New guidelines in Ghana legitimise mobile money as a payment system

Mobile money is a growing segment in Ghana, having been launched in 2009, later than in some African countries. Transactions worth a total of GHC11.6bn ($3.22bn) were made in 2014, up from GHC2.4bn ($666m) in 2013, according to Bank of Ghana (BoG) statistics. The number of transactions soared from 36.8m in 2013 to 106.4m in 2014, while the number of registered mobile money customers grew by nearly two thirds in 2014, reaching 5.42m. As in conventional telecoms subscriptions, MTN is the market leader, with around 4.8m subscribers and monthly transactions worth more than GHC18.5bn ($5.13bn). Mobile money is particularly useful for extending banking services in more rural areas where it does not make economic sense to open a physical branch. Mobile money has allowed remittances from urban areas to be sent to villages with ease and security.

New Guidelines

In July 2015, the BoG issued a new set of guidelines on mobile money, giving telecoms companies offering mobile money services six months to pare off these operations into a separate electronic money business, and apply for a bespoke operating licence under the new framework. The guidelines are intended to enhance the regulatory environment for mobile electronic retail payments and fund transfers.

Under the new guidelines, electronic money can only be provided by financial institutions regulated under the 2004 Banking Act, or licensed non-bank entities “engaged solely in the business of e-money and activities related or incidental to the business of e-money, and which are regulated and supervised by the BoG” – hence the need for new, separate companies to be established by mobile operators to run mobile money functions.

The guidelines also establish maximum daily and monthly transaction limits, in three categories. Limits range from GHC300 ($83.25) to GHC500 ($138.75) a day, with monthly maximums from GHC3000 ($832.5) to GHC5000 ($1387.5). Aggregate limits on outbound payments by mobile money merchants would be GHC10,000 ($2775) a day and GHC100,000 ($27,750) a month. However, the BoG has stated that exceptions will be granted in cases when particularly large companies needed to make bigger transfers.

The central bank said that the new framework was intended to promote the acceptance and availability of electronic money as a retail payment medium, while securing a regulatory system that controls risks associated with the segment and protects consumers. Banks have in many cases been reluctant to invest in a market without exclusivity deals, out of concerns that their rivals will benefit. Meanwhile, mobile operators have had no direct relationship with the BoG, having to go through banks to work with the regulator. The new guidelines should help address this issue.

Growth Potential

In Africa mobile money is perhaps most developed in Kenya. M-Pesa, a mobile money service run by Vodafone, generates 18% of the revenue of telecoms operator Safaricom, in which the UK operator has a 40% stake. This is more than twice the proportion of revenue from data (7%), according to Deloitte. As long ago as 2011, a remarkable 80% of adults in urban areas in Kenya were using mobile money. This level of success has yet to be matched almost anywhere else.

Deloitte says that the next wave of mobile money development is likely to include mobileonly banks, microfinance (an important segment in Ghana), and mobile insurance. Market leader MTN has already played a key role in developing these services elsewhere, including TYME mobile bank in South Africa, cloud-based micro-banking in Nigeria, and a mobile insurance deal with the South African financial services company Hollard.