A Tale of Three Cedis, Mobile Money, and Fintech? User Experiences in Ghana’s Evolving Moneyscape

A decade ago, I published “A Tale of Two Cedis”, a psychological perspective of user experiences of adjustment to a central bank-led disruption to payments in Ghana. In that and other papers, I explored how Ghanaians made sense of the old currency¹ (what became known as the Old Ghana Cedi), and its replacement, the New Ghana Cedi. The latter was a banknote and coin series more portable than its predecessor due to the elimination of 4 zeroes.

Thereafter, I published other papers, based largely on interviews with everyday consumers, examining how people made sense (or didn’t) of Mobile Money. I researched the public awareness of and reasons for the then slow uptake of Mobile Money in Ghana. (Uptake has increased dramatically since then).

My research in Ghana’s moneyscape had numerous takeaways. Here are two examples. First, the old currency remains an important part of sense-making for a seemingly large subset of Ghanaians. Currently, 10+ years post-redenomination, some Ghanaians routinely convert the cost of goods and services to the old currency to get a sense of just how pricey something is – to determine the “real value”. In technical terms, such users default to the phased-out scale rather than the rescaled calibration of the fiat currency to subjectively determine worth. Second, from the user perspective, the onboarding of mobile money was partly hampered by a focus on the tangibility of money. Simply put, at the time, people preferred money that they could touch and feel – and handle, hide, wave, toss, present, and on occasion, flaunt. Apart from initial distrust of Mobile Money in its early days, lack of a perceived distinction between Mobile Money and Ezwich (a biometric card-based payment option and financial inclusion strategy introduced by the Ghana Interbank Payment and Settlement Systems Limited (GHIPSS)), low levels of awareness and understanding of this phone-based payment tool, many of my respondents at the time were of the view that money wasn’t quite a money devoid of a physical form.

The face of payments in Ghana has changed dramatically since my “Tale of Two Cedis” was published. Yet distinct patterns prevail in Ghana’s payment ecosystem. I discuss a few of these below.

What has changed?

Today, the payment ecosystem in Ghana, while not flawless, is decidedly much more complex. While not cashless, it is certainly cash-lite. A digitally literate, bank account holder has the option of paying for goods and services via mobile phone using Mobile Money through a Mobile Network Operator. This is done via e-value in the local currency previously loaded onto their Mobile Money Wallet by a push transaction from their online banking account², processed by a third party financial technology company aka fintech (invisible to the consumer) linking the banking system to the mobile money platform on the rails of GHIPPS products. Alternatively, the shopper could pay by cash, card (assuming the vendor has a point of sale machine), a third-party payment app, or via QR code. Ghana is the first African country to launch a universal QR code enabling instant merchant payments from mobile money wallets (GSMA, 2021). A frequently heard question today is “ Don’t you have momo? “. This is the case particularly when a vendor is unable to make the change, a perennial local cash-related problem in some sectors of the market economy. Churches, a HUGE presence in this very religious country, particularly embraced mobile money payments during the COVID 19 lockdown period. By doing so, churches have expanded beyond their significant engagement with the formal banking sector to mirror the nation’s cash lite, mobile money dominated payment preference shift.

What may change in the future?

The Bank of Ghana has announced that it is considering launching a digital currency, the e-cedi. According to an August 2021 press release, it is piloting the concept in conjunction with a company headquartered in Germany. The e-Cedi is distinct from Mobile Money even though people may be able to conduct transactions with both via smartphone. Mobile Money is a Mobile Network operated in partnership with the banking sector, while the e-cedi will be controlled by the Bank of Ghana. The e-Cedi will be a Central Bank Digital Currency (CBDC). CBDCs (Nigeria’s Central Bank has rolled a CBDC out, so we will see how theirs works out in a West African payment ecosystem) are distinct from cryptocurrencies. The latter are independent of central banks and national boundaries. A panel discussing the e-cedi at Ghana Digital Innovation Week discussed an improved and expanded digital ecosystem that could sit on the e-cedi’s shoulders. However, I have come across some reservations in media discourse and some interviews in the fintech space about the need for a CBDC in the face of existing and potential innovative alternatives in Ghana’s current payment ecosystem.

It struck me that should the e-cedi be rolled out, the Ghanaian consumer will have access to not one, not two, but three cedis. First is the Old Ghana Cedi, no longer fiat currency, used for value meaning-making, and -according to at least one newspaper article- offerings at some African traditional religious shrines. (Interviews I conducted at several shrines indicated that some old forms of value were spiritually significant and were routinely used for particular rituals). The second is the New/Current Cedi – used for a host of payments. These include physical payments of goods and services, in-person church offerings, donations to the beggars in the roadsides in large cities, tips, gifts, and … ahem…. ”water” for unnamed uniformed personnel often seen on roads). Should there be a third, it will be the new and virtual kid on the block: the Central Bank Digital Cedi (CBDC). I look forward to the forthcoming White Paper from the Bank of Ghana discussing their rationale and plans for this innovation.

Further down the line, currently slated for 2027, is another possible change to Ghana’s payment ecosystem: the launching of the West African Eco, managed by the West African Monetary Institute (WAMI) and the West African Monetary Agency (WAMA). The websites of these two agencies outline the multiple steps required to make that goal a reality. The proposed currency is not without its critics.

Financial technology (fintech) community members that I recently interviewed indicate several exciting potential new developments in Ghana’s payment space. Some of my fintech interviews hinted at sentiments of perceptions of being held back by regulators, signalling the global tension between industry innovators and regulators in the world of banking and finance.

Finally, Ghana’s ministry of finance announced a controversial 1.75% levy on electronic transactions above 100 GH per day. The short and long term implications of this directive on cashlessness are unclear.

What has remained the same?

Due to infrastructural constraints, payment transaction speeds remain slow. “Everyone” seems to blame it on “the network”. Some of the time involved in conducting cashless transactions may also be because of design constraints: many systems have options that use Unstructured Supplementary Service Data (USSD codes) which provide access to payment platforms by non-smartphones. Research on payment transaction speeds at the point of sale has found that contactless cashless transactions are generally touted as much more time-efficient than cash. Other studies on transaction speeds have inconsistently found contact-based cashless payments faster or slower than cash payments. In Ghana, however, cashless payments involve multiple steps, often on the part of both the buyer and the seller. That said, slow cashless transactions may be faster than slow cash-based transactions that involve one of the parties looking to make the change. For now, transaction speed does not appear to be a major concern for Ghanaian customers. Concerns about accessibility, security, trustworthiness, and ease of use are much more prominent for Ghanaian consumers.

Most of the iterations of payment forms that Ghanaian consumers have engaged with require a degree of effort on the part of the user (product awareness, product comprehension, understanding of consumer protection concerns, and in the case of tech products, and some degree of digital literacy). In technical terms, Ghanaian users seem to have to continually engage in product learning and sense-making in order to effectively engage with the evolving world of financial products. Fortunately, based on my cashless payment forms available in Ghana today. It appears that developers considered the “average” Ghanaian consumer to have been trained and that the required technological learning curves going forward will be much smaller than their predecessors. But the revisiting of the old Ghana cedi to make sense of value in the present day suggests that consumer learning may not necessarily always move in expected directions. Also, in a country with an estimated lower secondary school completion rate of 75%, some sectors of Ghana’s populace may be excluded from adopting alternate forms of payment due to literacy and digital literacy barriers. (I do not mean to suggest a perfect correlation between school completion and digital literacy, but the reading ability and digital literacy certainly are assets when navigating those payment apps). In earlier research, I found that low educational level was associated with a knowledge gap about financial services in Ghana.

And Finally…

Fairy tales in the days of yore generally ended with “And they lived happily ever”. In Ghana’s Tale of Three Cedis, Mobile Money, and whatever Fintec comes up with next, it is my sincere hope that the Ghanaian consumer pays happily ever after. In order to achieve this, user experiences in the payment space need to be repeatedly and variously studied, understood and enhanced.

Featured Image: By PDPics, Pixabay-Licence, https://pixabay.com/photos/currency-note-paper-money-ghana-166846/.

1. The term old “currency” sounds like an oxymoron. [↩]
2. Note: There are other ways of loading money onto a mobile money wallet, such as a push payment from someone else’s bank account or mobile money account, or by depositing cash with a Mobile Money agent. [↩]

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