GHANA:The future of digital payments; is the end nigh for cash?

BY Sandra Manu

The advent of digital, mobile and social media has integrated finance into the daily life of the individual in a way it never was before. Gone are the days when customers need to carry around wads of cash, limiting their purchasing power at a given moment, and creating serious risks of theft.

Waves of innovation from merchant charge cards, to the modern credit card, and now mobile payment solutions like SlydePay have made the act of paying seamless and secure for customers.

Mobile financial technology providers are leveraging the familiarity of the mobile device across the emerging markets, coupled with the assurance of security and ease of use to provide impetus to the growing cashless economy supported by regulators. Increasingly, companies are creating smartphone apps that not only significantly reduce reliance on traditional payment processes but also provide a unique customer experience and increase engagement by smoothing traditional friction points.

There are a lot of mobile money enablement solutions which allow customers to collect, to pay, and to disburse their mobile money. Banks have also enabled account to wallet and wallet to account, effectively allowing customers to fund their mobile money or to now fund their bank accounts with their mobile money, which now takes cash out of the equation.

In all these, one cannot avoid but ask the inevitable question, will notes and coins ever disappear from the payment system or Cash will continue to thrive because it solves real-world problems in a way that non-cash solutions do not?

Commenting on this, the President of the Ghana Association of Bankers, Mr. Alhassan Andani, says today’s payment eco-system is highly complex, with many parties with entrenched and conflicting incentives working hard to build the payments solution of tomorrow.

“What does seem clear is that whether tomorrow’s customer reaches for their wallet, their phone, or some other device to pay their experiences will be more seamless than ever before. At the moment, cashless transactions in the system is just about 20-25% of total payments. Cash is still king”, he stressed.

“But the great thing about the sovereign who issues cash does so at great cost, just physically printing and maintaining those notes. This is totally unnecessary; it’s the non-value add to economic activities. And also, the industry which banks go through having cash bullion vans, cash centers, movements from one location whether it is from the central bank to the banks or vice versa, and now even from customer locations to the bank is all an industry that is costing a lot of money. It is really not a real value add to the real economy.” he added.

Experts are confident the future of digital payments is not only omnichannel but will be very personalised and contextualized. This is because the traditional payments customer persona is fast being replaced by one that expects a personalised experience from banks similar to that of other industry players, like Apple, Uber or Amazon.

According to Patrick Quantson, Head of Digital Transformation, Stanbic Bank Ghana, banks could use data analytics that draws insights from a consumer’s previous transactions to predict future needs and then send real-time offers to their banking app for a store they are walking past.

“We can say every time you go to the ATM, it says XYZ do you want to withdraw your usual GHS1000 because we know anytime you visit the ATM that’s the amount you withdraw. We won’t let you waste time by scrolling down searching for the GHS 1000 option. So, the service provision will be very personalised and contextualized because we have enough data to understand what you do all the time”, he predicted.

As more futuristic technology is highly anticipated, customers are expected to be able to make payments with watches, wristbands or other wearable technology, and even possibly use their fingerprints to make payments.

Whether the final nail in the coffin will be a new cashless innovation, impracticality of use or the running costs of cash itself, is yet to be seen, but the death knell of notes and coins could very well sound within our lifetime. Notes and coins are already being replaced by ones and zeros with the rise of cryptocurrencies like Bitcoin. As the shackles of traditional financial systems are shaken loose, the real innovation can begin - cash could be just another data feed for developers to play with.