ON a daily basis, more money circulates between mobile phones that cost a few thousands of cedis to own than they move around banks and their branches that cost an arm and a leg to build or rent.

Since overtaking cheques as the number one payment system in the country around 2017, mobile money (MOMO) has maintained its dominance in the electronic (e) transactions space, helping to oil the digitalisation and cash-lite drives that are the next game-changers for the economy.

The mobile chip-based transactions have also emerged as the most potent medium to deepening financial inclusion and closing the inequality gap in the country and globally.

Through MOMO, millions of Ghanaians who would have hitherto struggled to access financial services now consume them at the comfort of their farms, shops and homes.

The data

A Bank of Ghana (BoG) report showed that 372 transactions valued at GH¢76.2 billion occurred on MOMO in January, this year, compared to the 436 cheques valued at GH¢16.1 billion that occurred within the same month.

Last December, the value of MOMO transactions was GH¢82.8 billion compared to cheques, which was GH¢18.9 billion, according to the bank’s data released on March 18.

It also showed that fewer volumes and values were transacted on the other payment platforms such as the Real Time Gross Settlement (RTGS) system, the Ghana Automated Clearing House (GACH) system, the National Biometric Smartcard Payment System – e-zwich system, the National Switching and Processing System – the gh-linkTM, GhIPSS Instant Pay (GIP), the Paper Payment Instrument Accreditation Scheme and Internet banking.

Indeed, beyond dwarfing the value and volume of transactions, MOMO accounts and agents have also overtaken bank accounts and branches, thereby cementing the ‘kingship’ that the mobile phone-enabled transactions have attained.

Drivers

The buoyance in MOMO transactions is in spite of the fact that the platform is fairly new.

It emerged just around 2010, then operated only by MTN, but soon gained national acceptance as more people were convinced that it was safer, more secured and convenient to save on, pay through and receive from the mobile phone chip.

This gave rise to more telecos joining the MOMO space and that in turn led to a boom in accounts and agents rendering the services.

The coming into force of the interoperability in 2017 further boosted the growth.

By making it possible for people to send and receive MOMO across different networks at singinifcantly lower cost, what could have passed for the only barrier to the growth in mobile phone-based transactions had been broken.

‘MOMO it’

Indeed, regulation, through BoG and the National Communications Authority (NCA), also came in handy to smoothen the rough ends and reassure the public that money saved in the phone was as secured as those saved in the bank.

While that happened, consumers and businesses alike also grew more comfortable using MOMO.

As more businesses join the trend to take payments via MOMO, more consumers have been opting to ‘momo it’ through mobile phones than use the traditional cash, cheques, credit cards and the emerging internet banking.

No wonder almost every business, from the wayside food vendor to the complex multinational, now has MOMO as an integral part of its payment methods.

Also, the integration of MOMO services with the operations of banks and financial technology (FINTECH) firms also helped with ease of transactions.

The result is the current boom in accounts, values and volumes of transactions that also oil the e-commerce business as well as creates and sustains decent jobs in the digital economy.

Impact and challenges

The benefits of MOMO are immense. It has narrowed access to financial services by roping more people into the formal financial sector.

This has reduced cash-based transactions and all the challenges it poses.

MOMO is also a job creator. The hundreds of agents nationwide pass for ‘mini companies’ that offer temporary yet sustainable jobs to youngsters across the country.

But with its popularity come the challenges. On a daily basis, more people complain of losing their money to fraudsters as more criminals take advantage of the comparatively lower security protocols on MOMO to swindle customers.

BoG does not issue statistics of fraudulent transactions on MOMO although it compiles and issues a banking industry fraud report.

In 2019, the Cybercrime Unit of the Ghana Police Service reported over 300 fraud cases.

Given the nascent nature of MOMO and the fact that majority of the fraud victims are the less initiated, more needs to be done to sanitise the sector to help imbue confidence and keep the growth northwards.

The future

But how does the future hold for MOMO?

In spite of its popularity in developing countries, MOMO is a less fanciful payment option in developed countries.

There, card-based transactions rule. ‘Swipe to pay,’ not ‘momo it,’ is the trend in the United States of America, the United Kingdom, Germany, Canada and other developed economies.

This begs the question if MOMO will survive Africa and, for that matter, Ghana’s race to a developed economy?

Experts say MOMO has a bright future. With more Africans and Ghanaians in particular still outside the financial landscape, nothing more than the mobile phone will help lure them in.

Besides the virgin markets, largely informal nature of Ghana’s economy gives more room for growth to MOMO.

Besides, it will take ages before businesses gravitate from MOMO to cards and if even that was to happen overnight, the informal nature of the economy means that more people will prefer MOMO, which is almost direct, to point of sale devices (POS), which requires additional infrastructure and set up.

In all these, regulation and policy needs to be tactical to encourage continuous growth and adoption. That is why the attempt to tax MOMO is suicidal.

Instead of seeing it as a cake that must be shared, governments and regulators must see MOMO as a means to an end – a credible vehicle to tracking transactions to be able to cast the tax net evenly.

It should also be capitalised upon to collect more taxes as tax payment through MOMO removes the human interference and the challenges it poses.

All in all, MOMO’s kingship in Ghana’s e-transaction space needs to be guided, given the immense benefits it portends.