Bank of Ghana

Strategic Payments Roadmap for Ghana

Prepared for Bank of Ghana

March 2014

Table of Contents

Contents

1. Introduction 8

2. Laying the Foundation 14

2.1. Introduction 14 2.2. Initiatives 15 2.2.1. Setting up a Ghanaian Payments Council 15 2.2.2. MFS Circular (Addendum to BB circular of 2008) 18 2.2.3. Pricing caps and display circular 19 2.2.4. Implement POS and acceptance guidelines 20 2.2.5. Enable TSA regime 21 2.2.6. Publish and maintain Cost of Cash index 22 2.2.7. Publish Payments newsletters 23 2.2.8. Pursue security certification to improve trust 23 2.2.9. Define a comprehensive stakeholder communication plan 24 2.2.10. Enable fraud and misuse reporting 26 2.2.11. Reach out to National Communications Authority for telco infrastructure 27 2.2.12. Stronger engagement with Ministry of Finance etc to secure buy-in 28 2.2.13. ePayments regulation / code 28 2.2.14. eMoney regulation 29

3. Making Better Use of What is Already There 31

3.1. Introduction 31 3.2. Initiatives 32 3.2.1. Reinvigorate mobile payments 32 3.2.2. Provide value added services on current schemes 34 3.2.3. Ensure all employees paid electronically 35 3.2.4. Other e-government initiatives 36 3.2.5. Develop and roll-out a hybrid or mobile Point Of Sale (M-POS) capability 37 3.2.6. POS deal negotiation (Dual readers including Contactless?) 39 3.2.7. ATM switching & Activity Monitoring 40 3.2.8. Supporting laws as per World Bank guidelines 40 3.2.9. E-payment only threshold 42

4. Building for the Future 43

4.1. Introduction 43 4.2. Initiatives 43 4.2.1. Launch instant payment scheme 43 4.2.2. Enable a bill pay scheme and supporting infrastructure 44 4.2.3. Host anti-fraud solution at GhIPSS 45 4.2.4. Enable a collaborative e-commerce payment method (e.g. iDeal / MyBank) 45 4.2.5. Implement penal pricing for cash & paper (Cashless Policy) 46 4.2.6. Launch direct debit scheme 48 4.2.7. Launch a multi-function Ghana card 48 4.2.8. EMV Cards 49 4.2.9. Participate in West African interlinking of EFTPOS/ATM switches 50 4.2.10. Participate in West African RTGS payment interlinking 51 4.2.11. Recapitalize and commercialize GhIPSS stake in tranches in favour of banks 52

5. Innovation for 2019 and beyond 53

5.1. Introduction 53 5.2. Initiatives 53 5.2.1. Multi-currency payments on mobile 53 5.2.2. IBAN / Numbering 53 5.2.3. Enable NFC payments 54 5.2.4. Account switching 55 5.2.5. ISO 20022 55 5.2.6. Separation of Scheme from Infrastructure 56

6. A Strategic Roadmap 57

6.1. Introduction 57 6.2. Quick wins by classification 60 6.3. Roadmap by timescale 62

Appendix 1: Methodology 65

Appendix 2: Abbreviations and Acronyms 66

Appendix 3: References 70

Strategic Payments Roadmap for Ghana

“The promotion of a cash-lite economy is a collective responsibility of all stakeholders involved in the development of the payments eco-system.

This will require appropriate policies that promote investment and innovation as well as smart plans from both the private and public sectors.

These, together with technical and financial support from development partners will unleash the full potential of this country to enhance its overall development.”

Mr. Millison Narh, Deputy Governor, Bank of Ghana

Acknowledgements

We thank The Bank of Ghana and Ghana Interbank Payment and Settlement Systems Limited (GhIPSS) for their cooperation in completing this report on a future roadmap for the country to 2019 and beyond.

We also thank the other stakeholders, namely the Banks, Telcos, Retailers, Corporate businesses, and the Ghanaian Treasury for their valuable input and opinion in attending the June and December 2013 workshops and in completing the questionnaires, which alongside peer country experience have been instrumental in shaping the report.

Finally, we must acknowledge Capgemini for playing a very important role in this project and in the preparation of this report and the accompanying presentation deck.

Note - This report is supported by a separate detailed presentation deck as used in the December workshops and other presentations and sources of data are also available should the reader wish to read further.

Executive Summary

In summary, Ghana has the core payment systems infrastructure in place such as RTGS, ACH, ATM and POS switches and cheque processing systems. It also has Mobile money capabilities through Telco providers such as MTN and Airtel, Mobile which follow established practice similar to those in countries such as Kenya and Tanzania. However cash is still very much the preferred means of payment and yet we see cheque volumes increasing which should in fact be ACH transactions. POS acceptance and hence cards usage is low.

These systems provide a foundation on which further enhancements and payment services can be built to achieve the twin goals of a cash-lite economy and greater financial inclusion however the fundamental issue is that payment systems in serving all stakeholders from consumers to the government itself has not been subject to collective consultation and decision making by the same cross-section of stakeholders. The result is that the benefits of electronic payments are not always fully understood and thus do not get the ‘buy in’ of the stakeholders and consumers involved in the usage of the services.

It is therefore fundamental that a suitable governance structure is formalised and that working groups are created to particularly address specific focus areas under the umbrella of a Ghanaian Payments council. In fact this was one area where there was a unanimous response by the survey group.

The brief of the payments council would be structured to cover matters such as standards, pricing, determining priorities, scheme rules and legal drafting. The new initiatives would be managed by working groups who are responsible for delivering the end to end roll out of any new initiative. It must be noted, however, that these groups need to be sufficiently staffed and managed to meet their commitments according to established project management principles. At present there is the risk of the infrastructure being ready before stakeholders fully understand what it means to them and what is required to implement.

Additionally, alongside the payments council there needs to be effective regulation and penalties for non-compliance with any payments council directive. Clearly this needs a legal underpinning to be effective.

We have heard of cases where for example a corporate can circumvent a limit for writing cheques by writing several lower value cheques, or of delays in posting payments to a customer account to benefit from float, or high merchant service fees for card payments all of which do not support a change in payments behaviour. It is recommended therefore that there is greater transparency in pricing and that the payments council consider pricing caps and general principles to be adopted in pricing e.g. processing a debit card should be no more than a cheque(and ideally less) and domestic cheque pricing be based on a flat fee rather than ad-valorem. Furthermore, as with the EU Payment services directive, D+1 should be considered for payments as the time between a debit being applied to the originator’s account and the credit being posted to that of the beneficiary.

We did compare the wholesale pricing of payments in terms of what GhIPSS charge banks and found that fees were in line with other peer countries but bank customer fees did appear to have a high markup.

Not surprisingly feedback from bank customers indicated that bank fees were too high yet the banks felt that they were at the right level. Nevertheless this is certainly a topic to be discussed at the payments council as to what is and what isn’t a reasonable fee and margin based on processing payments.

‘Incentives’ should also be applied to encourage different behaviour in terms of a reduction of fees, a fee surcharge or a form of loyalty scheme depending on the desired outcome. In this sense, payment

made to the RTGS could be at a lower fee depending on the time of day as in India to flatten intraday liquidity ‘spikes’ or penal fees applied for cash collections over a certain limit as in Nigeria. We have also recommended that a cost of cash index is maintained to communicate the true cost of cash to support further the value of electronic payments.

Kenya’s MPESA is well known as a great success especially in terms of greater financial inclusion and similar initiatives in Ghana have the potential to be equally successful in achieving that objective. However the growth has been slow. The view of Telcos in Ghana is that the principal issue is not that of awareness but of education. If consumers are able to see how easy it is to use this service through hands on experience and demonstrations and as a result understand the convenience and security it brings, greater usage would ensue. Peer experience is to be encouraged and marketing campaigns could perhaps use well known public figures in TV and newspaper advertising.

Lack of Education, banking facilities for the unbanked/illiterate and lack of trust in e-payments were the principal barriers to a drive from cash and greater financial inclusion. A mobile money agenda is seen as a critical element in the Ghana payments strategy.

A greater perhaps loosely coupled relationship between the national telecommunications agency and the Bank of Ghana is essential, and all forms of mobile payments should be subject to BoG approval with respect to Payment services provision as well as the NCA. Financial and non-financial (i.e. airtime) transactions should also be segregated to keep a clear dividing line between m-money and traditional Telco billing. BoG announced at the December meeting that this legislation was currently being drafted and would be in place in early 2014.

The report also recommends that all activities by BoG be publicised and as is good advertising practice, the communications should be consistent and continual around any specific campaigns. A Payments council newsletter is recommended as one such vehicle and we believe that the more that usage is endorsed by trusted parties or peer groups, the more interest and usage will be the result.

The next step is to make better usage of what is already available. There are two parts to this; One is in terms of re-launching and invigorating current services through specific campaigns such as re- launching mobile payments using education and publicity on the benefits such as convenience and security. The other is to provide value added services and improve penetration of e-payments acceptance and the usage of e-payments.

BoG have also considered purchasing POS terminals to encourage points of acceptance but it is fundamental that should this proceed, such terminals would need to be ‘future proofed’ by supporting mobile P2P type payments. The market ‘charcoal seller’ is a case in point where a mobile P2P payments capability would apply without the need for an traditional POS. Feedback was mixed with regard to negotiating pricing for POS terminals with suppliers to obtain bulk discounts but the experience of Nigeria suggests that this makes commercial sense.

As an example of making better use of what is there already we believe that direct corporate access to the ACH under the sponsorship of their relationship bank will be beneficial in terms of easier payment of salaries and would allow smaller banks to have access to central clearing under an agency arrangement. Several software suppliers could provide this and GhIPSS could operate a service bureau. This would avoid the practice of a large employer making RTGS payments and banks having to manually post salaries to the appropriate account.

The next stage would be to bring in new capabilities that form the basis for the future where the world is moving rapidly to real time, instant everything and the choice for any payment method at any time and any location is provided i.e. complete flexibility. These points are discussed further in the World Payments Report 2013 by Capgemini and RBS as are the trends for payments to reflect better in the end to end businesses of corporate industry, merchants and consumer lifestyle. This also brings in an

additional focus on online internet purchasing as the market matures in terms of broadband availability in homes especially in the metropolitan areas.

We note that real time payments is being planned for a first half of 2014 roll out, and this will further support the electronic payments agenda and support P2P as well as C2B and B2B payments though it may dilute existing ACH volumes and care needs to be taken in the timing of its introduction. In addition to be successful, scheme rules need to be established and understood by stakeholders, and the bank’s systems need to be capable of real time rather than batch processing and of real time AML checks. Compared to a 3-day cycle, there is no recourse to recall if a mistake is made or a suspected fraudulent transaction. Real time or instant payments are certainly a precursor to collaborative e- commerce methods such as the Dutch I-deal payment method and the UK ZAPP initiative and a more convenient method of payment than cards which in turn minimises the incidence of incomplete purchases.

In this stage there is the opportunity with a more established infrastructure to introduce loyalty products such as cash back or points for financial transactions to incentivise further the digital agenda.

The focus also moves into the realms of inter-country or international payments with schemes such as WAMZ in West Africa interlinking national RTGS similar to those that have started in East Africa and out of South Africa. These are designed to simplify and bring efficiencies to international trade and the supply chain from a small importer buying goods in China to the large multinational oil companies. The same concept can also be applied to linking ATM/POS switches and enabling a Ghanaian visitor needing to withdraw cash from a local ATM in Togo without recourse to the black market or carrying a wad of US dollars.

Further innovation for 2019 and beyond is more of a case of streamlining or fine tuning what has gone before regarding the organisation in terms of ownership of GhIPSS and separating the scheme from processing and driving a wider usage of standards such as ISO20022. This stage or classification covering restructuring and standards can therefore be considered as fine tuning what has been achieved in previous years.

Ultimately the recommendations and decisions will be made by the BoG and Payments council and the roadmap may change from that provided herein.

That said, all in all, this is an exciting time for Ghana and from the workshops there is a clear willingness by the stakeholders to collaborate and work together for the common good of the country. There are number of quick wins where the impact is high and ease of implementation medium to high and these should be started to demonstrate commitment in setting the firm foundation for the journey. These are provided in section 6 of this report.

There should also be a flagship initiative that really demonstrates to Ghanaians and their neighbours that innovation is not only achievable but operational and as in peer countries a ‘carrot and stick approach will be needed together with a joint approach to m-payments with the Telcos operating in the country. It would also be beneficial if a case similar in impact to mobile public transport payments in Brazil were to be delivered and on the agenda, though given the diversity of transport operators this exact programme may be difficult to achieve in Ghana.

Overall, the Bank of Ghana and GhIPSS should set specific goals for reducing cash and increasing financial inclusion and monitor performance against those targets in order to assess the impact of specific actions. The journey will be one of continuous steady improvement which given the will of the various stakeholders to succeed will be successful. The following quotation sums up that view very well.

2014 2015 2016-18 2019 & beyond

2.2.1 Setup Ghanaian Payments Council 2.2.2 MFS 2.2.3 Pricing caps BoG : Target state Circular and display circular 2.2.4 PoS and acceptance guidelines

2.2.6 Cost of 2.2.5 Enable TSA 4.2.11 Recapitalize and 5.2.2IBAN / cash Index regime commercialize GhIPSS 5.2.6Separation Numbering 2.2.7 Publish payments 2.2.9 Stakeholder stake 5.2.4 Account of Scheme from newsletters communication plan 2.2.8 Pursue security Switching Infrastructure 3.2.8 Supporting laws as certification to 4.2.9 West African 5.2.5 ISO 2.2.10 Fraud & misuse 2.2.11 NCA per World Bank 5.2.3 NFC

Laying the the Foundation Laying improve trust interlinking of 20022 reporting Reach out payments guidelines 5.2.1Multi- 3.2.7 ATM & EFTPOS/ATM switches4.2.10 West African RTGS 2.2.13 ePayments currency mobile 2.2.14 eMoney Activity payment interlinking regulation / code regulation monitoring 3.2.9 epayment 2.2.12 MoF 3.2.3 electronic 4.2.7 Multi-function only threshold 4.2.8 EMV Cards Buy-in salary payments Ghana card 3.2.5 hybrid / mPoS 4.2.3 Anti-fraud 3.2.1Reinvigorate 3.2.2 VAS on capability solution at GhIPSS 4.2.5 Cashless 4.2.6 Re-visit direct mobile payments current schemes policy debit scheme 3.2.4 eGovt. 3.2.6 PoS deal 4.2.4 eCommerce/ Initiatives negotiation ebanking gateway

4.2.1 Instant 4.2.2 Bill payment

Payment scheme scheme

Making better of use better Making what is already is there already what

Building the future Innovation for 2019 and beyond

Exhibit 1: T-map roadmap which describes the initiatives by classification and timeline

1. Introduction

The Payments systems act of 2003 empowered the Bank of Ghana (BoG) to play a pivotal role in establishing, operating and promoting payments systems (among other things) in Ghana.

BoG then established Ghana Interbank Payment and Settlement Systems Limited (GhIPSS) which owns and operates e-payments schemes and infrastructure within the country and many of these infrastructures have been established within the 2008-2012 window.

Exhibit 2: Payment systems landscape in Ghana: GhIPSS is the principal payments infrastructure body in Ghana, anchoring the payments transformation landscape as part of the Bank of Ghana Cash & Slow E-Payments Cards ‘Cross / X’-Border Payments Cash Cheques Direct Direct RTGS Debit Debit Credit SWIFT Remittan Credit Debit (POS) (ATM) ces

GhIPSS CCC* GACH gh-link TM

e-zwich (National Switch)

GIS$ Traditional Products Traditional

. Aitel . Tigo . Sika card . MTN . Mondex card Mobile Fin Services Prepaid / Closed loop Mobile / Wallets

Bill Pay and E-invoicing Emerging Products Emerging

* CCC - Cheque codeline clearing i.e. cheque truncation system. $ GIS - Ghana Interbank Settlement System - RTGS. This uses SWIFT FIN Y Copy.

As such Ghana has the fundamental baseline infrastructure in place to support further enhancements by offering: . Real Time Gross Settlement system for high value payments and settlements . An ACH for direct credits/credit transfers and direct debits – G-ACH . An 3 day and same day cheque clearing mechanism – Gh-CCC

. ATM interchange enabling cash withdrawal from any ATM with a valid debit card – Gh- LINK . A national POS acquiring service for merchants – Ezwitch

Thus far there have been two distinct waves of development of the national payments infrastructure which have established the baseline systems but some specific initiatives are planned for 2014 and further value added initiatives will follow as part of the short to medium term (2014-2020) roadmap.

Exhibit 3: The payment systems evolution in Ghana: Bank of Ghana has overseen 2 waves of development and could trigger the next wave to achieve twin objectives of inclusion and efficient payments (lower cost of payments)

Payments 1.0 (Wave 1) Payments 2.0 (Wave 2)

October,2002 - GIS

(RTGS) operational HVPS

Dec,2010 to Aug 2011 a. CT (ACH Direct Credit)

LVPS b. DD (ACH Direct Debit)

Cash Payments Cash - 2008- Aug,2012 - gh-link (Switch) Non E-Zwich (proprietary banking

and retail payment system) & Card & Switch 2010 2013 1996 1998 2000 2002 2004 2006 2008 2012

1997 - 2009/10 - MICR (Cheque clearing) CCC (Cheque

Cheque Truncation)

Cash & Paper Paper & Cash Payments Cash

Careful considerations of options and their fitment to Ghana’s context is important to define Payments 3.0 (wave 3)

However, even with this infrastructure baseline, Ghana is very much a cash society and as shown in the following exhibit, cheque usage is rising against a global trend in cheque reduction1 and e/m-money initiatives are not on a steep growth trajectory despite growing mobile phone ownership.

1 World Payments Report 2013, Capgemini and RBS

Exhibit 4: Growth in payment product types: While all payment products are demonstrating growth, paper payments are still demonstrating healthy growth

Product Type CAGR Cheque Usage dwarfs ACH usage CCC Cash (M1, narrow Money) ACH Cheques 4.6% (09-12) ACH 75.78 (2011-12)

eZwich 68.84% (2008-12) 6.71m 1.33m

9x growth (H2,2012 0.69m

Gh-Link 2.71m Vs H1,2013)

GIS (Customer Account) 2012 2013 (Jan- May)

While non-cash payments have demonstrated very high growth rates (on low base), the acceleration of epayments is a must for achieving the twin objectives of efficient payments with inclusion (payments reachability) In general Ghana is not as advanced in its move from cash as say Nigeria or in achieving financial inclusion through the digital ecosystem as in say Kenya.

In addition, whilst this infrastructure is in place, there are specific capabilities, scheme rules and monitoring that are not in place and could enable increased usage if provided. Generally the benefits of e-transactions are not fully understood and cash is still ‘king’.

It should be noted that a number of Telcos such as MTN have set up schemes similar to MPESA in Kenya, yet these have not achieved the same level of penetration as Kenya or Tanzania.

Exhibit 5: Ghana as a lively economy and ‘Payments’ can help stimulate and sustain economic progress

Market Indicators

Local socio economic analysis / econometric indicators Population 25.37 Bank account 29 (Source : World Bank 2012) penetration (People with formal Account) Per Capita GDP (Source : Global Financial Inclusion (Global $40.71bn Findex) Database 2011) (Source : World Bank 2012) PoS density GDP growth 7.59% CAGR 4.16 per 100,000 residents CAGR (8%-’08; 4%-’09;8%-’10; 15%-’11; 8%-’12) (Source : World Bank,2009) (Source : World Bank 2012) Banked Vs >80% Internet usage 40.7% Unbanked (Source : (10,564,180 subscribers) Population http://www.pwc.com/en_gh/gh/pdf/ghana- at the end of August, 2013 banking-survey-2011.pdf) (Source : http://www.nca.org.gh/) Mobile phone usage . >100% (27.51m Aug 2013) Literacy rate 71.5% mobile voice telephony connections age 15 and over can read and write . 34.5% - Mobile data subscription Source : CIA World Fact Book, 2010 census (Source : http://www.nca.org.gh/)

Over the last decade, the continent had become the most exciting global economic story with Ghana ranking 14th among the top 20 fastest emerging economies in the world - The Economist

Similarly the benefits to merchants, corporate businesses, government departments (such as the Ministry of Finance), and consumers from the e-agenda is not well understood as it might be.

As shown in exhibit 4, Ghana is a lively economy and an effective and enhanced payment systems ecosystem is viewed as essential to stimulating and sustaining economic progress.

With this in mind the Bank of Ghana asked Standard Chartered Bank to help define a roadmap up to 2019 and beyond which would enable the twin and related objectives of greater financial inclusion and a significant shift from cash payments to electronic/digital payments, to be achieved within a ‘cash-lite’ economy.

This represented some specific challenges and issues to overcome in defining the barriers to e-payments growth and to determine how to engage the demand and supply side stakeholders to achieve greater usage with respect to the usage of the specific levers of (a combination thereof) - law, commercials, governance, defining broad solutions / initiatives that can be implemented to allow rapid epayments uptake.

In addition whilst the principal focus is intra-Ghana, the Bank of Ghana also seeks to improve international payments to support the commercial transactions of Ghanaian businesses with neighboring West African states and principal trading countries such as China. Enabling faster turnaround time (TAT) and reduction in carrying cash for payments are seen as specific objectives in this area.

This report will serve to provide the following:

. Define the roadmap (sequencing and timeline) over which the above can be achieved. . Enable the above through a combination of data analysis, stakeholder connect (selected sample) and peer group analysis. . A definition of schemes, change management & culture to ‘enable’ this change?

Standard Chartered Bank have been working closely with Capgemini—a strategic consulting and services provider to the bank—together with GhIPSS and representatives of the Bank of Ghana to create the content of this report. The source of the data in this report has been from primary research through several stakeholder workshops, questionnaires and interviews and input from GhIPSS/Bank of Ghana, and secondary research through available sources to determine peer country practice and general best practices deployed. The peer countries used were Kenya, Nigeria, Kenya, South Africa and Tanzania. Exhibit 6: Potentially, there are 4 broad scenarios of evolution for e-payments in Ghana Demand Pull Rapid uptake

A sizable group of demand side A collaborative and sequenced stakeholders expects significant approach that delivers Visibility benefits from the use of epayments. (Suppliers) and Value to (Buyers /

epayments These stakeholders will force their Demand) that enables targeted e-

products banks to start offering e- payment payments growth through combination

products of supply enablement and demand Request

strategy stimulation.

Snail paced progress Supply Push Demandside

Broad Infrastructure exists. Paper Newer schemes / products are defined. epayments

epayments payments still growing. Non-cash Newer players with connectivity, reach payments growing but reach still low (i.e. are enabled to deliver services (incl. products Unbanked) and not cannibalising the Legal approval). Players proactively demand for (in-efficient) paper payments. push epayments to reduce ‘cost of

Reluctant to This situation not accretive to policy payments’ by rewarding transition away decisions and for accelerating / from loss leader products. supporting economic agenda. Reactive and patchy Pro-active and comprehensive

Supply side epayments strategy

We observe that Ghana is a ‘two-paced’ market : while the ‘banked’ need awareness for uptake, the ‘unbanked’ need alternative for rapid inclusion into payments world.

Various scenarios were determined and validated to create the questionnaires used and a full deck of slides were produced to define the whole study end to end, which were used to solicit views and opinion during the stakeholder workshops.

In approaching this study the various approaches to rolling out an e-payments strategy were analyzed. Of these the Rapid uptake model was viewed as the most appropriate to be used for Ghana.

How to read this document

Following this introduction, this document proceeds to discuss the various initiatives that were identified as having strategic importance for Ghana. The initiatives are discussed in various chapters aimed at improving Ghana’s payments landscape: Laying the Foundation (chapter 2), Making Better Use of What Is Already There (chapter 3), Building for the future (chapter 4), and Innovating for 2019 and beyond (chapter 5).

Each of the initiatives discussed in the above chapters can be further classified as being or pertaining to a different aspect of the payments infrastructure: . Governance aspects: pertaining to regulatory (pertaining to the legal underpinnings necessary for payments to function within) industry and government bodies and their relation to each other with respect to national payments bodies. . Technical aspects: pertaining to initiatives aimed at setting up or improving the present-day technical infrastructure for carrying out payments . Scheme aspects: . Change Management aspects . Commercial aspects

The document ends with an overall overview of the strategic payments roadmap for Ghana. Quick wins are identified and the various initiatives are plotted against a timeline.

2. Laying the Foundation

2.1. Introduction

Ghana has a good payments infrastructure foundation, in fact many initiatives and steps are already present, however there is clearly scope for improvement. The foundation is clearly infrastructure based and GhIPSS already has plans for enhanced or new infrastructure for the country supporting new payment methods.

What is missing is the alignment and support of the stakeholders (government departments, Banks, commercial businesses, merchants, consumers and allied organizations such as Telcos). The risk at present is that new payment schemes can be introduced before the target stakeholders understand the benefits to them or have the resources and budgets to implement them.

Clearly high MSC’s for merchant POS transactions inhibiting widespread acceptance of cards or the case of the GHS 100 for clearing a cheque or rural banks not having access to all payment systems are some of the issues being cited today.

In cases of disputes between banks over say a return of funds from a fraudulent cheque the Bank of Ghana will provide an arbitration committee but this is not a formalized and recognized department to conduct binding arbitration.

In general, a government will lay down some high level political principles such as making sure there is an even-playing field and access to payment systems by all banks, that there should be principles of fairness in terms of pricing and fees, and for greater if not full inclusion of its citizens into financial services.

Following on from this there would be a super-steering committee of stakeholders to determine what is needed and the scheme rules, standards and operating principles for introducing new or enhanced payment services. This is typically called a ‘Payments council’ and the critical success factor is to have a broad church of membership which in the past has been primarily made up of (large) banks.

It is also imperative that whatever principles, schemes and rules are agreed, these need to be monitored and there needs to be penalties for non-compliance. Some form of regulatory oversight committee should be set up with a dual role of arbiter in the case of disputes.

As with all foundations on possible soft ground there needs to be a strong underpinning of a legal framework drafted by the Bank of Ghana. However as legal changes can take time, our recommendation is that new initiatives are rolled out in parallel with the legal process.

It was clear from the workshops and questionnaires that there was overwhelming support for a formal governance structure supported by new financial laws to provide a solid foundation on which to build. The case of m-money provision is a case in point where new agents are

approved by the NCA, but should also be approved by the Bank of Ghana as Payment services providers, thus needing greater cooperation between Telcos and the Bank of Ghana.

Having set up these structures it is essential that there is a broader communications and implementation policy to ‘inform, enthuse and educate’ all participants in the payments ecosystem and advise them what they need to do and when in order to reap the benefits of a ‘cash-lite’ country.

With a solid Governance and legal structure and generic communications policy and process for the implementation of new schemes, we believe there will be a solid foundation on which to build and this is a priority short term deliverable in the roadmap.

2.2. Initiatives

2.2.1. Setting up a Ghanaian Payments Council

Initiative Category Governance & Legal Ease of Implementation Medium Impact High Proposed Timelines Near term (H1 2014) Current State Peer Practice . Payments governance is driven primarily by Bank of . Tanzania: Established NPSC (National Payments Ghana together with delivery arm - GhIPSS (wholly System Council) that helps direct NPS (National owned by BoG). Payments System). . Bank of Ghana drives the broad objectives of . Nigeria: Structured 10 working groups under CBN efficiency and Inclusion through its policies and though not labeled as a payments council. oversight. . India: Held under the aegis of NPCI, The payments governing body. . Australia: Joint consultation by RBA and APCA launched in October, 2013 to form Australian Payments Council. Voice of Stakeholder Q: We asked stakeholders at the workshop if the BoG should develop and anchor a payments governance body with multiple/wide stakeholder participation (by a. Strongly agree whatever name called – Council, Committee, Group b. Agree etc)? c. Neutral A: An overwhelming, 100% of the respondents d. Don’t agree ‘Strongly agreed’ There was also a strong support for the appointment of an independent payments ombudsman. A Payments Council is the prime means by which many countries and regions ensure diverse stakeholder involvement to evolve decisions and consensus on the direction and details of the payments industry. It also ensures ‘alignment’ for the benefit of end customer by smoothening Actions/ out narrow interests that may arise from time to time. Details The Ghanaian Payments Council could be formed with, including but not limited to, following aspects : . Objectives : Primary authority to Define, Design and Drive the realization of Roadmap through collaborative decision making, and alignment with national government objectives.

. Legal Structure : Set up as an association or foundation with its own articles of association . Participants: Suggested participants can be GhIPSS, Banks, FIs, Telcos’, Stock Exchange, Major Corporates, Large Merchants, Retails consumers. The steering committee however would be a smaller group headed by the Governor of the Central Bank with decision making authority. . Sub-committees : To ensure focus and adding ‘details’ to the direction, we recommend to constitute, at a minimum, five committees – Operations, Legal, Standards, Automation, Technology and pricing. . Funding: Institutional Members to the council could pay a yearly membership fee with which the various activities of the council can be supported. See Exhibit 6: Proposed structure of the Ghanaian Payments Council We believe the diversity in Ghana payments system will be well addressed with the Rationale appointment of a formal payments council and the council would be the rightful owner of the strategic payments roadmap.

Exhibit 7: Proposed structure of the Ghanaian Payments Council

2.2.2. MFS Circular (Addendum to BB circular of 2008)

Initiative Category Governance & Legal Ease of Implementation High Impact High Proposed Timelines 2014 Current State Peer Practice . BoG issued the ‘Branchless Banking’ guidelines . Kenya: CBK (Central Bank of Kenya) engaged with under the notice- BG/GOV/SEC/2008/21 in 2008 CCK (Communications commission of Kenya) (along with an addendum). where CCK deferred to CBK specifics of M-PESA . It provided the basis for mobile financial services in oversight. Ghana. The details included: permitted model (many . Tanzania : MoU with Telecom regulator (between to many), permissible activities, KYC, anti-money Bank of Tanzania and Tanzania Communications laundering, use of agents, agent due diligence, regulatory authority (TCRA) agreements etc. . The agency model is in place due to many Ghanaians not having a bank account due to various infrastructure and social reasons. . Many Telco’s are providing mobile payment facilities but challenges exist : ─ Interlinking of payments between operators ─ Lack of education on benefits ─ Slow growth

Voice of Stakeholder Enable (agent based) mobile financial Q: We asked stakeholders by when BoG should services enable agent based mobile financial services. A: 70% of the respondents agreed that it should enable Near Term within 2014. (6months) Short Term (2014) Medium Term (2015-17)

Mobile financial services have proven to be the single most important scheme / product to drive inclusive growth in African markets. See the following exhibit on impact of mobile financial services in Tanzania. We recommend : Actions/ . A re-visit of these guidelines to publish additional guidelines that would trigger greater Details adoption. It is critical that Ghanaians have a bank account or mobile money account to credit and debit if cash usage and financial inclusion objectives are to be met. . Engage with NCA to push for aggressive uptake (while balancing oversight)

. Calibration of this scheme is very important for BoG to achieve its goal of ‘Financial Rationale Inclusion’.

Exhibit 8: Tanzania volumetric analysis demonstrates that traditional products plateau / decelerate over time - Volumes handled (Traditional products) - - Volumes handled (High Growth products) -

6 CAGR 160 . TISS - 25.49% (from ‘05) CAGR 140 5 . Cheques - 1.82% (from’05) . ATM- 50.85%(from ‘05) . EFT - 31.85% (from’06) 120 . SMS - 148.49%(from ‘06) . POS - 71.14% (from’06) 4 . Mobile FS - 326.88%(since

. Internet - 44.27% (from ’06) 100 ‘08) (in (in Millions)

3 80 (in (in Millions) 60

2 Volumes

40 Volumes 1 20

0 0 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011

ATM Mobile Fin Services SMS Banking TISS (RTGS) Cheques EFT (ACH) POS Intenet banking

Scheme Details Scheme Details

CAGR restricted to under 2%. While volume held up, processing During the period from 2008 to 2011, number of agents rose from Mobile Fin Cheques value reduced by 50% demonstrating higher value payments taking 2,757 (2008) to 83,795 (2011) forming the foundation of the Services the ‘e-route’. 325%+ explosive growth. Continued rise in PoS transactions at 71% CAGR can be attributed to higher POS penetration in Tanzania at 11/100,000 Vs POS 4/100,000 in Ghana Source : World Bank, 2009 Source : http://www.bot-tz.org/PaymentSystem/statistics.asp , Capgemini Analysis

While ‘agent enabled’ mobile financial services & SMS banking transactions rose rapidly.

2.2.3. Pricing caps and display circular

Initiative Category Governance & Legal Ease of Implementation Medium Impact Medium Proposed Timelines H1 2014 Current State Peer Practice . Payments governance is driven primarily by Bank of . Kenya & Tanzania: Provide EFT debit, credit, Ghana together with delivery arm - GhIPSS (wholly cheque clearing as ‘free services. owned by BoG). . India: RBI has mandated tiered maximum fees for . Bank of Ghana drives the broad objectives of RTGS payments. efficiency and Inclusion through its policies and oversight. Voice of Stakeholder (Pricing Caps) Q: We asked the regulatory stakeholders if payments pricing should be regulated at a product / scheme a. Strongly agree level? b. Agree A: An Overwhelming, 100% of the responded agreed. c. Neutral d. Don’t agree

Voice of Stakeholder (Display) Q: We asked the stakeholders if payments products and pricing should be displayed in the branch? a. Strongly agree A: More than 77% of the respondents agreed. b. Agree c. Neutral d. Don’t agree

Voice of Stakeholder (Level of Pricing) Q: We asked stakeholders if payments were fairly priced? a. Fairly priced A: While more than 60% respondents felt that b. Overpriced payments were fairly priced, about 29% of the c. Underpriced respondents felt that payments were overpriced. In an earlier survey by BoG, there is evidence of d. Others ______overcharging by some participants. We recommend BoG to pass / issue a circular mandating both display of payment product pricing and also cap pricing at a reasonable level. We recommend the ‘pricing’ committee in the Payment council as the appropriate forum to recommend the details at a product level. Actions/ Details The intention is not to stifle competition and micro-manage payment services providers and banks, but to instill regulation that is based on fairness and transparency for consumers and business alike. Accepted practice is that domestic cheques should be charged at a flat fee, and debit cards similarly rather than ad-valorem. . Improves awareness . Standardizes pricing (removes ad hoc / exorbitant pricing) Rationale . Sets-up the expectation of participants for pricing caps under a non-cash policy that will be introduced subsequently.

2.2.4. Implement POS and acceptance guidelines

Initiative Category Legal Ease of Implementation High Impact Medium to High Proposed Timelines 2014 Current State Peer Practice . The PoS infrastructure is linked to the e-zwich . Nigeria : Specific POS guidelines with minimum scheme. definition of minimum standards, stakeholder and . ATM cards of banks exclusively work on ATMs roles and responsibilities definitions, settlement, fees only. and charges limits, POS Terminal specifications (along with optional services and timelines for compliance. . Hybrid PoS, which accepts both e-zwich and Appointment of NIBSS as the (PTSA - Payment normal ATM cards are undergoing certification terminal service aggregator). NIBSS is responsible for and will be rolled-out shortly. the certification and re-certification of all payment . Commercial banks have contracted with Visa and terminals and applications on behalf of the Industry MasterCard to provide PoS solutions to their merchant clients.

Voice of Stakeholder Improve POS penetration rapidly Q: We asked stakeholders if BoG should move to enable rapid PoS penetration - in the near, medium or long term?

A: 89% of the respondents agreed that this scheme Near Term (6months) should be launched in the short term. Short Term (2014)

Medium Term (2015-17)

Long Term (beyond 2017)

We recommend the issuance of specific POS guidelines to trigger POS penetration Actions/ Details beyond the e-zwich and ATM wave in line with Nigerian benchmark. . Creates framework for players to choose role in POS transformation. Rationale . Creates a level playing field.

2.2.5. Enable TSA regime

Initiative Category Governance & Legal Ease of Implementation Low Impact Medium Proposed Timelines 2014 Current State Peer Practice . Republic of Ghana is in early stages of treasury . Leading countries like USA, UK, France, China, management / centralization. Philippines have successfully deployed TSA / centralization models. . India: While accredited commercials banks act as tier 1, RBI acts as the tier 2 to enable the TSA for Government of India. . Nigeria: The initiative was championed by the Federal Ministry of Finance with the office of the accountant- general of the federation serving as the implementing agency, in active collaboration with the Central Bank of Nigeria (CBN) in 2012. Voice of Stakeholder (General Laws) Q: We asked stakeholders to rate current regulations support BoG to play an active role in Government payments and finances like a) enabling (G2X - Govt to a. Yes, Fully support Consumer, business etc) payments b) enabling TSA (Treasury Single Account) structures etc? b. Yes, party support A: There is clear view from the respondents that c. No - Need new initiatives like TSA are required. amendment / approval We recommend alignment with Ministry of Finance and other units of the Government of Actions/ Republic of Ghana to enable Treasury centralization / TSA to reap efficiencies of visibility, Details lower cash balances, limited borrowing etc. Such an approach would also streamline receipts and payments from the treasury.

. The Government can be an ‘early adopter’ of e-payments thus triggering adoption by other stakeholders. Rationale . Savings triggered from efficiency can be invested in improvement of the Payments systems and Banking sector as a whole.

2.2.6. Publish and maintain Cost of Cash index

Initiative Category Change Management Ease of Implementation High Impact High Proposed Timelines H1 2014 Current State Peer Practice . Cash is a dominant payment instrument in Ghana. . Nigeria : Used a clear ‘Cost of Cash’ Index as a . Ghana also faced currency ‘re-denomination’ precursor to the ‘Cashless Nigeria’ initiative exercises that cost economy. It is estimated that the . Both in the UK and EU, various studies have been re-denomination in 2007 cost USD 66.2m (USD commissioned that quantify the ‘cost of cash’ to rally 94.8m in 2003). public opinion to migrate to low cost payment . If savings are triggered through lower cash usage, products. the same can be channeled by the Government for productive uses. Voice of Stakeholder Publish and maintain a ‘Cost of Cash Q: We asked stakeholders if BoG should Publish and Index’ for Ghana as a whole ? maintain a ‘Cost of Cash Index’ for Ghana as a whole? A: More than 85% of the respondents agreed to the idea of publishing a ‘cost of cash’ index. 1-Don’t Agree 2-Neutral 3 -Agree 4. Strongly Agree

We recommend immediate publication of ‘Cost of Cash’ index with a minimum coverage of : . Cash in Transit . Cost of processing Actions/ Details . Vault Management . Counterfeit losses The index should also track the M1 metric (narrow money) and improvements should be published at least once a year. . Prepares consumers for a ‘Cashless Ghana’ initiative. . Can enable savings for payments service providers and for Ghanaian economy as a whole. . Enables continued support for other e-payment initiatives while capturing ‘early benefits Rationale measurement’ (low hanging fruits). . Provides a visible metric that can be tracked by various stakeholders. Such metric would also be picked up by media creating further awareness and acceptance (lower resistance to change)

2.2.7. Publish Payments newsletters

Initiative Category Change Management Ease of Implementation High Impact Medium Proposed Timelines H1 2014 Current State Peer Practice . There are no payments newsletters published today . UK: The UK Payments council publishes a Quarterly by BoG. newsletter ‘Communique’. . India: NPCI publishes e-newsletter at regular intervals. . Australia: ‘Payments Monitor’ a quarterly newsletter is published by APCA (Australian Payments and Clearing Association). . Nigeria: Used a newsletter approach to drive the ‘cashless’ initiative. Voice of Stakeholder A regular ‘Payments council Q: We asked stakeholders if BoG should publish a newsletter ? regular payments newsletter? A: 90% of the respondents agreed.

1-Don’t Agree

2-Neutral

3 -Agree

4. Strongly Agree

We recommend a combined statistics and policy / payments plan progress based newsletter to Actions/ be published on a quarterly basis (under BoG / Payments Council).The same should be made Details available to all payments industry participants (push) and at websites of BoG and GhIPSS (pull). . Enables Systematic communication Rationale . Enables reachability to wider audience and triggers discussion / debate . Conveys progress and helps drive advocacy.

2.2.8. Pursue security certification to improve trust

Initiative Category Change Management Ease of Implementation Low Impact Medium to High Proposed Timelines 2014-2015 Current State Peer Practice . While BoG / GhIPSS deploy prudent practices, . EU: EBA Clearing pursued ISO 27001 to improve public the systems are not yet PCI-DSS certified. trust in information systems. . South Africa: Bankserv is PCI-compliant and in 2012 achieved PCI 2.0 compliance. . Nigeria: NIBSS is PCI DSS compliant

Voice of Stakeholder PCI-DSS compliance Q: We asked stakeholders if BoG/GhIPSS should undertake PCI-DSS Compliance? A: More than 87% of the respondents agreed. 1-Don’t Agree 2-Neutral 3-Agreee 4-Strongly Agree

Voice of Stakeholder ISO certifications and audits Q: We asked stakeholders if BoG/ GhIPSS should undertake ISO security compliance and audits? A: More than 87% of the respondents agreed. 1-Don’t Agree 2-Neutral 3-Agreee 4-Strongly Agree

. We recommend BoG / GhIPSS to undertake PCI certification and validate the same on an annual basis. . We recommend that any card based payments for income tax, corporation tax, VAT Ghanaian equivalents have their card details stored so as to enable any overpayments or Actions/ refunds to be paid back via the same method as was originally used. This will allow card Details scheme rules to be adhered to and support AML. . A QSA (Qualified Security Assessor) may be appointed for the purpose. . Also, all payments applications procured by GhIPSS must be PCI compliant -Payment Application Data Security Standard (PA DSS) . Improves public perception that their card details are safe. . Helps drive adoption of security standards by payments industry participants. Rationale . Meets Scheme rules . Sets an example for online retailers to follow (and in turn become PCI-DSS compliant).

2.2.9. Define a comprehensive stakeholder communication plan

Initiative Category Change management Ease of Implementation Medium Starting 2014 and Impact High Proposed Timelines continuously thereon Current State Peer Practice . BoG together with Ministry of Communications . UK: A range of communication tools are used to - engages with the stakeholders through traditional FAQ’s, one minute guides, success stories etc. means - press conference, select stakeholder . Tanzania: TCRA (Tanzanian Communications meetings etc. Regulatory Authority) played an important role in enabling mobile payments by communicating KYC requirements (alignment of KYC for mobile SIM and KYC for M-PESA) and supporting the improvement of awareness and education.

. Nigeria: Launched a continuous campaign to rally users and stakeholders to enable the ‘Cashless Nigeria’ initiative. Used diverse methods like . Weekly information bulletins on roll-out and stakeholder connect schedule. . Provide for detailed ‘Frequently asked Questions’ to improve self learning . Share success stories that ‘consumers can relate to’ Voice of Stakeholder (RTGS) Develop a Stakeholder Vs Media matrix Q: We asked stakeholders if BoG should develop a and extensively enable outreach. Develop Stakeholder Vs Media matrix and extensively enable a communication plan with relevant Govt outreach along with development of a communication ministry / body. plan with relevant Govt ministry / body?

A: More than 91% of the respondents agreed with this 1-Don’t Agree proposed initiative. 2-Neutral 3 -Agree 4. Strongly Agree

We recommend a detailed communication model to engage with stakeholders at 3 levels : . Pre-initiative . Initiative Roll-out . Post Initiative (Ongoing) We also recommend that target stakeholders should be segmented into two broad categories: Actions/ Details . Commercial / Non-Consumer bodies – This category includes – Public Sector, Regulators, Private Sector, Telcos, Banks and Large Merchants. . Retail & Individual driven enterprises – Individuals and Small merchants and vendors etc. The stakeholders should be engaged with a range of communication tools. We suggest 15 such tools mapped to the phase and client type for use by BoG. See suggested framework in following exhibit. . Comprehensive engagement leading to awareness and education. Rationale . Early identification of issues triggering resolution. . Broad citizen support for ‘faster’ ePayment adoption.

Exhibit 9: Communications matrix. Initiative phase versus client segments Initiative / Program Phase

Initiative Roll-Out Post Initiative / Bank / Telco / Pre-Initiative Player driven BAU / Ongoing Phase 1 Phase 2 Phase BoG driven

‘n’ Public Sector 1.News paper adverts

13 2.Newsletters ators Regul 3.Workshop - Train the trainer

Pvt 4

Sector 4.Workshop - end user 8 8 5.Training sessions 4 1 1 7 6.SMS Broadcast

Telco 9 1 9

Commercial 7.One page guide / Brochure 10 6 6 6 8.Circular / Notice 7 4 2 7

Banks 9.Emails 10.Agent training 5 3 4

ants 11.FM Radio Large Merch 15 15 15 15 12.TV Adverts Client Segments Client 13.Product pack (with 14 14 14 timelines) 14.Road show

Small 15.FAQs Vendors etc Vendors merchants / 11 11 11

Individuals

Retail & Individual Individual & Retail driven enterprises driven

2.2.10. Enable fraud and misuse reporting

Initiative Category Change Management Ease of Implementation High Impact Medium Proposed Timelines Short to Medium term Current State Peer Practice . There are no specific returns sought on Fraud and . India: The RBI has issued specific guidelines on misuse. Frauds – classification and reporting. It includes – classification, monetary limits and aligned reporting, attempted fraud case reporting, Quarterly returns and a progress report, guidelines for internal review and reporting to external investigation agencies etc. . Nigeria: A monthly return on fraud and forgeries is mandated with a penalty for failure to report. Voice of Stakeholder Q: We asked stakeholders if BoG should publish fraud Publish ‘fraud’ and misuse statistics and misuse statistics? A: 79% of the respondents agreed.

1-Don’t Agree

2-Neutral

3-Agreee

4-Strongly Agree

We recommend a directive to capture and report fraud through ‘returns’ to be filed by payments providers. At a minimum, such returns can be sought on a monthly basis or based on ‘amount’ Actions/ limits require immediate reporting. We recommend, “Payments Council” to determine the Details appropriate method to communicate such statistics to payment service providers with consideration towards anonymity (especially for consumption by general public). Rationale Enables better oversight and triggers actions to maintain sanctity.

2.2.11. Reach out to National Communications Authority for telco infrastructure

Initiative Category Governance & Legal Ease of implementation Easy Impact Low (but necessary) Proposed Timelines 2014 Current State Peer Practice . Unclear which part of the telecoms and payments . Payments infrastructure is a vital infrastructure for a infrastructure falls within the oversight and country. With growth of mobile payments, a joint or regulatory remit if the National Communications clearly demarcated regulatory overview is needed; Authority or the Bank of Ghana. many countries have set up joint working groups or . BoG will launch regulations covering mobile committees to understand and work through each payments in 2014. Mobile payment schemes will others remits. then need to be approved as compliant with BoG . Certain countries such as Tanzania have adopted a regulations as well as NCA telco regulations. It is fast track approach to regulation whereby the telco understood to mandate a separation of accounts for and the bank regulators work under and MOU whilst financial and telco transactions. the detailed legal work is being debated and drafted. We recommend BoG and the NCA to set up a joint committee that delineates responsibilities between each regulatory body and regularly discusses the state of the sector. As an example, the NCA oversees the overall telecoms infrastructure, looking at public charging or solar panel charging infrastructure in rural areas. With the advent of mobile Actions/ payments (e.g. the paying of government benefits on mobile accounts), the effectiveness of Details this infrastructure becomes of vital economic importance for Ghana on any given day. Therefore both regulatory bodies have different but shared interests in the state of the infrastructure. We recommend that an MOU is created and signed by BoG and the NCA as a precursor to the final governance and its legal underpinning. . Need for clear governance; . Need for regular overview of bottlenecks and solutions to possible roadblocks for rolling out Rationale mobile money; . A joint working committee (between NCA and BoG) would facilitate this.

2.2.12. Stronger engagement with Ministry of Finance etc to secure buy- in

Initiative Category Governance Ease of Implementation High Impact High Proposed Timelines H1 2014 Current State Peer Practice . BoG is well aligned with Ministry of Finance (MoF). . Kenya: Finance ministry ordered an audit into M- PESA scheme in December 2009, more than two years after no objection from Central bank of Kenya. This demonstrated a light touch approach to kick start the scheme but with monitoring oversight and audit. We recommend Prior and constant engagement with MoF to ensure government alignment on all payments initiatives (from planning to execution – opinion, information sharing, feedback Actions/ incorporation and in-principle approvals. Details MoF is a key stakeholder and we recommend adherence to communication principles recommended in this report. Early views on funding for transformation initiatives. Rationale Secure buy-in on newer schemes (e.g. mobile money)

2.2.13. ePayments regulation / code

Initiative Category Governance & Legal Ease of Implementation Low Impact Medium Proposed Timelines 2014 Current State Peer Practice The Payment Systems Act 2003, Act 668 empowers . Australia: The ePayments Code regulates electronic the BoG to oversee and manage payments systems payments, including ATM, EFT, POS and credit card and provide broad guidance on payments aspects transactions, online payments, internet and mobile (obligations, evidence, disputes etc) banking, and bill payments. . India : Payment and Settlement Systems Act, 2007 (PSS Act, 2007) We recommend realization of a ePayments code that provides for, at a minimum, the following aspects : . Disclosure Actions/ . Liabilities Details . Conduct of payments service providers . Complaint handling. Such code will typically cover aspects like - Terms and conditions for products, Un-authorized payments liability, Recovery of mistaken payments etc. . With the proliferation of e-payment products in recent years there is a need to document the rights and responsibilities of payments service providers vis-à-vis consumers. Rationale . The challenges and outcomes vary based on underlying product and hence this regulation / code should cover product level needs of consumers of payments services.

2.2.14. eMoney regulation

Initiative Category Governance & Legal Ease of Implementation Low Impact Medium Proposed Timelines 2014 Current State Peer Practice . The Branchless banking guidelines of 2008 are the . eMoney directive in EU. closest to eMoney guidelines. But the scope is . UK : eMoney is defined as : significantly different. ─ money that is stored electronically, including . An eMoney regulation enables a sound legal magnetically; framework for ‘stored value payment products’ ─ issued on receipt of funds for the purpose of making payment transactions ─ accepted as a means of payment by persons other than the issuer

Voice of Stakeholder (General Laws)

Q: Against the backdrop of mobile and epayments a. Strongly agree revolution in payments both globally and in Africa, We asked stakeholders does Ghana need a b. Agree comprehensive emoney framework? c. Neutral A: More than 95% of the respondents ‘Strongly agreed’ d. Don’t agree an e-payments framework was needed for Ghana.

We recommend issuance of eMoney regulations that cover, at a minimum : . Authorization (who can issue) . Capital Actions/ . Conduct Details . Complaint handling . Supervision and reporting . Fees etc eMoney includes products like Prepaid, wallets whether used at retailers or online. . This regulation enables, typically, non-banks to provide payment and banking (partially) services and can be a useful medium to aid financial inclusion. Rationale . Such competition, typically, enables better choice and value for consumers by triggering the need for ‘Innovation’

Case Study: Brazilian president approves mobile payments law

Brazilian President Dilma Rousseff has approved a law that introduces regulations for mo-bile payments in Brazil. Law number 12,865 creates a new legal entity known as a "payments institution," which will be regulated by the Brazilian Central Bank and allowed to offer mobile payment and banking services to low-income consumers. Digital wallet providers, card issuers, banks, and mobile operators will be eligible to apply for payments institution licenses.

The main goal of the bill is to promote financial inclusion. It also calls for common standards and interoperability between Brazil's various m-payments initiatives. But interoperability will not be mandatory, rather it is signaled as a goal further down the road, and any new (m-payment) service (that) receives a license will be required to have a clear roadmap of how it will eventually interoperate with the wider Brazilian financial ecosystem. The bill seeks to create the 'lightest' possible mechanism in terms of regulatory burden for commercial players, hoping it will translate into cheaper payment instruments that will reach low-income customers.

The BCB had 180 days from the publication of the bill to develop the framework for its payments regulations, which will need approval by Brazil's Congress and the country's Conselho Monetário Nacional, or National Monetary

Low banking penetration but growing middle class

For many financial services firms in Brazil one of the biggest challenges is how to gain market share of the upwardly mobile lower middle class without incurring high credit and operational risks. The advent of basic payments services through a “KC-Lite” approach, effectively capping the amounts that customers are allowed to transact on a daily basis in return for a lighter enrolment regime; allows the creation of vast platforms of users that can then be analyzed for customers who warrant a full-service approach. It represents, in other words, a platform which can be used by banks to enroll those customers that seem most upwardly mobile and credit worthy.

Brazil has a high percentage of unbanked consumers, even as mobile phone penetration there has grown rapidly: according to the World Bank, in 2011 less than 60 percent of Brazilian adults had an account at a formal financial institution, while there were 125 mobile phone subscriptions per 100 people.

How to create scale

In order for such a platform to be viable, scale is needed. Various initiatives are being studied, including the adoption of a prepaid m-payment method for Sao Paulo’s and Rio de Janeiro’s micro- bus public transportation method, the disbursement of Bolsa Familia’s welfare payments through mobile accounts, or the linking of POS systems to allow for m-payments.

3. Making Better Use of What is Already There

3.1. Introduction

As stated in the introduction of this document the financial infrastructure and baseline payment systems are already in place. This chapter examines specific initiatives that can be introduced to achieve a wider usage of those systems as well as enhancements and value added services that can be applied to those current schemes.

The current mobile services should be ‘re-invigorated’ and closer cooperation between the NCA and Bank of Ghana plus the MNO’s is needed in a coordinated manner to subsequently relaunch the existing services. It is believed that the endorsement of the m- money providers as PSP’s by BoG through a new stringent approval process and subsequent publicity will provide a high degree of trust with regard to any perceived risks when compared to cash usage.

This section will also address some of the issues in terms of EftPOS acceptance which is not widely available against the backdrop of a merchant community with few large retail chains.

We also examine hybrid EftPOS and acceptance of m-money at the point-of-sale will add further acceptance of the move from cash especially as the old adage of ‘Convenience, convenience and convenience’ holds true. Payments is just the final stage in a purchase.

From a merchant perspective a faster tendering process away from cash will mean less time at the checkout and may reduce checkouts, but the benefit will be greater information and the possibility of stimulating sales using a loyalty scheme.

Usage of monoline cards e.g. CUP which operate outside the card schemes allied to pricing caps on fees can reduce the merchant service charges that are collected from acquiring banks. The level of MSC has been quoted as a principal barrier to merchant acceptance.

We note that the Bank of Ghana is considering the purchase of EftPOS terminals to stimulate acceptance which in turn will influence consumers to sign up to card schemes and thus rely less on cash. However it is strongly recommended that any such terminals be ‘future proofed’ in terms of what methods can be adopted e.g. NFC, m-money, EMV etc. In many cases such as ‘the charcoal seller’ or small or sole traders education and acceptance of m-money will negate the need for traditional EftPOS as it will be mobile or cash rather than card or cash.

3.2. Initiatives

3.2.1. Reinvigorate mobile payments

Awareness Initiative Category Ease of Implementation High Commercial Set-up and launch Impact Medium Proposed Timelines campaign from H2 2014 Current State Peer Practice . Ghanaian m-payments schemes launched by There are many examples of mobile payments commercial parties such as MTN or Airtel are slowly schemes throughout Africa. Schemes such as mPesa gaining traction; have actually been used as a template for the current . However even though subscription numbers seem schemes in Ghana. However the copying of these to be rising, transaction volumes seem to be examples to the Ghanaian situation may lie at the heart flattening; of the current slowing of growth in transaction volumes. In other words, a reinvigoration of mobile payments . Analysis shows that this can be attributed to a must tailor these schemes to the specific Ghanaian number of factors (amongst others): situation and culture in order to succeed. ─ A lack of legal underpinning for m-payments It should be clear as to who within government has the providers with respect to the provision of responsibility and accountability for regulating and payments services (to e addressed shortly coordinating the m-payments market: either the bank with new upcoming legislation); of Ghana or the National Communications Authority. ─ The focus and predominance of peer-to-peer The upcoming addendum to the present e-money payments in current schemes, and the lack of legislation will clarify this role, obliging mobile money focus on retail payments (see also discussion and wallet suppliers to register as payments services on Hybrid POS below) providers. PSP’s in the EEA are regulated under the ─ A lack of trust and education in the use of terms of the EU payments services direction (PSD). mobile payments schemes; Separation of Telco services such as post-pay airtime ─ A lack of government sponsored m and banking services is a likely outcome but a close payments: The government is the prime working relationship between the NCA and BoG will be source of transactions in Ghana and could essential to the success of this initiative which has drive transaction volumes substantially; brought significant benefits to peer African countries. ─ The need for a more predominant role to be played by the banking sector in Ghana with respect to offering cash and liquidity services to m-money agents and branches; ─ The lack of standards and a roadmap to “interoperability” between m-wallets and between m-wallets and banks.

Previous Research Key factors determining the success of mobile money schemes2 External Factors . Socio-economic factors (such as geography, GDP per capita, levels of financial inclusions, and level of GSM penetration and the level of infrastructure in a market) certainly have an influence on how a mobile money provider will develop its service; however, they do not determine or predict the degree of its success; . Studies show no statistical correlation between the GSM market share of an MNO and the success of its mobile money service. Mobile money can be a viable business even for small operators;

2 Source: GSMA — Mobile Money for the Unbanked, State of the Industry 2012 and MMU “Driving Customer Usage of Mobile Money for the Unbanked” 2011

. There is in fact a positive correlation between level of competition in a given market and the success of mobile money offerings: more market dynamics means more in-vestment and success for all parties; . The vast majority of successful mobile money providers are MNOs, rather than banks or third-parties. However in most regions MNO regulatory environments are not clear or enabling MNOs to offer mobile money services along with banks, in or-der for mobile money to extend the reach of financial services successfully within more markets. This is seen as an inhibiting factor. Internal Factors . Mobile money is an OpEx, not a CapEx business. Investing in distribution seems to be key. Successful providers tended to focus on growth rather than profitability and tended to re-invest the money they made, and all successful providers have the ambitious objective of growing their Mobile Money business into a significant share of overall revenue within five years of deployment (e.g. at Safaricom this is about 18% of total revenues) . Organizational aspects play a key role, and what seems to work is: strong commitment to mobile money from its CEO, mobile money unit stand-alone from the rest of the company, focus on one or two core services to start with, assign high number of FTE’s to distribution and customer care . In terms of marketing strategy, mass mark advertisement campaigns used primarily to raise awareness, but direct marketing and field agents to register new customers. . In terms of product mix it appears that the key to success is choosing the right product for a market and then focusing on this product; In Ghana’s case it appears that over reliance on peer to peer transactions may not be enough, and that a focus on retail payments is needed too; . It is crucial to make it easy for customers to make transactions soon after they register . If literacy barriers are high, provide over-the-counter services, which allow a mobile money agent to perform a transaction on behalf of the customer. . Focus on creating and maintaining high performing agents: . Crucial to develop solutions for agents to easily manage their liquidity and rebalance: e.g.: easy access to mobile money float and liquidity (cash), such as using master agents, super agents, and rebalancing via internet banking. . Active agent management – closely monitor agent activity, assessing both the volumes of their transactions and the quality of their service. . Dismiss agents for KYC infringements, fraudulent activities, low performance (based on their volume of transactions and revenues) and branding infringements. Master agents can be cut if they fail to keep adequate levels of float or have too many underperforming agents. . Managing active rates – active rate of on average of successful providers is 73% We recommend the inception of a working group that investigates measures for reinvigorating mobile payments in Ghana. We suggest this working group to operate under the auspices of the Ghanaian Payments council and the National Communications Authority, and to adopt the following guidelines and objectives: . Pool resources from commercial parties to develop an education campaign for the use of mobile money. Focus on “below the line” marketing like using face-to-face methods through agents rather than above the line mass advertising; . Clarify who within government has the responsibility and accountability for regulating and Actions/ Details coordinating the payments market: either the bank of Ghana or the National Communications Authority. The upcoming updating of the present e-money legislation will clarify this role, obliging mobile money and wallet suppliers to register as payments services providers. This separation between telco’s traditional subscription business and payments provision should also ensure that payments provision has its own rules for consumer protection, dispute resolution etc. The Bank of Ghana has a role to play in informing the public in general about this new role and in engendering trust of the public in Ghanaian m-payments schemes as guaranteed under law; . Start a program for the widening of adoption of mobile payments, e.g. through fuel stations, hotels, restaurants , etc. See also section 3.5 on hybrid POS for SMS-based

POS solutions needed to increase the use of mobile payments for retail situations; . Publish a roadmap in which guidelines and expectations on standards, interoperability between wallets and between wallets and banks are set in the future; . Pursue the creation of strategic partnerships between banks and Telco’s for the banking support of agent networks in cash and liquidity management services; . Develop an incentivizing pricing scheme: price the use of cheque or cash payments higher than electronic payments; . Include guidelines for a mechanism aimed at the resolution of incorrect/disputed payments; . Involve government agencies. Government payments such as wages, benefits, but also acceptance of payments such as tax, fees and fines etc. should be made electronically through m-wallets or bank accounts. Reinvigorating m-payments in a coordinated manner and with government and payments Rationale council involvement will lead to rising electronic transaction volumes.

3.2.2. Provide value added services on current schemes

Initiative Category Scheme Ease of Implementation Medium Impact High Proposed Timelines H2 2014 Current State Peer Practice . BoG manages the GIS (Ghana Interbank Settlement . India: Credit Transfer scheme (NEFT) has System) RTGS system. The Average value per introduced multiple intraday settlement windows transaction has increased from GHC 509,279.4 in providing cleared funds in under 2 hours from 2003 to 1,134,731.7 in 2010 demonstrating that only initiation. very high value are being settled on RTGS system. . Kenya: CBK - Kenya’s banking regulator requires . GhIPSS manages multiple schemes for e-payments. the use of RTGS for payments above Sh1 million Of which GACH supports direct credit and direct but over time the system has proved popular even debit products. for payments of as low as Sh100,000. Voice of Stakeholder (RTGS) Lower RTGS monetary limit Q: We asked stakeholders ‘by when’ should an RTGS limit be lowered? Near Term (6months) A: More than 65% of the respondents responded that Short Term (2014) this facility should be launched within 2014. Medium Term (2015-17)

Long Term (beyond 2017)

Voice of Stakeholder (Intraday Batch) Intraday multiple batches for Direct Q: We asked stakeholders ‘by when’ should intraday Transfer / Credit Transfer multiple batches for ACH payments be enabled? Near Term (6months) A: More than 80% of the respondents responded that this facility should be launched within 2014. Short Term (2014)

Medium Term (2015-17)

Long Term (beyond 2017)

Voice of Stakeholder (Advance Submissions) Enable advance submission. Q: We asked stakeholders ‘by when’ should advance submissions for ACH payments be enabled? A: More than 63% of the respondents responded that Near Term (6months) this facility should be launched within 2014. Short Term (2014)

Medium Term (2015-17)

Long Term (beyond 2017)

We recommend BoG / GhIPSS to enable the following options on existing scheme / product to improve their attractiveness to users : . Intraday batches for Direct credit / credit transfer settlement . Enable advance submission of payments (Direct Debits and Credits) . Lower RTGS limit Actions/ Details . Provide direct corporate access to the G-ACH, as per the UK . Develop a scheme for mobile-authentication of direct debit collections to introduce trust in ‘pull’ transactions for corporate and consumers . Consider image capture of cheques and positive pay schemes. . A move to uniform account numbers and standardized forms . Enable users taste power of e-payments and faster turnarounds. . Enables planning by users and shift from cheques. Rationale . Removes re-keying of individual by banks on payroll that is made via RTGS payments . Introduces control and trust on direct debit collections to broaden usage of that payment method

3.2.3. Ensure all employees paid electronically

Legal Initiative Category Technical Infrastructure Ease of Implementation Hard Commercial Start process by end of Q4,2014 Impact Very High Proposed Timelines Implement by end of Q4 2020 Current State Peer Practice . Wages and salary payments in Ghana are done . Banks provide employee templates through internet mostly by cheque or cash; banking for SME’s. . With the adoption of mobile money schemes, . Larger corporate are sponsored by their banks to wage/salary payment onto mobile money wallets or submit single debit/multiple credit payroll directly to accounts is feasible and provides a strong the ACH via ACH accredited software and ‘scheme advantage over cheque and/or cash usage. certification Of interest: http://www.safaricom.co.ke/business/solutions-by-

business-needs/grow-your-business/cloud- services/online-payroll Stakeholder comment In interviews with stakeholders, Government departments make payments to employees directly and employees have bank accounts to support this. However it was reported that payrolls can be returned due to what are viewed by corporate customers as spurious reasons and in one bank, payment is made to the bank using RTGS with a schedule of payments to be made to employees, resulting in extra work for the bank and the possibility of keying errors. Peer practice is to use a single debit (employer) and multiple credits (employees) via the national ACH. We recommend the inception of a working group that investigates measures for the stimulation of electronic wage payments. We suggest this working group to operate under the auspices of the Ghanaian Payments council, and to adopt the following guidelines: . Develop scenario’s for the electronic wage payment on both existing infrastructure (bank accounts) and on mobile money wallets; . Ensure interoperability between bank and mobile money accounts is on the roadmap; . Develop an incentivizing pricing scheme: price the use of cash, cheque or cash wage Actions/ payments higher than electronic payments; Details . Include guidelines for a mechanism aimed at the resolution of incorrect/disputed payments; . Pay government benefits or welfare benefits electronically or price them accordingly so that electronic payment is cheaper for beneficiary; . Allow for automatic income tax deductions at a later stage: if included from the outset this may lower the adoption of electronic wage payment; . Involve government agencies: government wages should be paid electronically, thereby stimulating the use of overall electronic payments. . Stimulating electronic wages vastly improves the efficiency of the overall payments landscape. Payment of benefits ensure payments reach the beneficiaries, and allow for Rationale proper statistics and controls of overall wage/benefit payments. . Electronic wage payments will allow automatic income tax deduction in the future.

3.2.4. Other e-government initiatives

Initiative Category Scheme Ease of Implementation High Start H2 2014 through Impact High Proposed Timelines 2018 Current State Peer Practice . End of year/manual tax deductions and . UK: RTI (Real Time PAYE) schemas the most reconciliation radical change to tax payments since 1947. . Tax payments to the treasury are variable in their Removes end of year reconciliation and supports use of electronic payments top up benefits. . Apart from a closed service provided by two banks, . Kenya/Uganda – have an online tax payment electronic payment of customs duties is not system such that when users make a payment via possible, and is usually by cheque or cash. their bank, the bank links to the tax portal and validates the tax slip number. This ensures accurate payments and immediate reconciliation for the tax department.

. We recommend that the GCNet platform be made immediately accessible to all banks in order to promote electronic payments. . We recommend an initiative whereby Tax payments can be made electronically (and far easier than cash or cheque) and supported by the correct information. Depending on the values this might use the new Instant pay or existing RTGS systems. . We suggest that the new Instant Bill payment service planned for 2014 also enables government tax departments to be registered, though the alerting feature may not be required. Actions/ Details . The Instant pay scheme should allow the capture of tax payment data. A medium to long term objective could be RTI, such that when salary payments are made to employees under a PAYE scheme, information on gross to net salaries together with tax and other deductions are provided to the Ghanaian tax authorities as per the UK scheme. . We further recommend that e-collections is adopted for customs payments via mobile, internet or other electronic means and al-lows for any additional data such as PDF or photographed documents and receipts as required. . Benefit and pension payments should always be paid using electronic means direct to a bank account, payment card account, m-money account as appropriate. . Simplified and accurate assessments for taxation . Provides the data needed for any top up benefits for low paid workers. Rationale . Faster receipt of tax payments and less manual processes. . Easier and more accurate reconciliation of receipts vs. demands. . Less risk of dishonoured cheques or cash ‘leakage’.

3.2.5. Develop and roll-out a hybrid or mobile Point Of Sale (M-POS) capability

Technical Infrastructure Initiative Category Ease of Implementation Medium Commercial Start process by end of H1,2014 Impact High Proposed Timelines Implement by end of Q4 2015 Current State Peer Practice . Mobile payments are growing steadily in Ghana, . Kenya: Lipa Na MPesa: retail payments by which a but are mainly restricted to peer-to-peer payment customer enters a merchant’s predefined mPesa till situations. number and then pays through the mPesa menu on . Card payments in retail situations are limited in his/her phone through an SMS. There are no number. transaction fees for payee; merchant pays a fee per transaction (usually +/- 1%). . POS penetration levels are low in Ghana (4.16 per 100,000 inhabitants) . Nigeria: Paga: using a specific merchant short- code, customers can pay merchants through SMS. . In order to increase the acceptance of e payments in retail situations, a comprehensive stimulus . POS card accepting tools: Square, Izettle: POS program is needed, which puts a series of M-POS apps on a Smartphone that accept card payments solutions at its heart. . MHIT (Australia): SMS-based system . SMS-based retail POS solutions seem to be best aimed at small retailers that allow menu positioned in Ghana. tailoring per retailer: e.g. an app for a particular restaurant with set menu where an SMS-based payment can be made at (or before) 24purchase.

Voice of Stakeholder (POS Penetration) Q: We asked whether BoG should target a specific POS penetration level (As per World Bank the ratio is a. Strongly agree 4 per 100,000 Vs e.g. Tanzania 11/100,000)? b. Agree A: About 60% of respondents agreed. c. Neutral

d. Don’t agree

Voice of Stakeholder (Display) a. Strongly agree Q: We asked the stakeholders if BoG should negotiate a ‘country wide’ POS deal with a leading consortium of b. Agree POS suppliers? (e.g. Nigeria negotiated a similar deal and POS is available at N45k/ USD 280) c. Neutral A: About 50% of respondents agreed d. Don’t agree

e. This would be the wrong thing to do

Voice of Stakeholder Q: We asked stakeholders if a hybrid POS would be a winning initiative? a. Strongly agree A: more than 75% of respondents strongly agreed. b. Agree

c. Neutral

d. Don’t agree

We recommend the inception of a working group that takes the initiative to stimulate the adoption of POS devices in retail situations in Ghana with the aim of increasing e-payment levels in retail situations. We suggest this working group to operate under the auspices of the Ghanaian Payments council, and to adopt the following guidelines: . Develop standards and guiding principles for POS methods for retail situations: e.g.: stimulate the use of SMS-based POS methods such as Lipa Na MPesa; . Include guidelines for a mechanism aimed at the resolution of incorrect/disputed payments; . Stimulate the integration of SMS-based POS methods with Value-Add-Services such as balance of accounts for merchants, inventories, etc... . Keep transaction pricing low: retail customers should not have to pay for using the service, merchants should pay very low fees based on package (e.g. depending on value add Actions/ services that payments providers offer them);; Details . Determine the feasibility of creating a Smartphone app for merchants that integrate the SMS confirmation messages from retail customers with value add services (total sales, VAT, etc.); . Develop a strategy for SMS-Based POS methods: a single standard that all commercial parties need to adhere to, or allowing competing parties to develop their own standards; . Involve merchant associations, consumer protection agencies, telco companies and banks in the development of the standards/guidelines; . Develop a roll-out strategy: per retail sector or nationwide (e.g. for transportation, food purchasing or fuel purchasing, or for all situations); . Develop an awareness campaign aimed at increasing the use of SMS-based payments; . Determine guidelines for card-accepting POS systems: study the applicability of existing Smartphone applications for card-based POS (i.e. Square or Izettle).

. Stimulating m or e Payments in retail payment situations will vastly increase the level of epayments in the economy and reduce cash usage; . Improves awareness and increases acceptance levels; Rationale . Provides a standardized framework for commercial parties to adhere to, including proper dispute resolution mechanisms that engender trust in the payment method; . Allows for the focused stimulus of certain sectors; . Determines the applicability of card-based mobile POS systems.

3.2.6. POS deal negotiation (Dual readers including Contactless?)

Initiative Category Technical Infrastructure Ease of Implementation Medium Impact High Proposed Timelines H1 2014 Current State Peer Practice . PoS penetration is low in Ghana. According to . Nigeria: The industry has endorsed four World Bank estimates (in 2009) there are only 4.16 manufacturers for supply of Point-of-Sale terminals PoS terminals per 100,000 residents. with negotiated discounts and local support arrangements. A PoS can be purchased from any of these suppliers for as low as N45k per terminal. However, parties are free to purchase PoS terminals from any manufacturer, so far they meet the PoS specifications set in the Nigerian Point-of- Sale guidelines( plus card industry standards). Voice of Stakeholder Q: We asked stakeholders if BoG should negotiate a a. Strongly agree ‘country wide’ POS deal with a leading consortium of b. Agree POS suppliers? c. Neutral A: Only 50% of the respondents agreed with the view, while more than 40% did not agree that this should be d. Don’t agree enabled. e. This would be the wrong thing to do

We recommend : . Issuance of a position paper on this infrastructure in co-operation with the NCA. . A follow-up of the same with an industry interaction with representatives from the POS Actions/ suppliers under the aegis of the payments council. Details . Provision should be made to support ‘dual interface’ (Contact and Contactless) PoS . Publish a business and benefits case of negotiated PoS deal. A positive scenario arising out of such an analysis, along with other due considerations should form the basis of adoption of this initiative. . While the benefits of higher PoS penetration are evident, the fractured response from stakeholders necessitates a focused discussion (documented through a position paper). . Replacement of ‘contact’ only PoS in favor of dual interface PoS is costly and is an inhibitor. Rationale Early provision will help ‘market’ led adoption. . PoS penetration is an integral part of vision of cashless economy. Without higher POS penetration cashless initiative cannot be realized.

3.2.7. ATM switching & Activity Monitoring

Initiative Category Technical Infrastructure Ease of Implementation Low to Medium Impact Medium Proposed Timelines 2015 Current State Peer Practice . No real time monitoring available . Nigeria: Is in the early stages of implementing . ‘Cash n dash’ services technical monitoring solutions – terminal components and service status, detection and . Biometric authentication tracking, network availability and status etc. BAM . Both VISA and MasterCard are issued and (Business activity monitoring) solutions for complex accepted in Ghana, however both local and foreign event processing are also being considered. card transactions are routed to VISAnet and Master . UK. The LINK network enables all domestic Visa Card Int. for processing. and Mastercard debit card transactions to be processed by the LINK switch with RTGS settlement of net positions.

Actions/ BoG should ensure cards used on domestic ATMs to be processed by gh-LINK Details We recommend a medium priority for activity monitoring. A core aspect of safer and lower cost domestic operations that will be the basis to support Rationale effective operations, given the expectations around greater volumes.

3.2.8. Supporting laws as per World Bank guidelines

Initiative Category Governance & Legal Ease of Implementation Low Impact Medium Proposed Timelines 2016-2018 Current State Peer Practice The Republic of Ghana has its banking and payments . Guidelines: The World Bank has recommended a regulatory base primarily in the following acts. set of 12 aspects of regulation that should comprise . Banking (Amendment) Act, 2007, Act 738 the legal framework for the National Payments System. i.e. . Anti-Money Laundering Act, 2008, Act 749 ─ General laws: Property and Contract, . Borrowers and Lenders Act, 2008, Act 773 Banking and Finance, Insolvency, Credit and . Payment Systems Act 2003, Act 668 collateral, laws for determination of Jurisdiction and e-documents& digital . Financial Institutions (Non-Bank) Law 1993, PNDC signatures. Law 328 ─ Specific laws : Payments instruments, . Bodies Corporate (Official Liquidations) Act, 1963 calculation and discharge of payment (Bankruptcy and collaterals) obligations, default proceedings and disputes, central bank roles, responsibility . Bills of Exchange act of 1961 Act 55 (an adaptation and authority in National Payment system, of the English Bills of Exchange Act 1882) formation and conduct of infrastructure The Payments systems act provides for : service providers and markets, securities infrastructure services. . principles of transparency as applicable to payment systems; . India : Payment and Settlement Systems Act, 2007 (PSS Act, 2007) . minimum obligations of participating financial institutions; . principles required to achieve irrevocability and finality of payment; . admissibility of electronic evidence in the law courts;

. dispute resolution; and . other miscellaneous provisions covering disputes, offences, penalties and interpretations. Source : http://www.doingbusiness.org/law- library/ghana and http://www.bog.gov.gh/ Voice of Stakeholder (General Laws) Q: We asked stakeholders their opinion on the current state of laws that support / pertain to payments in Ghana (General Laws)? A: Other than Banking & Finance laws and credit & collateral, the respondents felt that the remaining laws Property & Banking & need a revision / upgrade. Contract Laws Finance laws

Legend for all graphs:

e-documents Insolvency laws & digital signatures

Legend for all graphs: Jurisdiction & Credit & applicability Collateral laws

Voice of Stakeholder (Specific Laws) Calculation and Q: We asked stakeholders their opinion on the current Payment discharge of state of laws that support / pertain to payments in Instruments payment obligations Ghana (Specific Laws)? A: Other than laws pertaining to Payment Instruments and Calculation and discharge of payment obligations all other laws need a revision / upgrade.

We recommend an in-depth analysis of existing laws to ensure alignment with World Bank guidelines. We recommend the ‘legal’ committee in the Payment council as the Actions/ Details appropriate forum to delve into this aspect. Notwithstanding the typically long drawn process of regulation from ‘Drafting’ to ‘Act’, BoG should issue operational guidelines, where applicable, to support initiatives in the interim. . Helps align to global standards Rationale . Provides sound grounding for planned payments transformation that is legally enforceable.

3.2.9. E-payment only threshold

Initiative Category Legal Ease of Implementation High

Impact Medium to High Proposed Timelines 2015 Current State Peer Practice . Currently there is no monetary threshold beyond . Nigeria: Third party cheques above N150, 000 which payments need to be effected only through ineligible for encashment over the counter and have electronic means. to be presented through clearing. . Currently, any such limits are circumvented through multiple smaller transactions totaling to required amounts. . We recommend launching this initiative with a relatively higher monetary limit to acclimatize Actions/ and create awareness among stakeholders. The same should be followed-up with lower Details limits aligned to other ‘Entry criteria’ for Cashless policy. . Coordinated to come in to play at later stages of cashless policy. Rationale . Helps prepare stakeholders to move to e-payments.

4. Building for the Future

4.1. Introduction

This chapter covers the specific new initiatives that may use existing infrastructure, but provide new payment schemes or services that will bring benefits to all stakeholders.

4.2. Initiatives

4.2.1. Launch instant payment scheme

Initiative Category Scheme Ease of Implementation Low Impact High Proposed Timelines 2014 (in progress) Current State Peer Practice . Currently there is no ‘Instant Payment’ Scheme . UK: The Faster Payments Scheme (FPS) that operational in Ghana. delivers immediate payments has seen very high . However, GhIPSS is undertaking preliminary uptake since launch (over the last 5 years). The activities in launching the scheme in 2014. FPS rails have been used by banks to overlay innovative solutions. Vocalink is launching ‘Zapp’ initiative for use by banks to enable immediate mobile payments. . India: Immediate payments are developed as a mobile enabled product - IMPS. Origination is now allowed from Netbanking services of commercial banks also. . Nigeria: An important pre-criteria for ‘Cashless’ initiative, the NIP - Nigerian Instant Payment was launched prior to cashless initiative. Voice of Stakeholder Instant / real time low value payments Q: We asked stakeholders ‘by when’ should an Instant scheme payment product be launched in Ghana? A: More than 86% of the respondents responded that this scheme should be launched within 2014. Near Term (6months) Short Term (2014) Medium Term (2015-17) Long Term (beyond 2017)

. We recommend GhIPSS to launch Instant Payment Scheme at the earliest. . BoG should also encourage payment institutions to re-use the ‘Instant Payment’ scheme Actions/ Details to build / overlay Value added services (VAS) . The launch should also be aligned with the stakeholder communication plan method recommended.

. The overall implementation plan should be agreed with the Payments council to ensure that scheme rules and real time implications are understood and agreed. . Scheme rules would include pricing, debit caps for banks (if deferred net settlement), daily and transaction limits for specific banks, response time, sort code checker etc. . BoG should ensure that banks have sufficient AML security checks in place given the real time nature of transactions – this would typically follow card systems practice. However, GhIPSS could in fact offer a ‘cloud based’ service whereby suspect transactions could be returned to the sending bank for additional verification. . Enable users taste power of immediate secure transfer. . Prepares consumers for a ‘Cash-lite Ghana’ initiative. Rationale . Provides the infrastructure for further services e.g. non-debit card online purchases (see 4.2.4)

4.2.2. Enable a bill pay scheme and supporting infrastructure

Initiative Category Scheme Ease of Implementation Low Impact High Proposed Timelines 2014(in progress) Current State Peer Practice . There is no specific bill presentment and payment . Australia: BPAY is a payment and e-presentment infrastructure. Mobile solutions provided by Telecom service provided through the BPAY Scheme, firms offer payment options. comprising financial institutions and biller . GhIPSS plans to launch an Instant Bill service in businesses. BPAY is currently offered by over 150 2014, which will notify the biller of a payment being financial institutions and on more than 45,000 bills. made and a gateway to view transactions. This Bills carry CRN (Customer reference number) to stops short of a full EBPP program but pre- match invoice and customer. Value added services registered billers should simplify the process, like BPAYView for Online / Mobile banking view and reconciliation and reduce errors. payment, pay using QR code available. . Nigeria: e-Bill PAY scheme that is Account-number- based, online real-time Credit Transfer (based on NIP). This is available through multiple channels - Internet Banking (IB), Mobile Banking, Kiosk to registered billers with notification. Voice of Stakeholder Bill pay scheme Q: We asked stakeholders, when to adopt Bill Pay initiative- in the near, medium or long term? Near Term (6months) A: 91% of the respondents agreed that this scheme should be launched in the near term. Short Term (2014)

Use of QR codes in the EBPP process was also of Medium Term (2015-17) interest to the stakeholders but was felt to be a longer term initiative towards 2017. Long Term (beyond 2017)

We recommend launch of bill presentment and payment scheme leveraging current infrastructure that will bring the planned Instant bill initiative to a full EBPP capability. Within the design of this solution, alignment with Instant payment scheme is envisaged. Actions/ The system should also allow full details of the invoice presented to be visible to both biller Details (supplier) and payer (customer) and a unique reference that enables the biller to reconcile the invoice(s) against their bank statement. The system should enable extended narratives to be supported and GhIPSS might consider a central repository of invoice data along the lines of the Finnish Rosettanet scheme.

. Enables bringing all ‘pull’ payments onto single umbrella . Enables an EBPP infrastructure and triggers drive away from cash and cheque based Rationale payments. . Provides alerts on payments being made and also enables more efficient open invoice reconciliation.

4.2.3. Host anti-fraud solution at GhIPSS

Initiative Category Scheme Ease of Implementation Low Impact Medium Proposed Timelines 2015 Current State Peer Practice . There is no real time fraud detection solution in . Thailand: ITMX, Thailand's interbank payment place. provider, implemented a real-time fraud detection solution for its 21 member banks. The solution detects fraud in ATM/debit card transactions and monitors 70 million transactions per month.

Voice of Stakeholder a. Strongly agree Q: We asked stakeholders, if BoG / GhIPSS host anti- fraud technology at GhIPSS level (collaborative space) b. Agree to improve reliability? c. Neutral A: 87% of the respondents agreed, with a majority d. Don’t agree agreeing strongly. e. This would be the wrong thing to do Actions/ We recommend implementation of anti-fraud technology at GhIPSS to combat fraud. As the e- Details payment uptake improves, fraud can dilute the faith of consumers. . Protect member banks from fraudulent transactions. Rationale . Ensures consistent coverage across member institutions. . Reduce financial losses and operational costs.

4.2.4. Enable a collaborative e-commerce payment method (e.g. iDeal / MyBank)

Initiative Category Scheme Ease of Implementation Low to Medium Impact High Proposed Timelines Medium term Current State Peer Practice . Currently there is no GhIPSS / BoG scheme that . Payment schemes that enable e-commerce have enables e-Commerce. successfully integrated ‘net / online banking’ . This assumes significance due to the fact that while functionalities into e-commerce checkouts, whereby Ghanaians match up to African average on usage of no card or banking details are shared with the Social networking, mo-bile banking and Online Merchant, while paying from the convenience of Net shopping are ‘strikingly’ below African Average and / online banking services provided by commercial may need a ‘trusted’ online multi-bank e-commerce banks. enabler. . iDeal, NL: e-Commerce initiative in the Netherlands became the ‘most preferred’ method of payment for e-commerce transactions beating cards, PayPal, credit transfer and direct debit.

. MyBank, EU (EBA): EBA’s ‘MyBank’ initiative, similar to iDeal, but at a European level, also is rapidly becoming the delivery channel for multiple payment instruments. While Credit Transfer and Direct debit are available, future products include payment on delivery, P2P payments, subscription to e-invoices etc. We recommend an immediate analysis into this scheme. While benefits may be limited to urban Actions/ population in and around Accra, the signaling effect of such a scheme is likely to have far Details reaching consequences. . Channel increasingly available Internet usage and usage habits to trickle into banking while enabling to drive e-commerce. . Overtime can pick up volumes from other products, especially loss leaders like cash and Rationale cheque. . Is ‘bank friendly’ and can re-use ACH infrastructure. . Lower reliance on payment card network / infrastructure.

4.2.5. Implement penal pricing for cash & paper (Cashless Policy)

Initiative Category Legal Ease of Implementation Low Impact High Proposed Timelines 2015 Current State Peer Practice . There are no penal provisions for cash and paper . Nigeria : Defined a comprehensive penal pricing (Cheque) payments. policy : . 3rd party cheques above GHS5000 are ineligible for ─ Daily cumulative limit for withdrawals and enchashment OTC. lodgments ─ Lower penal fees for deposits and higher penalties for withdrawals ─ 3rd party cheques above N150,000 ineligible for encashment OTC ─ No reports to Central Bank on excess drawers. ─ Cash Charges kick-in after 3months of policy start date (charges holiday).

Voice of Stakeholder Introduce cashless policy Q: We asked stakeholders, when to adopt a cashless policy in Ghana - in the near, medium or long term? A: 57% of the stakeholders wanted the implementation Near Term (6months) to be within the short term, while the balance 43% wanted the implementation in medium term and Short Term (2014) beyond. Medium Term (2015- 17) Long Term (beyond 2017)

. While levying penal charges as an isolated initiative is straight forward, we recommend careful consideration of prior change management, prior infrastructure enablement and communication plan. . We recommend co-ordination of this initiative with ‘Cost of Cash’, ‘e-threshold’, ‘Instant Actions/ Payment’, ‘Bill payments’, ‘Mobile payments’ and ‘PoS initiatives’ to ensure a proper Details ‘foundation’ which in our opinion would drive success of this initiative. We recommend an umbrella / coordinated governance across the above initiatives under the aegis of a ‘Cashless Ghana’ initiative (or similarly named). . Exhibit 9 describes where penal pricing fitted into the overall cash-lite journey for Nigeria. Rationale . Triggers significant push towards non-cash methods while reducing cost of cash.

Exhibit- Anatomy 10: Anatomy of the Cash of-less the modelcashless in Nigeria model - in Nigeria Envision Enable Engage

Alternate Need Pricing Pricing Funneling Transition Continuous engagement Handling

Phases : Pilot @ Lagos - 85% of POS and 66% of cheques Endorsed and negotiated - PAX,Bitel, penetration. Ingenico, Verifone with 45k/terminal PoS pricing 1.25%, max N2k/txn PoS Training, Awareness .Card Neutral PoS Alternate product fulfillment Daily cumulative limit for .NIP instant transfer Side

Supply No job losses at bank level

withdrawals and lodgments .11+ mobile players licensed

Schemes Carrot

- .E-bill PAY E No reports to Central Bank on ‘Monday Column’ (Print) excess drawers. Stakeholder

group sessions mkts Main Trade /

Lower penal fees for deposits

Meetings Q&A(FM)

Market places Workshop

Q&A at Q&A Demand Side Demand

Pricing Higher penal fees for withdrawal Cash Charges kick-in after 3months of policy start date. 2009 Cost of Cash for Banks not to provide ‘cash in economy & projections transit lodgment services’ from Jan’12 ( replaced by CBN licensed CIT providers)

TAT for complaints on e-channels 3rd party cheques above Regular monitoring and oversight of banks to Stick e..g. 72 hours for ATM complaints N150,000 ineligible for ensure adherence. encashment OTC

Payments System management Bill and Financial system Ombudsman bill are with National assembly. Evidence act under review.

4.2.6. Launch direct debit scheme

Initiative Category Scheme Ease of Implementation Low to Medium Impact Medium Proposed Timelines 2016-18 Current State Peer Practice Direct debits in Ghana are available but like . Direct debits for B2B and C2B are widely used in mature many African countries form a very small markets and provide a ‘pull’ method for making regular proportion of payments. payments. They are very important in the cash flow of Inter-Bank direct debits are not generally used in small businesses such as gyms or other membership Ghana based organisation that rely on a regular flow of subscriptions. They are equally convenient for payments such as gas and electricity payments by consumers and businesses alike. . The UK model works on an exception basis under a direct debit guarantee scheme whereby collections made without a mandate or advised change in value are reversed under the scheme rules. . The SEPA Direct debit scheme is more complex with a far tighter control and communications of mandates between parties. We recommend an analysis into a Ghanaian scheme which can be provided through G-ACH. We believe that giving a third party the ability to collect funds directly from a person’s bank account may have some resistance in Ghana and so suggest that the instant bill alerting mechanism be used to enable account holders to verify and approve a collection. Actions/ This can also be a discussion point with the Telco providers for post-pay plans and this may be Details a catalyst to kick start the scheme. As is current practice in some countries such as the UK, utility providers can provide discounts for payments made via direct debit to enable consumers to sign up to the scheme. A guarantee scheme along UK lines can also build trust in the scheme. In this scheme, any unauthorised (e.g. without a mandate) collection is guaranteed to be repaid to the debited party. . Simplification of regular payments . Improved cash flow for businesses Rationale . Is ‘bank friendly’ and can re-use ACH infrastructure. . Further reinforces the cash-lite agenda

4.2.7. Launch a multi-function Ghana card

Initiative Category Scheme Ease of Implementation Low to Medium Impact Medium-High Proposed Timelines 2016-18 Current State Peer Practice . Banks in Ghana issue cards today but they are not . In addition to traditional co-branded cards, countries used widely due to the lack of points of acceptance such as France and especially China issue . Merchant service charges (msc) are high and monoline cards – Carte Bleu and China Union Pay include interchange as per card scheme rules (CUP) respectively. . Examples have been cited whereby cash is carried . The country scheme can set the rules and in the internationally to pay for purchases, say from China. case of CUP.bi-lateral arrangements with other national schemes enables international acceptance.

We recommend a discussion with Banks and merchants and if accepted, an analysis into a Ghanaian specific card scheme that cooperates with China Union Pay and other monoline card schemes where specific payment/trade flows exist. Cards based on a national scheme can set rules for fees that are acceptable to merchants and Actions/ the card can also be a catalyst for other functions i.e. it should be a ,multi-function card from the Details outset and support a loyalty rewards scheme, and if NFC enabled, transport payments. The scheme should also enable a pre-paid card capability for international commercial purposes. The loyalty capability could build up value on the card based on purchases made and could include special promotions such as a cashback on purchases. This again would incentivise card usage over cash or cheque at the point of sale. . A National identity for Card based payments . Lower MSC’s Rationale . More than a payment method . Further reinforces the cash-lite agenda

4.2.8. EMV Cards

Initiative Category Technical Infrastructure Ease of Implementation Low Impact Medium Proposed Timelines 2016-18 Current State Peer Practice . EMV cards are issued by commercial banks to . Nigeria: Migrated to EMV by September, 2010 (the customers that are typically travelling out of Ghana. date was pushed by at least four times) migration about 30million magnetic stripe cards. . Kenya: Kenyan banks are expected to move from magnetic strip credit and debit cards to the new Visa and MasterCard EMV chip and PIN standard by March 31, 2014. We recommend a medium term priority for EMV cards initiative. A timeline may be arrived by Actions/ the recommended “Payments Council” by comparing POS adoption and fraud and misuse Details statistics. In the interim anti-fraud technology adoption by GhIPSS can shepherd the card business. . Lower fraud losses (typically ATM) when compared to magnetic stripe Rationale . Lower fraud losses in cardholder present transactions compared to signature . Tight authentication for ‘offline’ purchases (i.e. no online authorization)

4.2.9. Participate in West African interlinking of EFTPOS/ATM switches

Governance / Scheme / Initiative Category Ease of Implementation Medium Technical Infrastructure Impact High Proposed Timelines 2016-18 Current State Peer Practice . The principal vehicle for international card payments . The best example of International card usage is or ATM cash withdrawals are the card schemes i.e. CUP which is achieved by a series of bi-lateral Mastercard, Visa, Amex, etc. relationships. . BoG/GhIPSS would like to consider a linking of Ezwitch and the equivalent systems in other West African countries. We recommend . Ghana payment council should consider a scheme to link Ezwitch with other countries and commence with a pilot to prove the concept. . A priority list of countries for which inter-linking is sought along CUP lines should be drawn up as part of the payments council agenda. Actions/ . This will be dependent on the availability of monoline bank cards as card scheme rules and Details fees generally apply irrespective of whether the network is used for a co-branded card. . Determine settlement currency. . Align card enabled transformation initiatives (ATM, PoS, EMV, PCI, Regional acceptance) with WAMZ payments agenda. . A separate working group is suggested for inter-country initiatives such as this. . Enable economic uplift through trade improvement both regionally and with global trading partners. Rationale . Enables consumers and corporates to buy goods and services in other countries. . Supports the cash-lite agenda . Enables cash withdrawals in local currency whilst in neighbouring countries.

4.2.10. Participate in West African RTGS payment interlinking

Governance / Scheme / Initiative Category Ease of Implementation Low Technical Infrastructure Impact High Proposed Timelines 2016-18 Current State Peer Practice . WAMZ (West African Monetary Zone) - A regional . EAMZ: Kenya, Uganda, Tanzania, Burundi and co-operation group with the objective of achieving Rwanda comprise the East African Monetary Zone. monetary union was established in the year 2000. In November 2013 a 10 year roadmap was signed . The group comprises of leading West African to achieve ‘single currency’ for the Union. From a Nations of - Gambia, Guinea, Liberia, Nigeria and payments perspective, - EAPS (East African Sierra Leone and Ghana. Payments System) went live in December . Among other leading objectives, enabling cross 2013. It facilitates real-time transfer of large value border payments and supporting infrastructures for payments across borders via the interbank Swift RTGS, ACH, EFT/POS/ATM pertain to the network. Rwanda and Burundi have not participated payments domain. in this system yet. . SADC-SIRESS. A South African initiative for an integrated regional electronic settlement system. The working group includes a broad range of countries including East Africa and went live on 21st July 2013 for South Africa, Namibia, Lesotho and Swaziland where the ZAR is a common currency and is the first stage of a broader program. Issues around a common settlement currency need resolution before a broader rollout. We recommend . Ghana payment council should be represented within WAMZ payment committees. . Pursue RTGS interlinking (Decentralised / Distributed system) at the earliest.

Actions/ . Determine settlement currency, and use the original European TARGET interlinking approach Details as a starting point, given the preferred WAMZ ‘loosely coupled’ option. . BoG might consider a pilot concept working with a neighbouring country such as Nigeria or Togo on a bilateral basis. . Align card enabled transformation initiatives (ATM, PoS, EMV, PCI, Regional acceptance) with WAMZ payments agenda. . Secure funding from multilateral development banks (e.g. IMF, ADB, AfDB, World bank) towards payments initiatives that are approved under the aegis of WAMZ initiative. . Enable economic benefits through trade improvement both inter-regionally and with global trading partners. Rationale . Enables inter-regional trade to become easier and more efficient. . Enables further socio-economic developments through the harmonisation of common interests such as trade tariffs, border controls with the integration of the telco and financial infrastructure.

4.2.11. Recapitalize and commercialize GhIPSS stake in tranches in favour of banks

Initiative Category Governance Ease of Implementation Low Impact High Proposed Timelines 2016-18 Current State Peer Practice . GhIPSS is wholly owned by BoG. . India: Stake in NPCI (National Payments Corporation of India) is held by ten promoter banks. NPCI is a not-for-profit company and shareholders do not receive any dividend. Discussions are underway to broad base NPCI’s shareholding. A two tier model based on deposit base (Tier 1) and payment volumes (Tier 2) is under consideration. The additional capital will help NPCI to further strengthen the retail payments infrastructure and bring down transaction costs in the banking system. . South Africa: BankServAfrica is bank owned - four large South African banks as well as a consortium of lower volume South African banks housed in a separate company called Dandyshelf 3 (Pty) Ltd. . UK: VocaLink is owned by a consortium of 16 banks and building societies . Australia: Scheme level ownership is evidenced - BPAY is owned by Big 4 banks, EFTPOS is owned by 16 banks. . Nigeria: NIBSS is owned by all licensed banks and discount houses in Nigeria, and the Central Bank of Nigeria. Voice of Stakeholder Q: We asked stakeholders, if BoG should divest stake a. Strongly agree in GhIPSS? b. Agree A: 60% of the respondents agreed to this proposal. c. Neutral d. Don’t agree

We recommend BoG to move towards Bank ownership of processing infrastructure (i.e. GhIPSS) through in a phased manner while unlocking value through channeling more payments through the network. Actions/ This initiative should also align to identified funding needs to ensure most efficient deployment Details of funds. This may need to occur sooner than the date stated e.g. 2015, depending on the funding of infrastructure projects related to the initiatives planned by the payments council. . Financial inflow to fund the roadmap Rationale . More skin in the game from banks is better for ‘commitment’.

5. Innovation for 2019 and beyond

5.1. Introduction

This chapter describes further innovation that is seen as longer term and in essence falls into the ‘nice to have’ rather than the ‘essential to have’ category.

5.2. Initiatives

5.2.1. Multi-currency payments on mobile

Scheme / Technical Initiative Category Ease of Implementation Low Infrastructure Impact High Proposed Timelines 2019-20 Current State Peer Practice . Not available. . Making or receiving international remittances in a foreign currency direct as m-money as in Kenya. . Using a Ghana e-wallet in another country either via a Telco provider or attaching a credit card to a wallet of using Visa Paywave or similar. We recommend . That this is considered a longer term objective and an extension of intra-Ghana mobile Actions/ schemes. Details . This should be considered in the context of alternative emerging schemes such as interlinked ATM/POS switches which could have a dependency. . Provides cross-border usage of m-money Rationale . Secure and convenient.

5.2.2. IBAN / Numbering

Governance / Scheme / Initiative Category Ease of Implementation Low Technical Infrastructure Impact High Proposed Timelines 2019-20 Current State Peer Practice . Local bank and Account numbering is adopted. . The IBAN numbering scheme has been adopted as a standard within the European Economic area and is mandatory for SEPA Credit transfers and Direct debit collections. . IBAN is mandatory in the UAE.

We recommend . That this is considered a longer term objective to standardise account number identification. Actions/ . This should be an agenda item for WAMZ and adopted as a standard when national RTGS’s Details are interlinked and where the benefits of standardisation would be accrued. . Monitor the benefits and issues in rolling this out, and learn from experience of the UAE and UK. . Enables the standardisation of Bank and account numbers for clients on an international Rationale basis. . Reduction in errors, less repairs.

5.2.3. Enable NFC payments

Technical Infrastructure Initiative Category Ease of Implementation Hard Commercial Low (depending on adoption Impact Proposed Timelines 2019-20 rates) Current State Peer Practice . NFC payments are being touted and heralded as . UK Transport cards such as Oyster cards used on the “next big thing” in payments, however adoption London transport. levels are low and technical problems with rolling . Barclaycard NFC enabled cards at POS and trials at out the necessary infrastructure are strife. Retailers such as Boots (pharmacy chain).. . However some niche-specific schemes such as transportation cards, venue payments at concerts and events etc, are being moderately successful Voice of Stakeholder (NFC Payments) Q: We asked whether BoG should rank the introduction of NFC payments as important in the near, short or Near Term (6months) medium term. A: About 60% of respondents proposed to wait for the Short Term -2014 medium term. Medium Term (2015- 17)

With respect to NFC, we recommend a “wait and see” approach. The costs of rolling out NFC Actions/ enabled infrastructure are so high that return on investment could be doubtful. There are Details however opportunities for sector specific initiatives: e.g. transportation or large events. . High costs of NFC infrastructure Rationale . No real successful NFC payment implementations.

5.2.4. Account switching

Initiative Category Scheme Ease of Implementation Low Impact High Proposed Timelines 2019-20 Current State Peer Practice . There is no switching service. . UK: The new Current Account Switch Service (seven day service) was launched on 16 September 2013. The system provides for central account switching system and also a re-direction service. . EU: In May 2013, the EU published a proposal for a Directive that includes account switching alongside other programmes. The service would enable PCA (Payment Current Accounts) switching to be made simpler. Voice of Stakeholder Q: We asked stakeholders, when to adopt Account Account Switching switching initiative- in the near, medium or long term? A: A little fewer than 50% felt that it should be a short term initiative, while remaining earmarked it to be a Near Term (6months) medium to long term initiative. Short Term (2014)

Medium Term (2015- 17) Long Term (beyond 2017)

With high un-banked population, we believe switching enablement is a longer term priority. Actions/ BoG should debate the need for account number portability in addition to transferring regular Details payments and funds. However this is probably too complex and doesn’t provide an adequate ROI. Rationale . Switching enables competition and delivers choice to customers.

5.2.5. ISO 20022

Initiative Category Scheme Ease of Implementation Low Impact Low to Medium Proposed Timelines 2019-20 Current State Peer Practice . SWIFT FIN ‘Y’ copy is the standard messaging . EU: The SEPA initiative is built upon messages standard prevalent. based on XML standard enshrined in the ISO 20022. . SWIFT has published an adoption dashboard called ‘mApp’. As per the map 60+ initiatives are currently underway (registered at www.ISO20022.org)

Voice of Stakeholder ISO 20022 messaging Q: We asked stakeholders, when to adopt ISO20022 - in the near, medium or long term? A: A little over 50% felt that it should be a short term initiative, while remaining earmarked it to be a medium Near Term (6months) term initiative. Short Term (2014)

Medium Term (2015-17)

Long Term (beyond 2017)

We recommend a “wait and watch” approach. We believe the current infrastructure is serving well and ‘adoption’ is a core challenge than ‘refresh’. BoG can align the migration to peer Actions/ adoption in Africa, whether or not aligned with regional settlement schemes. Support from Details SWIFT (i.e. Translation and mapping rules, machine readable standards definition, middleware and interface products, training and implementation consultancy) may be utilized appropriately. . High costs of change Rationale . May not be a priority for Ghana in the medium term. More immediate priorities of efficiency and inclusion.

5.2.6. Separation of Scheme from Infrastructure

Initiative Category Scheme Ease of Implementation Medium Impact Low to Medium Proposed Timelines 2019-20 Current State Peer Practice . There is no separation of scheme and infrastructure. . EU: With SEPA, the management of the schemes Definition and delivery is rolled into BoG and will be separated from the processing infrastructure. GhIPSS (fully owned by BoG) This will enable infrastructure providers to offer their . Scheme: A scheme is a set of rules, practices and services to all payment service providers in SEPA. standards agreed between providers of payment For instance, card processors will be able to serve services. different card schemes and acquirers throughout SEPA. This will increase business opportunities and . Infrastructure: refer to the underlying delivery competition for infrastructure providers. systems and processing platforms. . Australia : The recommendations of RTPC-Real time payments committee to the PSB- Payments System Board included a clear recommendation of scheme from Infrastructure Actions/ We believe payments business in Ghana is at least 5 years away from the need to separate Details scheme from infrastructure. . Long term stability and competition enablement. Rationale . Interoperability between providers enables standardization of services and value added services (as a differentiator)

6. A Strategic Roadmap

6.1. Introduction

The intent of this section is to present graphically the roadmap from two perspectives and answer to specific questions namely:- . What are the initiatives that will provide quick wins i.e. have a high level of impact, but are low in complexity and thus relatively quick to implement in terms of effort? . What is the timeline that takes into account the dependencies of each initiative on each other?

Section 6.2 describes in the form of matrices, the relationship of impact and effort required for each of the main phases of the report from which quick wins can be identified. Overall this maps onto the main phases described within the report and covers the specific initiatives that are recommended during those phases i.e. what actions are to be taken to meet the goals and principles that are to be agreed by the Payments council.

Section 6.3 describes the roadmap more from a high level implementation perspective placing specific initiatives into the time periods stated in the presentation deck which would map onto specific subcommittees within the payments council.

The Payments council itself would be the highest level of committee and would set itself terms of reference and goals and objectives, a number of which would already be defined. This would be defined in the Payment council’s constitution. A number of references are given in Appendix 3 as to what other countries have done, but the South African example is a good one to consider.

To organise, manage and regulate in relation to its Members all matters affecting payment instructions, including its Members' participation in the National Payments system, by –

 adoption of a strategic focus on payments, including payment instruments and payment systems, whilst simultaneously aligning it to national strategy;  focusing on national interest, but simultaneously considering the influences, conditions and developments in the Southern African region and the rest of the world;  promoting international liaison and understanding of global developments in payments, payment instruments and payment systems;  promoting a safe and sound payment system;  focusing on the End-to-End Payment Value Chain and on the participants in such a process;  promoting transparency in the End-to-End Payment Value Chain, where  appropriate;

 making and facilitating decisions in the payments industry;  guiding and supporting all participants in the NPS with reference to innovation within the Regulatory Framework of the NPS; . adopting and maintaining appropriate structures and frameworks for purposes of monitoring and governance; . promoting, proposing, supporting or opposing as may be deemed to be appropriate and expedient any proposed legislative or other measures affecting the interests of the Members and the NPS; . co-operating with other organisations or entities which are in existence or which may be established to deal with matters which affect PASA, its Members or the NPS; . creating a forum through which all Members can collectively voice and address issues of common interest and concern; . seeking direct representation on all forums which directly affect the Members; . acting as a medium for communication by its Members with the South African Government, the Reserve Bank, the Registrar of Banks, the Co-operative Bank Supervisors, the Registrar of Financial Institutions, any financial or other exchange, other public bodies, authorities and officials, the news media, the general public and other private associations and institutions; . doing such other lawful things as may appear to be in the interests of PASA, the NPS and its Members acting within the Regulatory Framework of the NPS and which are not inconsistent with the objectives or any matter specifically provided for in this constitution The Payments council is the principal decision making body with a broad church of membership for those who run the financial systems, provide financial services and consumers of those services. This body would be principally concerned with Commercial and Governance matters.

From this specific Schemes would be defined many of which would be existing schemes such as National clearing or RTGS, which can be considered to be a foundation from which enhancements can be delivered i.e. making better use of what is there and scheme rules would be defined such as limits, operating times, service times. RBI guidelines as per the National payment corporation of India are good examples as are the UK faster payments or BACS scheme details. The scheme itself would be further defined through the subcommittees i.e Operations, Pricing, Standards.

Pricing would cover such matters as maximum and minimum fees that banks can charge to its customer segments, whether a service is a flat fee or ad-valorem based on the value of the payment. Penal fees designed to incentivise the drive from cash to an cash-lite society would also be within the remit.

Operations would focus on matters such as service times (e.g. UK Faster payments), availability of the service (e.g. 24x7 or start/end of day cut off times, but also in how the scheme will be operated and by whom. In Europe and a number of countries the Scheme is separate from the operator and for the Single European Payment Area (SEPA) there are multiple operators (PE-ach).

Standards would be set as to how banks and bank users for example would communicate with each other such as ePOS, e-wallet payments, ACH direct credits, SWIFT FIN or MX.

The standards committee would ensure that standards are defined that meet the needs of the payment system users (eg extended narratives for more effective accounts receivable reconciliation as in ISO20022).

Of course this drives the need for automation, but what realistically should be automated to best meet the needs of the stakeholders at a workable cost and under what operating model as defined by the operations sub-committee.

The technology sub-committee would define the technology to be used to deliver the solution including architecture leading to package selection and the Technical infrastructure needed to operate the payment systems that will support the operation of the scheme.

The Schemes and the constitution itself will require a legal framework to underpin its operation and to enforce specific pricing or other aspects of its operation. The legal sub- committee would concern itself with such matters. Consider the European Payments council created the SEPA direct debit and credit transfer schemes and the Payment services directive underpinned this and all payments between participants within the European Economic area.

Change management will be required to inform enthuse and educate the stakeholders and their customers on the benefits of the scheme and to manage the introduction and cutover from old to enhanced, or completely new schemes. A great deal of planning will be required to be done in this area. Responsibility for this can be within the operations and technology sub-committees but accountability would be at the highest level as this is critical.

Exact implementation targets will need to be investigated in detail based on scope and effort and priorities set by the Payments council after due consultation with the stakeholders.

On these charts some placeholders are shown for specific milestones in achieving a cash- lite Ghana with a high level of financial inclusion. These milestones will need to be agreed by the payments council and in all likelihood will include a series of interim milestones that can be measured against realistic targets. As such a feedback improvement process and a quality based metric approach will be beneficial to the success of this important national programme.

6.2. Quick wins by classification Exhibit 11: Ghana Strategic Payments Roadmap: Laying the Foundation

MoF Buy-in ‘Cost of cash’ Index

High MFS Circular Ghana Payments Council eMoney Stakeholder Regulation NCA Communication reachout plan PoS Acceptance guidelines Fraud and misuse reporting Enable TSA Publish payments Pricing Caps and regime newsletters Display

Security Strategic Impact Strategic certification epayments code

and regulation Low

Low High Implementation Effort

Governance Scheme Technical Change Commercial Infrastructure Management Exhibit 12: Ghana Strategic Payments Roadmap: Making better use of what is already there PoS deal E-Govt. negotiation Hybrid or mobile initiatives

High Point Of Sale Employees paid ePayment only electronically threshold Value added Supporting legal services on framework (WB) Reinvigorate mobile current schemes payments

EMV Cards Strategic Impact Strategic ATM & Activity

monitoring Low

Low High Implementation Effort

Governance Scheme Technical Change Commercial Infrastructure Management

Exhibit 13: Ghana Strategic Payments Roadmap: Building the Future Penal pricing for Instant Payment cash & paper collaborative e-

High scheme commerce Re-launch Direct scheme Debit scheme Bill Pay scheme

WAMZ - eftpos/ATM interlinking Multi-functional Ghana Card WAMZ - RTGS

interlinking

Strategic Impact Strategic Low

Low High Implementation Effort

Governance Scheme Technical Change Commercial Infrastructure Management

Exhibit 14: Ghana Strategic Payments Roadmap: Innovation 2019 and beyond

High Recapitalise and commercialise GhIPSS stake in tranches in favour of banks

Separation of Scheme from Infrastructure Account Switching

Strategic Impact Strategic NFC payments

ISO 20022

IBAN /

Numbering Low

Low High Implementation Effort

Governance Scheme Technical Change Commercial Infrastructure Management

6.3. Roadmap by timescale

This section Exhibit 15: Ghana: 5 year Payments Roadmap – Legal

Step Stretch Leap 2019 H1 2014 H2 2014 2015 2016 2017 2018 Benefits / Guiding Principles Onwards Pilot ‘Cash-lite Ghana’ Initiative ePayments & Money Law Firm up the framework (incl BoE,1961 updation) MFS Supporting laws – privacy, data Circular protection Early Signaling to stakeholders Pricing Penal Pricing for cash Caps & & Paper Display Blend Carrot and Stick Approach circular E-payment Enable ‘TSA’ only regulation threshold Enable jurisdiction sanctity Ombudsman for Payments PoS & Mobile as Enable customer protection Acceptance POS guidelines Guidelines

There will need to be sanctions for non-compliance i.e. fines, for ‘sharp practice’ and an independent ‘ombudsman’ or arbitration panel to resolve inter-bank disputes

Exhibit 16: Ghana: 5 year Payments Roadmap – Commercial & Governance

Step Stretch Leap 2019 H12014 H22014 2015 2016 2017 2018 Benefits / Guiding Principles Onwards Pilot ‘Cash-lite Ghana’ Initiative Enable inclusive forums & Launch Ghana committees Payments Recapitalise and Council Inclusive ownership & funding of commercialise infrastructure MoU with GhIPSS Stake NSA (MFS) Co-develop backbone NCA- High Availability infrastructure Bandwidth

Direct collaborative infrastructure Multi-bank cash for cash handling

The payments council will be a forum for consultation but the BoG should have the final say with a clearly understood role and mandate for schemes and standards.

Exhibit 17: Ghana: 5 year Payments Roadmap – Technical Infrastructure

Step Stretch Leap 2019 H12014 H22014 2015 2016 2017 2018 Onwards Benefits / Guiding Principles Pilot ‘Cash-lite Ghana’ Initiative Integration with other Infrastructures (African WAMZ) Enable Regional payments alignment

Enable and ensure system integrity PCI Compliance(PADSS,PCI-PED,PCI-DSS) ATM & Activity monitoring

Trigger non-cash acceptance Hybrid Bank level PCI Compliance infrastructure POS PoS density PoS deal PoS PoS Roll-out of >10/100k negotiation Roll-out (phase 2) EMV Cards

Exhibit 18: Ghana: 5 year Payments Roadmap – Scheme

Step Stretch Leap 2019 H12014 H22014 2015 2016 2017 2018 Onwards Benefits / Guiding Principles Pilot ‘Cash-lite Ghana’ Initiative Launch GIP Separate scheme & Mandate Bill Pay Infrastructure Readiness for Cashless initiative mgmt scheme Standardize Forms Intraday Cheque Spruce up as-is infrastructure batches(CT,DD) CAGR< Advance 2% submission Set up Anti-fraud capability at RTGS Anti-fraud tech @ GhIPSS collaborative space lower limit

Launch Mobile Scheme Fin Inclusion Reporting Enable Social Inclusion and next targets met generation payments through USD/FCY ePayment gateway mobile power of ‘Mobile’ & e-commerce payments

NFC Payments New - G2C / Account Standardisation and competition B2C scheme Switching improvement Uniform Account # enablement policy ISO 20022

Exhibit 19: Ghana: 5 year Payments Roadmap – Change Management

Step Stretch Leap 2019 H12014 H22014 2015 2016 2017 2018 Onwards Benefits / Guiding Principles Pilot ‘Cashless Ghana’ Initiative Improve Awareness Improve awareness on dis- PSU ‘Cost of transition to benefits and costs of cash Cash’ Index 1-2 minute non-cash video’s Multi- E-Payments promotion through a channel Payments Newsletter combination of education, training Display & 1 minute (Qtrly) and guides Fraud & misuse reporting Launch campaign to support ‘Cashless Ghana’ CashLess Cashless - ongoing Initiative, targets initiatives pilot campaign met (Wave 1) Campaign

Greater publicized BoG engagement and regulation/oversight will be a positive step to enable change.

Appendix 1: Methodology

An iterative and consultative approach was adopted to put together a strategic payments roadmap for the Republic of Ghana. The details of the methodology across three phases are as under:

Phase 1 - An analysis of current state of payments in the Republic of Ghana was undertaken through As-is Baseline data collection on the economic, banking and payments indicators : . Financial and economic indicators . Current payments schemes . CAGR of payment schemes . Current pricing of payment schemes / products Results of a prior survey by Bank of Ghana (early 2013) were also adopted for further analysis and validation. Phase 2 - Ideation Hypothesis on a range of payments solutions required for payments landscape transformation were captured. These were then benchmarked against similar initiatives designed and developed by other leading countries like Australia, UK, India (from Outside Africa) and with Nigeria, Kenya, Tanzania and South Africa (from within Africa) A consolidated list of initiatives was thus customized for Ghana through discussions with BoG / GhIPSS representatives. A questionnaire was developed to capture feedback from various stakeholder groups (Bank of Ghana, Government Agencies e.g. Ministry of Finance etc, Banks, Telcoa, corporate, retailers, etc) Phase 3 - The suggested initiatives along with good practices from other markets were presented in Validation and a stakeholder workshop. Various inputs and feedback were captured. To also statistically Feedback capture the feedback the questionnaire was administered. The survey results, feedback and research (performed in the Ideation phase) have been blended to deliver this payments roadmap for Ghana.

Appendix 2: Abbreviations and Acronyms

Abbreviation Definition ACH Automated Clearing House ADB Asian Development Bank AfDB African Development Bank Airtel Bharti Airtel Limited is a leading global telecommunications company with operations in countries across Asia and Africa headquartered in New Delhi, India AML Anti Money Laundering APCA Australia Payments Clearing Association ATM Automated Teller Machine B2B Business to Business BAM Business Activity Monitoring BAU Business As Usual BB Branchless Banking BCB Banco Central do Brasil (Brazil’s Central Bank) BoG Bank of Ghana BPAY Australia’s Bill PAYment service C2B Customer to Business CAGR Compound Annual Growth Rate CapEx Capital Expenditure CBK Central Bank of Kenya CBN Central Bank of Nigeria CCC Cheque Codeline Clearing CCK Communications Commission of Kenya CEO Chief Executive Officer Chip and PIN Chip and PIN is the brand name adopted by the banking for the rollout of the EMV smart card payment system for credit, debit and ATM cards. The word "Chip" refers to a computer chip embedded in the smartcard; the word PIN refers to a Personal Identification Number that must be supplied by the customer. "Chip and PIN" is also used in a generic sense to mean any EMV smart card technology which relies on an embedded chip and a PIN CIT Cash In Transit operators CNP Card Not Present fraud CRN Customer Reference Number

Abbreviation Definition CT Credit Transfer CUP China Union Pay card DD Direct Debit DSS Data Security Standard EAMZ East African Monetary Zone EAPS East African Payment System EBA European Banking Association EBPP Electronic Bill Presentment and Payment e-Documents Electronic Documents EFT Electronic Funds Transfer e-money Electronic Money EMV EMV (stands for Europay, MasterCard and Visa) is a global security standard for chip card technology e-Payments Electronic Payments EU European Union e-zwich e-zwich is the brand name for the Ghana’s National Switch and Smart card payment system FAQ Frequently Asked Question FI Financial Institution FPS Faster Payment Scheme FTE Full Time Employees GACH Ghana Automated Clearing House GDP Gross Domestic Product GHC Ghanian Cedi (ISO currency Code) GhIPSS Ghana interbank Payment and Settlement Systems gh-link gh-link™ is GhIPSS’ interbank switching and processing system which interconnects switches of financial institutions and systems of third party institutions. GIS Ghana Interbank Settlement system GSM GSM (Global System for Mobile Communications, originally Group Spécial Mobile), is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe protocols for second generation (2G) digital cellular networks used by mobile phones. HVPS High Value Payment System IB Internet Banking IBAN International Bank Account Number IMF International Monetary Fund IMPS Immediate Payments Service (IMPS) in India offers an instant, 24X7, interbank electronic fund transfer service through mobile phones ISO International Organization for Standardization

Abbreviation Definition ITMX Thailand’s Interbank Transaction Management and eXchange KYC Know Your Customer LVPS Low Value Payment System MFS Mobile Financial Services MHITS mHITs (Mobile Handset Initiated TransactionS) is an Australia micropayment service which allows users to send and receive money via SMS MICR Magnetic Ink Character Recognition MNO Mobile Network Operator MoF Ministry of Finance MoU Memorandum of Understanding m-Payment Mobile Payment MPESA MPESA (M for mobile, PESA is Swahili for money) is a mobile-phone based money transfer and microfinancing service for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania M-POS Mobile Point of Sale MSC Merchant Service Charge MTN MTN Group is a leading emerging markets mobile operator in countries across Africa and the Middle East NCA National Communication Authority of Ghana NEFT National Electronic Funds Transfer system of India NFC Near Field Communication NIBSS Nigeria Inter-Bank Settlement System NIP Nigerian NIBSS Instant Payments service NPCI National Payments Corporation of India NPS National Payment System NPSC National Payment System Council OpEx Operational Expenditure OTC Over The Counter P2P Person to Person PAGA PAGA is Mobile Money Transfer Service in Nigeria PCA Payment Current Account PCI Payment Card Industry PNDC Provisional National Defense Council POS Point Of Sale PSB Reserve Bank of Australia’s Payments System Board PSP Payment Service Provider PSS Payment and Settlement System

Abbreviation Definition PTSA Payment Terminal Service Aggregator Q&A Questions and Answers QSA Qualified Security Assessor RBA Reserve Bank of Australia RBI Reserve Bank of India RTGS Real Time Gross Settlement system RTI Real Time Information RTPC Australia’s Real Time Payment Committee SEPA Single European Payments Area Sh Kenyan Shilling SIM Subscriber Identity Module SME Small and Medium Enterprises SMS Short Message Service SWIFT Society for Worldwide Interbank Financial Telecommunication (SWIFT) TARGET Trans-european Automated Real-time Gross settlement Express Transfer system TAT Turn Around Time TCRA Tanzania Communications Regulatory Authority Telecos Telecommunication Companies TiGO Millicom offers digital lifestyle products and services to emerging markets through service brand TiGO, which is derived from the Spanish word ‘contigo’ meaning ‘with you’, in Latin America and Africa to stay connected, primarily through their mobile devices TISS Tanzania Interbank Settlement System TSA Treasury Single Account UAE United Arab Emirates UK United Kingdom VAS Value Added Service Vocalink Operator of UK National Payments Infrastructure WAMZ West African Monetary Zone XML EXtensible Markup Language ZAPP Vocalink’s Zapp is a new way to pay using mobile phone and existing bank account

Appendix 3: References

. Capgemini, Finance Transformation Benchmarking Study, 2005.

. Capgemini, World Payments Report 2006, September 2006.

. Capgemini, World Payments Report 2013, September 2013

. PWC, Ghana Banking Survey, 2011

. Lions go digital: The Internet’s transformative potential in Africa, Mckinsey Global Institute November 2013

. Population & Housing Census, Ghana Statistical Service, May 2012

. M-Money Channel Distribution Case - Tanzania, International Financial Corporation, World Bank Group

. EBA Insight, April 2013

. iDeal factsheet, http://www.currence.nl/Downloads/iD_factsheet_UK.pdf

. Nigeria Payments systems http://www.nibss-plc.com/services/,

. Tanzania payments statistics http://www.bot-tz.org/PaymentSystem/statistics.asp

. Payments council articles and documents . South Africa (PASA) http://www.pasa.org.za/Documents/PASA%20Constitution.pdf http://www.pasa.org.za/structure_council.html

. Nigeria http://www.cbn.gov.ng/icps2013/papers/NIGERIA_PAYMENTS_SYSTEM_VI SION_2020[v2].pdf (see page 39-45)

. Tanzania https://www.bot-tz.org/PaymentSystem/Y2005Vjan2000.pdf (see page 18 onwards)

. Kosovo http://www.bqk- kos.org/repository/docs/SistemiIPagesave/TOR_NATIONAL_PAYMENT_CO UNCIL.pdf

. UK

http://www.paymentscouncil.org,uk

. European Payments council (EPC) http://www.europeanpaymentscouncil.eu

. India http://npci.org.in

In collaboration with