A STUDY by the Bank of Ghana back in 2017, which investigated the impact of mobile money on Ghana’s payment system, suggested that improvement in the mobile money sub-sector led to development of the payment ecosystem, deepening of financial inclusion and promotion of cash-lite economy.
The
empirical study also showed that factors that promoted mobile money usage led
to deepening of the financial system. In the furtherance of that, the study,
therefore, emphasised the need for the Bank of Ghana to continue to deepen the
payment system by leveraging on the widespread usage of mobile phones as
alternative channels for access to finance to help support improvement in the
monetary policy transmission mechanism.
Today, data on mobile money transactions has confirmed the acceptance of this
new form of moving money for varied reasons, including purchases, savings and
other transactions.
For
instance, the value of Mobile Money (MOMO) transactions, according to data from
the Bank of Ghana, showed that the value of such transactions hit GH¢87.7
billion in April this year. Much as there is some marginal decrease in the
volumes and values, the rise is consistent with the predictions of this BoG
study and other studies on the subject.
While
this trend has been forecast to rise even higher as more and more people adapt
to its use, there is a new development, cryptocurrency, with the advent of blockchain
also gradually evolving to eat into that space.
Cryptocurrencies
are in one’s digital wallet with an address. This is a series of numbers and
letters attached to a personal wallet, which one needs to send and receive
funds according to Webull.
According to Forbes Advisor, a cryptocurrency is a medium of exchange that is
digital, encrypted and decentralised. For instance, unlike the U.S. Dollar or
the Euro, there is no central authority that manages and maintains the value of
a cryptocurrency. Instead, these tasks are broadly distributed among a
cryptocurrency’s users via the internet.
One
can use crypto to buy regular goods and services, although most people invest
in cryptocurrencies as they would in other assets such as stocks or precious
metals. While cryptocurrency is a novel and exciting asset class, purchasing it
can be risky as one must take on a fair amount of research to fully understand
how each system works.
Risks to usage
Webull
says as with any investment, crypto comes with risk. This means that one should
be fully aware of all possible risks before investing and prepared to lose
anything one puts into cryptocurrency. Depending on the coins in which one
chooses to invest, different risk factors may apply. These include scams,
volatility, transactions among many others.
Crypto vs MOMO
The
debate rages on as to whether central banks must accept the existence of this
new payment mode (cryptocurrency) to regulate it and ensure the security of
investors and those who use it.
The
chief executive of Kenya’s biggest lender by market value said last week in a
trending story that cryptocurrency could supplement mobile money in Africa if
regulators could be convinced of its benefits.
Many
central banks on the continent have warned against trading cryptocurrency,
while some have made it outright illegal. The Central African Republic is the
only African nation to have adopted the digital assets and the South African
Reserve Bank is formulating rules to protect investors.
“Africa will benefit substantially from leapfrogging on the fourth industrial
technologies, and cryptocurrency is one of them,” the Equity Group Holdings Plc
Chief Executive Officer, James Mwangi, said last Tuesday at the Bloomberg
Invest: Focus on Africa Conference.
“Cryptocurrency
can as well complement the mobile money wallet, but essentially, we need to
talk to the regulators,” he added.
In
Kenya, mobile money transactions which were only made possible through the
willingness of the regulator to try out new technology had surpassed the use of
hard currency, Mr. Mwangi said.
In the same way, the use of new technology could help increase Africa’s
competitiveness because the continent lacked legacy systems, he said.
“We
are hoping that the use of technology, particularly data and artificial intelligence,
will be a major basis of leapfrogging because we are not talking about existing
manufacturing capacity; we are starting afresh,” he said.
Conclusion
The
evolution of methods of payments started many centuries ago. Each time, people
are thinking about how to make the process cheaper, faster, more convenient, and
safer.
In
spite of its inherent risks, most of the payment methods came with challenges
but eventually, the systems backing them were perfected, hence what we see
today. MOMO in Ghana for instance has and continues to encounter problems as
fraudsters are on a daily basis finding ways to outsmart unsuspecting users.
However, the regulations around its use are giving some confidence to the
people and gradually, the fraud around it is subsiding.
Cryptocurrency
may look risky today but it could be the dominant mode of payment in the coming
years.
The
way forward is for the central bank to prepare for it and ensure that it is
abreast of how it really works and draws policies that can keep the public
protected.
From
the literature around it, cryptocurrency is likely to complement MOMO as a
payment system rather than disrupt it.
Against
this background, rather than shut the door to it, central banks on the
continent must open up to it.
Know this
-
Cryptocurrency, sometimes called cryptocurrency or crypto, is any form of
currency that exists digitally or virtually and uses cryptography to secure
transactions.
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Cryptocurrencies don't have a central issuing or regulating authority, instead of using a decentralized system to record transactions and issue new units.
Source;graphic.com.gh