Payment Methods In West Africa: Ghana

West Africa (or Western Africa) is the westernmost region of Africa. The United Nations defines Western Africa as the 16 countries of Benin, Burkina Faso, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo, as well as Saint Helena, Ascension and Tristan da Cunha (United Kingdom Overseas Territory). According to the World Population Prospects, the population of West Africa is estimated at 419 million people as of 2021. The region is demographically and economically one of the fastest growing on the African continent.

According to Statista, the total transaction value in the digital payments segment is projected to reach US$2,901.00m in 2022 and the total transaction value is expected to show an annual growth rate (CAGR 2022-2027) of 12.02% resulting in a projected total amount of US$5,117.00m by 2027.

All over the world, the payment industry is experiencing a massive transformation, and West Africa is not excluded, especially as it is the region with the world’s largest-growing mobile money market with rapid economic expansion and an improving business landscape. Read on to learn how mobile money is transforming the payment landscape in Ghana.

Mobile Money on the Rise

Mobile money is a key payment method in Ghana, a region with more cell phones than people.

Mobile money technology (known locally as “momo”) first emerged in Ghana in 2009 but has grown exponentially in recent years. It allows users to pay for goods and services via their mobile devices.  For the past several years, Ghana had the fastest-growing mobile money market in sub–Saharan Africa, which has greatly enhanced financial inclusion. Those with bank accounts can link their account to a mobile money account via an app.  For the unbanked, there is a network of small mobile money agents at mini kiosks spread throughout the country which allows users to add and receive cash from their mobile money accounts right at the kiosk. 

Collaborative efforts between banks and telecommunication operators are underway to reach the significant unbanked population, leading to an abundance of new payment service providers and platforms.

While Ghana is a digital payments leader in West Africa, cash is still relied upon alongside mobile money apps like M-Pesa. Credit and debit cards are less popular, with under 6% penetration.

According to the Bank of Ghana, the development of payment and settlement systems in Ghana has been premised on the following key objectives:

  • To prevent and or contain risks in payment, clearing, and settlement systems;
  • To establish robust oversight and regulatory regime for the payment and settlement systems;
  • To bring efficiency to the fiscal operations of the Ghana Government
  • To deepen financial intermediation;
  • To discourage the use of cash for transactions while encouraging the use of non-paper-based instruments;
  • To promote financial inclusion without risking the safety and soundness of the banking system, and
  • To develop an integrated electronic payment infrastructure that will enhance the interoperability of payment and securities infrastructures.

According to the International Trade Administration, the major digital payment channels in Ghana are mobile money platforms and mobile apps, internet banking, digital wallets, e-checks, Unstructured Supplementary Service Data (USSD), and electronic funds transfers. These digital payment channels are being used for Payment to Government (P2G, B2G), Government Payments (G2P, G2B), Business to Business (B2B), Merchant and Retail Payment (P2M), Public Utility Payments, and Person-to-Person (P2P) payments.

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