Case Study: Money Transfer in Ghana

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INTRODUCTION The introduction of mobile money service is taking place in isolation but in parallel with the advent and expansion of other financial electronic payments services. One of these is E-Zwich, an electronic platform that enables the loading and spending of electronic cash and also allows the settlement of inter-bank claims in addition to online transactions. Others are being made available over the Internet and through SMS-text messages. The government regards these services as banking. They are strictly regulated and licensed by the Central Bank- Bank of Ghana under its branchless banking policy. Both MTN and ZAIN SIM cards are enabled to utilize the service but each new subscriber needs to register for the service at before it is activated. Upon activation, the user is provided with a secure electronic “wallet” where funds can be disbursed or uploaded. The users can either exchange electronic money for physical cash (cash out) at shops, partner banks and accredited agents or make use of it in making purchases or transfers.

Enabling a Cash Flow to Rural Areas In general, the most popular mobile money service is money transfer. The trend is for users in urban areas to transfer funds to recipients in rural areas. Traditionally in Ghana, city dwellers often send money to members of their extended family living in rural areas.

Other typical services include the purchase of mobile phone airtime, goods and services through electronic transfer of money from user's wallet to the merchant's account.

Commenting on money transfer via mobile phones, Carl NiikoiAshie, an mcommerce (mobile commerce) specialist at Zain who works on ZAP, said: “The customers can 'cash in' by loading money onto their ZAP wallet, then send the money to someone else on their phone in a simple process. The person receiving the money can 'cash out' by going to any of our outlets and exchanging the evalue for physical cash. We're seeing tremendous growth in the service across the country, with more cash-in done in the major cities while cash-outs are seen predominantly in the smaller towns.”

Ashie sees a lot of evidence that his product is reaching Ghana's unbanked. “Users do not need to have a bank account to use the service. Currently, there are a lot of monetary transactions that take place outside the confines of the banks and it will take a product like ZAP to fill the void while providing a secure, convenient and trustworthy channel of transaction,” said Ashie. “Some customers have also requested products that will allow them to use their ZAP wallets for savings and hence enjoy interest on their savings, just as pertains in the traditional bank setting.”

Today, consumers have a variety of ways to send and receive funds or money transfers. Although using cash to send a money transfer is the most popular method for most people, more and more people want additional options: to send and/or receive funds on the internet, over the phone, and now, on their mobile phones. Mobile money transfer is simply another way to send money. It is a

transfer of money to a receiver in which the funds are deposited into a mobile or “virtual” wallet. As the number of mobile phone subscribers in Ghana increases, so does the market for mobile money services. The majority of Ghanaians lack any formal bank account. mobile money could change the shape of financial transactions in the country.

An estimated 80 percent of Ghanaians are “unbanked” – meaning they conduct their transactions outside the banking sector with no access to financial services. Products like “mobile money,” that enable safe and secure money transfers without the use of a bank account, could have a major impact on this unserved segment of the population. Mobile money gives anyone with a mobile phone the ability to...
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