Ghana’s Nascent Mobile Payment System (a Research Into the Problems with Patronage and Operability)

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UNIVERSITY FOR DEVELOPMENT STUDIES FACULTY OF MATHEMATICAL SCIENCES DEPARTMENT OF COMPUTER SCIENCE

GHANA’S NASCENT MOBILE PAYMENT SYSTEM (A RESEARCH INTO THE PROBLEMS WITH PATRONAGE AND OPERABILITY)

PROJECT PROPOSAL BY: ALIRAH MICHAEL ADALIWEI (FAS/1473/07)

SUPERVISOR: MR DAVID S. LAAR (MSc. Manchester)

ABSRACT In the early 1990s, the use of mobile phones generated a system of payment which could enable users of mobile devices effect payments for their transactions. This system- the Mobile Payment System (MPS) - has given rise to a lot of innovations over the years.

A Mobile Payment System is a type of payment transaction processing within an electronic procedure in the course of which (at least) the payer employs mobile communication techniques in conjunction with mobile devices to initiate, authorize or realize payments made for physical or digital goods or services. Payments are either effected by mobile phones or near field communication devices with mobile network operators, banks and businesses as the major players in the system.

MPS began operating in Ghana in 2006 with eTranzact, txtnpay, MTN Mobile Money, Airtel Money and Tigo Cash. Despite its main advantage which imperatively is convenience, a very small fraction of the numerous mobile phone users in the nation have extensively accepted the system. Beyond this and additional advantages the system is facing a lot of challenges which have made it very difficult for it to be widely functional in the system and utilized by the masses.

The purpose of this project is to combine various research methods in the form of interviews, secondary data collection, observations and case studies to investigate the challenges that militate against the full acceptance and functionality of MPS in Ghana and as a result propose new strategies as relevant solutions that can be adopted to address these problems and transform MPS in the Ghanaian market.

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INTRODUCTION The world has witnessed an upsurge of innovations related to electronic methods of payment. In the last 50 years, a number of payment instruments meant to facilitate trading and simplify payments have been generated to replace the cash system which is gradually phasing out. One of such instruments is the use of a mobile phone or mobile device to effect (initiate, activate or confirm – (Au and Kauffman, 2007)) payments, whether miles away or just at the counter- known as the Mobile Payment System. The system which was initially used in Asia, precisely Singapore, 2001 & Japan, 2004, successfully crept into Europe, South America and North America. It has gained satisfactory grounds in these markets and actually seems to be competing with the credit card system which has been one of the formidable preceding systems. With the advent of mobile phones, personal digital assistants and smart phones, the global market was encouraged to adopt a system of payment that would employ the use of the most ubiquitous and simple to use personal devices to facilitate the expected convenience at any scenario of payment. In Africa or Ghana, to be more specific, mobile payment systems are very young in the market, struggling to gain the needed popularity let alone patronage. The first of its kind, eTranzact was introduced in 2006, followed by Txtnpay, MTN’s Mobile Money, Airtel Money (formerly Zap) provided by Airtel Ghana and Tigo Cash by Millicom Ghana Limited. The system is mainly used to pay utility bills, send money and purchase airtime credit. ConsumerMerchant Payment settings can either be at the counter (Face-to-face payment) or several miles apart (Remote payment) not necessarily depending on the items involved in the transaction. 3 | P a g e GHANA’S NASCENT MOBILE PAYMENT SYSTEM (A RESEARCH INTO PROBLEMS WITH PATRONAGE AND OPERABILILTY)

Because it has not yet been fully accepted in the market due to...
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