Ghana opened its doors to Mobile Money services (Momo) in 2010, however, sending money from one wallet to another on a different telecommunications network was only possible through the token system, which was complicated until the Mobile Money Interoperability (MMI) was introduced in May 2018.
Since its introduction, it’s easier to transfer funds across wallets of different networks. This possibility has also led many organisations to set up their systems to accept mobile money payments.
In 2017, a report by the United Nations-based Better Than Cash Alliance indicated that despite the massive improvements recorded in digital payments among individuals, businesses and the government in Ghana, cash remained the predominant mode of payment in terms of value and volume.
The report stated that 98.72 percent of payments made in 2016 by volume were made in cash.
Ghana Interbank Payments and Settlement Systems (GhIPSS), therefore introduced MMI in 2018, a project that allowed all telecommunication networks to be interoperable. Equally, funds could be moved from bank accounts to mobile money wallets and vice versa to facilitate digital payments seamlessly.
This project was part of the government’s plan to reduce cash as the predominant mode of payment, drive financial inclusion, and reduce the number of unbanked populations in Ghana. A feat that has been largely achieved.
Fast forward to the first quarter of 2020, Momo transfers across different networks (MMI), shot up to 358 percent compared to the previous year.
The volume went up from 1.1 million in the first quarter of 2019, barely a year after its introduction to 5,1 million transactions, according to figures from the (GhIPSS). This showed a clear indication of the impact being made by the interoperability initiative.
Chief Executive of GhIPSS, Archie Hesse, 2020, said in an interview that MMI has made payments through mobile money one of the most efficient and easy to access, urging all businesses and individuals to accept payment from Momo wallets as one of the default modes of payment or risk losing out on potential income. This profound statement stimulated public interest in Momo usage before the COVID-19 lockdown.
The MMI platform in December 2020, recorded more than GH¢1.2billion in transactions, this indicates a more than 568 percent surge in the pandemic year, compared with the 215 percent growth recorded between December 2018 and December 2019.
This suggested that the pandemic’s onslaught forced many, including those who were formerly apprehensive, to embrace doing business on the Momo platform, but most importantly to the fact that most payment platforms are interoperable, enabling ease of usage.
In the first quarter of 2024, the volume of electronic payment transactions processed by the GhIPSS saw a huge jump compared to the same period in 2023. The volume went up by 120 percent representing 28.8 million.
The Interoperability Factor
The State of Inclusive Instant Payment Systems (SIIPS) in Africa 2024 report, indicated that Ghana stands out as the only country on the continent where domestic payment schemes are fully interoperable.
The interoperable payment systems have been a game-changer in the drive for financial inclusion. Interoperability, referred to as the ability of different financial products, services, or systems to work together seamlessly, has been a powerful tool for advancing financial inclusion in Ghana, making financial services more accessible, affordable, and efficient for everyone, especially those who are traditionally excluded.
Interoperability has increased the convenience and value proposition of digital financial services (DFS) for many financial consumers.
The Story of a Real Estate Developer
At Amasasom in the Ga West Municipality in the Greater Accra region, a real estate developer, Jacob Nii Laryea, narrated his frustration in paying his field officers between 2015 and early 2018 before the commencement of MMI.
He narrated that because the real estate sector meant buying lands across the country and developing them for sale, he had field officers in different locations receiving weekly payments.
“It was challenging to send money across because some used MTN Momo and Vodafone cash, whilst others used Tigo cash and Airtel money. Because interoperability didn’t exist, sending money from the office’s MTN Momo account to all these accounts was worrying. The token system made it more expensive to send money to these other networks than to other MTN accounts.
“We then decided that one person from each location would come to the office on Saturdays to take payment for all their colleagues at that station. This also had its challenges as transportation cost was involved and sometimes sums of money got diverted to the wrong hands. And so, improbability was a blessing to Conard Estates Limited, especially as we could easily send cash around,” he said.
He added that interoperability also empowered the company to target market women and menial workers in 2019. For instance, it introduced the “Own a Dream Home” promotion, where individuals could make an initial 10 percent deposit for the land and pay the rest via Momo deductions weekly.
This product, he mentioned, recorded about 1,200 clients within two years because the challenge of most market women which was lack of access to bank accounts and the high cost of sending Momo to other accounts using the token system was eliminated. With this, they could easily sign on and make even daily payments.
Just like Jacob, a retired journalist and former staff of the state-owned newspaper organisation, Graphic Communication, Llyod Evens, recounted that the intervention of interoperability was a great relief because the queues at the banks during paydays were eliminated. After all, funds could easily be transferred from a bank account to the Momo account for further disbursement.
“When we started taking salaries through the bank, the queues at the banks, especially when it is payday were overwhelming. But with the gradual introduction of the bank apps, ATM Cards, and now Momo, especially bank-to-Momo interoperability options, it’s been a while that I have been to the banking hall,” he emphasised.
Mr. Lloyd expressed that looking back in time, the financial sector has been nothing short of transformative and interoperability was the ultimate tool that drove the growth exponentially.
These experiences summarise Ghana’s financial sector transformation from a manual one in the hands of only the banks to a more open space with options including telcos and Fintechs.
The evolution of financial services from what once seemed like a privilege reserved for those working in the public sector and near urban centers or with technical expertise, to one dominated by Momo making it accessible to most remote villages is transformative.
The financial sector has grown rapidly since 2010 when Momo was introduced, however access to formal financial services across the regions was still low but the intervention of interoperability.
The 97% Financial Inclusion Growth
The Financial Inclusion (FI) report of the Bank of Ghana (BoG) in 2024, indicated that Ghana has achieved about 97 percent financial inclusion in terms of access, however, only about a third of the population has the necessary knowledge to make informed financial decisions, thus only 32 percent are financially literate.
This remarkable performance in terms of access makes Ghana one of the fastest-growing markets in Africa for digital transactions. This growth has been driven by the increasing adoption of e-commerce and Momo due to the high mobile phone penetration rate.
By allowing various payment systems, such as banks, mobile money services, and digital wallets by Fintechs to connect and transact interconnectedly, interoperability has expanded access to financial services for people who might otherwise be excluded, especially in remote areas.
It is obvious that Mr. Jacob, the market women, and other menial job workers, perceived interoperability as an intervention that lowered transaction costs for making payment, by eliminating the need for multiple accounts or services to complete a transaction.
This makes financial services more affordable for low-income individuals and small businesses. Like the story of the market women procuring lands and building their dream homes, interoperability enhanced usability among the informal sector.
Momo’s Role in Financial Inclusivity
Momo has not just been about saving money and making payments. The service has expanded to other critical aspects of daily financial transactions, such as offering loans, insurance, international remittance, and investments. The introduction of interoperability advanced Momo and enabled all the aforementioned additions.
Data from the Bank of Ghana (Bog), in November 2024, indicated that registered Momo accounts stood at 71.9 million with active accounts increasing to 23.3 million.
On the business side, the number of registered Momo agents grew to 872,000 whilst the value of Momo transactions was about GH₵298.6 billion.
The Momo walled is mainly used to transfer value from one person to another person (P2P), business to business (B2B), for payment of goods and services such as buying airtime, paying for utility bills, Go and DSTV bills, salaries of some workers, Uber and Bolt fares, micro-credit, savings, and micro-insurance.
The Momo industry creates jobs for several agents’ country-wide such as service providers, merchants, retailers, and Fintech companies.
All these point to the critical role of Momo and to a large extent interoperability in advancing financial inclusion.
Fintechs Role
To consolidate the gains and further grow digital payments, the Bank of Ghana (BoG) in May 2020 established the FinTech and Innovation Office to drive the cash-lite, e-payments, and digitalisation agenda of banks. The FinTech and Innovation Office is responsible for the licensing and regulation of dedicated electronic money issuers (DEMIS/mobile money operators), payment service providers (PSPs), closed-loop payment products, payment support solutions, and other emerging forms of payments delivered by non-bank entities.
The inculcation of interoperability into the Fintech ecosystem also enabled the Fintechs to advance financial inclusion and provide loans, savings, and other critical innovative products that pushed the banks to form partnerships and even introduced more flexible systems for linking bank accounts and other financial services.
Challenges
Fraud: As online transactions grow, criminals find it profitable to target cyberspace. The incidents of Momo fraud skyrocketed tremendously and many people with such accounts were defrauded one way or the other leading to some people rejecting Momo services.
Despite the robust audit trail of digital payments, banks, and financial institutions by the central bank, risks of money laundering, terrorism financing, and illegal trade in customer data are real.
Building an ecosystem of high integrity is essential to growing the acceptance of digital payments and scaling up financial inclusion.
Momo Tax: the introduction of tax on electronic financial transactions, popularly known as e-levy, in 2022, has been described by many experts as a discouragement to the population from using electronic channels of payment. The 1.5 percent tax on Momo transactions in May 2022 has been watched closely by policymakers and described as a disincentive to the poor, hence the need to scrap such a tax as proposed by the new government to drive digital payments.
Financial illiteracy: Insufficient financial literacy remained a long-term factor for low savings rates in Ghana, and more broadly, financial illiteracy suppresses consumers’ demand for financial services, especially from the banking sector.
With the BoG’s financial inclusivity data indicating that about 68 percent of the population is financially illiterate, more has to be done to improve financial literacy using digital means where applicable.
Improved financial literacy programmes would stimulate demand for services as they would arm financial consumers with the information needed to identify the benefits and risks of financial products.
Access to Power: Some remote communities still lack access to power as they are not connected to the national grid. This makes it difficult to use mobile phones to access digital services.
Opportunities
Leveraging data to improve access to finance. The government should develop sound policies and legal frameworks to mandate data-sharing. With the current robust public digital infrastructure (DPI) available, such as the Ghana National Identification System (Ghana Card), and Ghana Post Address System, among others, sharing data through partnership and collaborations can offer to Ghanaians in the financial sector.
Leveraging data sources such as utility payments, mobile phone usage, and transaction history, creates a more inclusive credit scoring model. Considering that all Momo accounts have been linked to the Ghana card.
Advanced data analytics and machine learning algorithms can identify patterns and detect fraudulent activities more efficiently to help reduce risks and build customer trust. Data can be used to identify gaps in financial knowledge and design targeted financial literacy programmes.
These programmes can educate individuals on managing finances, understanding financial products, and making informed decisions.
The use of data in digital financial services, such as mobile banking and online payment platforms, can make financial services more accessible to people in remote or underserved areas.
All key stakeholders in the financial sector must work collaboratively, leveraging the digital public infrastructure investments made and the successes chalked from the existing initiatives to extend reach and deepen financial literacy.
Interoperability Under DPI
Interoperability is a key element of Digital Public Infrastructure (DPI). DPI refers to the foundational digital systems and services that enable various digital interactions and transactions. Interoperability within DPI ensures that these systems and services can work together seamlessly, regardless of the different platforms, technologies, or providers involved.
Interoperable systems are more scalable and flexible, making expanding services and adapting to changing needs and technologies easier.
