“When I make sales, I want to sit and count my money at the end of the day”: Low Adoption of Digital Payment Platforms among SMEs in Ghana

by IMTFI Fellows Clement Adamba, Onallia Esther Osei, and Rebecca Sarku

"There is power and some good feeling in holding cash"

Introduction
Ghana’s informal economy is dominated by small and medium-scale enterprises (SMEs) whose huge contribution to the economy is widely acknowledged. SMEs are, however, characterized by limited application of technological innovation that could enhance business financial transactions. Current non-cash payment platforms in Ghana include switch and card, primarily operated by e-zwich, gh-linkTM; mobile or wallet money operated by big mobile telecommunication companies such as MTN, Airtel, Tigo, and Vodafone networks. There is also real-time gross settlement system (RTGS), a funds transfer system where the transfer of money or securities takes place from one bank to another on a "real time" and on a "gross" basis.

Mobile Money Vendor
Accra Central Business District

There are a limited number of SMEs using digital financial platforms for transactions despite efforts to encourage adoption and utilisation. The Bank of Ghana (BoG) has attributed the low adoption of digital payment platforms to high illiteracy and ignorance about the relevance of non-cash payment systems (BoG, 2014). In our recent study, we found that, indeed some operators of SMEs in Ghana have adopted some form of digital financial payment for personal and business transactions. Our study also confirmed that illiteracy and lack of knowledge about digital money are the two predominant factors that affect adoption and utilisation of available digital payment platforms. However, we found two other reasons that will require more than literacy to encourage patronage among SMEs in Ghana – the high value of cash and low feelings of trust.

In the remainder of this blog post we highlight some of people’s perceptions about the value or power of holding physical cash over digital money and the issue of trust expressed in the reliability of the system and its operators.


“I want to count my money…….”
There is the feeling among some SME operators that counting cash at the end of a day’s business is an indication of a good day. One is able to determine physically whether or not the day’s transaction has been good or bad. More importantly, holding money and counting it at the close of the day enhances one’s self-image and gives a positive self-feeling. In the expression of one lady in Makola, Ghana’s busiest market in the capital city of Accra, the power associated with the holding of cash supersedes digital money. The feeling of having cash in hand arouses a greater sense of liquidity, power and feeling.

Inside the Makola Annex Market

“When I make my sales, at the end of the day, I want to sit down and count the money. Then, my self-esteem is enhanced. And then I also feel that I am working. But if the money is on a machine like the mobile thing we are talking about, it doesn’t make sense to me. There is power and some good feeling in holding cash [more] than there is with numbers on your phone or on a card.” (A 28-year-old female make-up kit trader in a focus group discussion in Makola, 24/3/2016).

This expression resonated among most of the participants in our study, who immediately concurred with this sentiment. In cases where people have received a mobile money transfer for example, they will immediately go and withdraw the cash.


The other problem is trust
Negative experiences of some adopters with digital payment platforms have led them to lose trust in the system, which has provided added impetus for many to completely stay away from adoption and use of digital payment platforms such as mobile money transfer services:

Adawso Roadside Market

“When I went to a vendor one time to withdraw a customer’s payment for goods that she transferred into my mobile money account, I was asked to bring my code. And I was afraid that once I tell the agent about my code, they may steal my money. Meanwhile I don’t know how to operate my phone. So as soon as I gave my code out, I withdrew everything from my account. This is because my cousin said she left GHC 200 in her account but when she went to withdraw her money, she was told that she did not have anything in it. It means that either her agent or someone took note of her code and then withdrew her money. So I prefer to have my money in cash. I know where to hide the money and not even a rat could notice it in my room. [This is better] than this code and secret number things they are talking about as a form of security for my money” (A 40-year-old fishmonger in Adawso market, 18/03/2016)

However, the distrust of the mobile money system could often be linked to misunderstandings of how the system works. For instance, some SME operators expressed concerns as to why one had to pay for registration fees and charges for transfer and withdrawal of money from mobile money vendors. Others expressed concerns about the need to pay charges for some of the most basic services. These concerns suggested that the SME operators feel exploited with fees or charges; eliciting their fear that mobile money service providers are cheating them instead of helping them with their businesses. But mobile money service agents and some platform service providers have noted that what subscribers call registration fee is actually an initial deposit for the wallet, just as it would be the case in starting a savings account with a bank.


Acknowledgement of some positives with digital financial service platforms
Notwithstanding the concerns of some SME operators about the challenges and the fact that there is the need for one to count his/her cash at the end of day, some SME operators do acknowledge some positive aspects associated with utilising a digital platform service.

mobile money advertisement in Ghana

For example, it is safe and reduces the risks of theft or robbery associated with travelling over long distances with physical money. For example, a female trader indicated that:

 “I don’t carry cash in my bag these days. At first when I travel to buy goods, we are usually attacked by armed robbers but with the mobile money technology, I usually transfer all my cash onto my mobile money wallet and then when I get to my destination, I withdraw it into physical cash to transact business. And so, even if we are attacked by robbers, they can only take my mobile phone and only a small amount of money away. Even if I lose my mobile phone, I still have my money because the code is with me” (A 32-year-old female cosmetic trader in Makola, 06/04/2016).

Another trader noted that keeping money in a mobile wallet helps to avert impulse spending:

“The benefit of keeping my money in my mobile money wallet is that when they pay me cash, it is likely that I may do an impulse buying but if the money is in my wallet it will be very difficult for me to go withdraw it. I hardly get time and if I will have to join a queue very often to withdraw money, then I will prefer that the money remains in the wallet. So it is more or less like a bank savings for me” (A 27-year-old female trader in Makola, 06/04/2016).

Conclusion
Digital payment platform designers and service providers have an obligation to educate potential users of the digital payment platforms on the suite of services that they provide.

Field Interview, Ga-Mashie

They need to spend more time on public media to educate people about the operations or workings of the digital platforms and how even illiterate users can operate these effectively without relying on any second party for support. Improved education outreach can also serve as a catalyst in reducing fears about security and the safety of wallets. Specifically, user-centered education can help people understand how to access money in their wallet as well as operate and utilize all the available packages on the platform such as buying airtime and paying bills through the mobile wallet. Platform providers need to do more to allay subscribers’ fears of risk and losing money through theft, including by agents.

Read their final report here