Maxwell Adombilla Akalaare/Graphic Business