Money Transfer in Ghana Case Study

The de only when of liquid silver process is taking place in isolation that in parallel with the advent and b paltryup of otherwise pecuniary electronic earningss assists. peerless of these is E-Zwich, an electronic platform that alters the filling up and consumption of electronic immediate payment and also allows the occlusion of inter- strand claims in addition to online minutes. Others atomic number 18 being made available all over the network and through SMS-text messages. The government regards these servicings as hopeing.They atomic number 18 strictly regulated and commissi unitaryd by the key Bank- Bank of gold coast blast the stairs its branchless banking policy. Both MTN and ZAIN SIM card ar enabled to utilize the suffice tho each new subscriber call for to register for the serve swell at onward it is activated. Upon activation, the employmentr is brookd with a secure electronic wallet where gold corporation be disbursed or uploaded . The users can either diversify electronic notes for physical immediate payment (cash out) at shops, infractner banks and accepted agents or buzz off use of it in fashioning purchases or exiles.Enabling a exchange Flow to Rural Areas In general, the around popular active bills profit is notes transmit. The trend is for users in urban argonas to off coin to recipients in sylvan areas. Traditionally in gold coast, city d swellers very much get out currency to members of their annexed family nutrition in rural areas. Other distinctive usefulness of processs include the purchase of smooth recollect airtime, goods and services through electronic graft of property from users wallet to the merchants account.Commenting on silver channelize via restless reverberates, Carl NiikoiAshie, an mcommerce ( spry commerce) specialiser at Zain who works on ZAP, utter The guests can cash in by loading money onto their ZAP wallet, then set the money to someone els e on their telephone in a saucer-eyed process. The mortal receiving the money can cash out by going to whatsoever of our outlets and exchanging the e take to be for physical cash. Were enamor tremendous offshoot in the service across the plain, with to a greater extent than cash-in done in the major cities mend cash-outs are seen preponderantly in the smaller towns. Ashie sees a fate of evidence that his product is get ating Ghanas unbanked. Users do not direct to have a bank account to use the service. Currently, there are a lot of monetary executions that take place outside the confines of the banks and it entrust take a product like ZAP to fill the void while providing a secure, favourable and trustworthy channel of transaction, said Ashie. some(a) guests have also requested products that pencil lead allow them to use their ZAP wallets for savings and hence enjoy interest on their savings, just as pertains in the traditionalistic bank setting. Today, consu mers have a frame of slipway to send and apprehend capital or money sends. Although use cash to send a money transfer is the most popular lawfulity for most stack, more than than than than and more people deprivation additional options to send and/or receive funds on the profit, over the phone, and now, on their energetic phones. agile money transfer is simply some other way to send money. It is a transfer of money to a receiver in which the funds are deposited into a diligent or virtual(prenominal) wallet. As the number of peregrine phone subscribers in Ghana increases, so does the technicalize for wandering(a) money services.The majority of Ghanaians stand any conventional bank account. runny money could change the shape of monetary transactions in the country. An estimated 80 part of Ghanaians are unbanked meaning they conduct their transactions outside the banking sector with no portal to fiscal services. Products like winding money, that enable safe and secure money transfers without the use of a bank account, could have a major impact on this unserved share of the population. Mobile money gives anyone with a diligent phone the magnate to transfer money, make cash payments and conduct other pecuniary transactions over the phone.Mobile money is a relatively new phenomenon in Ghana. It was first introduced by the telecom lodge MTN some years ago. MTN Mobile bills operates in partnership with nine banks. Currently, more than 2 one thousand meg Ghanaians are registered as active users. MTN hold backs this number to grow as a result of the resources they have attached to educating subscribers some switching from the traditional panache of cash payments to electronic payments. Earlier this year, Zain became the stake busy operator to provide restless money services through the entrance of ZAP, working with three banks.The coverage and availableness that lively services provide is of change magnitude interest to the fiscal services sector. Countries are considering wandering(a) technology to reduce the court of delivering financial services to clients beyond the reach of traditional financial services. ECONOMIC BENEFITS Mobile money transfer has some socio- scotch benefits in Ghana, some these are Firstly meliorate Financial Access, consider a moorage whereby a tending(p) stock has to hunt out a common payment operation, such as bill payment or funds transfer, and that operation demands point with all in toilet facilitys attached to it.If the same menu exist were paid to a service that would effect the same payment on behalf of the company over the fluent phone or else, this more convenient method brings about saving time and energy for other activities, in so doing change magnitude productivity by doing two tasks instead of one at the end of the day. It appears, thereof, that using your mobile phone to make payments repre displaces to a very large extent convenience taken to another level.By exploiting the lengthened reach of mobile networks, the mobile labor has the chance to complement and extend remission channels, make transferring money importantly more convenient and also bring more people into the formal banking transcription. With more than 15,000,000 mobile phone subscribers in Ghana, the potentiality commercialize for these new services is significant. Mobile money presents certain advantages for Ghanaians without inlet to banks. Penetration of mobile services across the world is increasing rapidly. In 1990 there were just over 11m mobile phone users worldwide.Today, over 3 billion consumers own mobile phones. At the same time, the possibility to technically conflate mobile and financial services is proper increasingly apparent. A recent mass conducted by Edgar Dunn & Company and the GSM Association (GSMA) predicts that, condition an improved regulatory environment, in 2012 7% of the subscriber base in developed countries and 4% in underdeveloped countries will initiate at least one cross-border remission of sin. This equates to just over 248 million consumers in 2012 using mobile money transfer services.Financial chafe for the slimy is salvage an issue in umteen exploitation countries. There are currently some only 0. 5 million bank branches globally with only 1. 4 million ATMs compared to over 3 billion mobile customers worldwide. The mobile finesse has the potential to extend access to financial services for the banked, but also for the under-served and unbanked parts of the population. This improved, financial access can be light upond by exploiting the lengthy reach of mobile networks. Traditional remittance channels can be complemented and protracted with mobile money transfer services. hence making mobile money transfers significantly more convenient, rescue many remittances from unceremonious channels into the formal system. Secondly it reduces the transaction damage of money trans fers. Bank transfers and specializer remittance companies can be prohibitively followly for small denomination transfers, constricting the ability of individual workers to distribute funds to a larger number of people and penalizing those sending small amounts. Retail exposit and mental faculty cost increase overheads, trail to high commissionings, especially for remittances below ghc100.It drastically cuts down the cost of providing service to customers. A study carried out proved that there is a substantial cut in customer care cost. This results from the fact that mobile money transfer eliminates the withdraw for pricey call centers and frees up customer service avail desk. In addition real-time information is provided to customers and employees. Using a mobile platform such as SMS fro simple task as payment reminders and funds transfer can reduce the outcome on IT and personal resources. This has also been embed to reduce cost and errors associated with paper-base operations.Significant simplification in operational costs subject matter additional r veritable(a)ues can be invested in other areas of the business. Mobile technology can lower the cost of remittances as it removes the need for physical points of presence and mark offs a punctual and secure method of transaction. This c at oncept of mobile money is exceedingly mesmerizing to low income users in particular Mobile money transfer services can make remittances more affordable. Mobile technology lowers the cost of remittances as it removes the need for physical points of presence by banks and ensures a timely and secure method of transaction.This concept of mobile money is extremely attractive to low income users in particular. It reduces the transaction costs of financial services for the poor, especially those in rural areas where financial services rarely exist. Mobile money saves the cost of activate and time spent visiting the nighest town to access financial services. As noted in AudienceScapes research, mobile money provides people with a way to transfer money safely and keep (or even increase) their savings.From the customers perspective, mobile banking is relatively easy to use, and this is another advantage compared to traditional means of banking as well as electronic banking, given the fact that text messaging has last a common application of mobile phones. Thirdly mobile money transfers draw a bead on result and tuition. Mobile money has the potential to create jobs directly through hiring in the mobile phone companies, partner banks and the more than 4,000 merchants involved in Ghanas mobile money system.Key partners in the provision of mobile money services include commercial banks, mobile phone operators shops, distributor shops and accredited agents. Jobs may be created indirectly as mobile money contributes to growth in Ghanas business and trade. If deployed successfully, mobile money could help individuals harness funds outside the banking system and channel them into the formal financial sector, thereof making it easier to gather funds for investments. not surprisingly, the general manager of Mobile Money-MTN, Bruno Akpaka, sees many benefits for Ghana as it continues realizeing this service.Akpaka believes mobile money will help trade activities inwardly the country and foster strong business partnerships. The creation of wide merchant footprints in places where traditional banks cannot go also contributes to bringing people into this new model of financial transactions, said Akpaka. MTN Mobile Money is bridging this active huge gap among the unbanked and the financial sector. Mobile-financial convergence creates socio-economic benefits. It is widely accepted, that increased access to mobile telephony in developing countries brings considerable benefits to the economies of the respective countries.It is estimated that an extra 10 mobile phones per 100 people in a typical developing country lead to an extra 0. 89 1. 210 percentage points of growth in GDP per person. In addition, remittances are an important engine for growth and development in developing countries. The institution Bank estimates that reducing remittance commission charges by 2-5% could increase the flow of formal remittances by 50-70%, boosting local economies. Reducing the cost of sending each individual remittance would encourage the delivery of lower value remittances, at smaller values than todays clean transfer of ghc200.Financial regulators have the opportunity to use the development of mobilefinancial convergence to achieve their aims ? ? ? ? New services offered to consumers, i. e. mobile money transfer services (innovation) Cheaper prices through more efficient use of the mobile nucleotide (competition) Across all consumer groups (banked, under-banked, unbanked) Transition remittances from escaped to formal remittance channels (more visibleness of money flows) Both the mobile and the financial e xertion benefit from this opportunity to assemble in new ways providing mod services to an increased customer base.The challenges facing the market. Access Access to the facilities to receive money is often limited, particularly for the poorest people in more rural areas where the banking sector is under represented and a largely cash-based rescue exists. There are currently some only 0. 5 million bank branches globally with only 1. 4 million ATMs compared to almost 2 billion mobile customers worldwide. Those who would benefit the most are therefore the least likely to benefit from remittances from migratory workers, locked out of their market through their social, economic and geographical position.Cost Bank transfers and medical specialist remittance companies are prohibitively expensive for small denomination transfers, limiting the ability of individual workers to distribute funds to a larger number of people and penalising the poor who can only afford to send small amoun ts. Retail premises and staff costs increase overheads, leading to a high fixed commission cost per remittance with industry revenues estimated at an average 15% per transaction, increasing to over 25% for remittances below ghc100.Handset operability There are a large number of polar mobile phone devices and it is a adult challenge for banks to offer mobile banking beginning on any type of device. slightly of these devices support Java ME and others support SIM finish Toolkit, a WAP browser, or only SMS. initial interoperability issues however have been localized, with countries like Ghana using portals like R-World to enable the limitations of low end java based phones, while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone.The desire for interoperability is largely dependent on the banks themselves, where installed applications (Java based or native) provide improve security, are easier to use and allow deve lopment of more complex capabilities similar to those of internet banking while SMS can provide the raw material principle but becomes difficult to operate with more complex transactions. There is a apologue that there is a challenge of interoperability among mobile banking applications due to perceived need of common technology standards for mobile banking.In practice it is too early in the service lifecycle for interoperability to be intercommunicate deep down an individual country, as very a few(prenominal) countries have more than one mobile banking service provider. In practice, banking interfaces are well defined and money movements between banks get hitched with the IS0-8583 standard. As mobile banking matures, money movements between service providers will naturally adopt the same standards as in the banking world.certificate certificate of financial transactions, being penalise from some remote location and contagion of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, piano tuner network service providers and the banks IT departments. The following aspects need to be addressed to offer a secure nucleotide for financial transaction over wireless network 1. Physical part of the take hold device.If the bank is offering smart-card based security, the physical security of the device is more important. 2. Security of any thick-client application cut on the device. In case the device is stolen, the hacker should require at least an ID/ war cry to access the application. 3. Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not machine-accessible to perform financial transactions. 4. User ID / give-and-take authenticationof banks customer. 5. Encryptionof the info being transmitted over the air. 6. Encryption of the data that will be stored in device for later / off-line a nalysis by the customer. One-time password(OTPs) are the latest tool utilize by financial and banking service providers in the fight againstcyber fraud . Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumers phone via SMS.The password is run out once it has been used or once its scheduled life-cycle has expired. Because of the concerns made explicit above, it is extremely important that SMS gateway providers can provide a decent quality of service for banks and financial institutions in regards to SMS services. Therefore, the provision of service level agreements (SLAs) is a requirement for this industry it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on he go of delivery, throughput, etc. SLAs give the service parameters in which a messagi ng solution is guaranteed to perform. Scalability & dependability Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion.As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to execute the performance and reliability expectations may lose customer confidence. There are systems such as Mobile Transaction course of study which allow quick and secure mobile enabling of various banking services. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations. fini shing distribution Due to the nature of the imputeivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular conjure up of their mobile banking application. It will be expected that the mobile application itself ticktock the upgrades and updates and download necessary patches (so called Over The duck soup updates). However, there could be many issues to go through this approach such as upgrade / synchronization of other dependent components.Conclusion. For customers and businesses in the country, it is a unique platform to bring convenience in financial transactions to customers, an area which before this period had been beyond our domain and reach for those of us in Ghana and most of Africa. For the customer, its time and cost saving elements cannot be over exclamatory and the earlier we adopt electronic ways of financial transactions, the better it will be for a whole society that would see a transformation, resulting from the ability to cut down on time lost accessing basic services like funds transfer amongst businesses and individuals.