Telcos start mobile money interest payment today

credit: myjoyonline

Beginning today, September 11, 2016, all mobile money wallet holders on the various telecoms networks in the country will start to earn interest on the balance in their wallets.
The first tranche, to be paid today, is for quarter one, between January and March, and the second tranche for the second quarter spanning April to  June this year will be paid September 18, 2016.

Market leader MTN has already sent out text messages to customers informing them of the payments on the set dates as directed by the Industry regulator, Bank of Ghana (BoG).

Tigo Ghana also earlier announced it will make two tranches of quarterly payments on same dates; and Adom News can confirm that Airtel and Vodafone will both be making interest payments on same dates, in accordance with regulator’s mandatory directives.

This is in line with the new BoG’s Dedicated Electronic Money Issuers (DEMI) Guidelines, which enjoins banks to pay interest on cash flow from the mobile money platforms to the telcos so that the telcos can pay out 80% of that interest to their mobile money customers.

The Central Bank recently approved interest levels of between 1.5 per cent and 7 per cent, but it was up to each telco to negotiate with each partner bank on what percentage of interest they prefer within the given range.

Adom News gathered that some banks are leaning towards the lower limit of the given range, while those who understand the importance of mobile money to the cashless society and financial inclusion drive, are leaning towards the upper limit.

Tigo Ghana said it will pay out over GHS1million in interests to customers. Meanwhile, Adom News learnt that Airtel is also paying over a million Ghana cedis, while Vodafone, which entered the mobile money market only recently, is paying out something slightly lower than a million Ghana cedis.

MTN Ghana, which controls about 80% of the mobile money market in the country, is expected to pay a much higher quantum of interest to customers. The amount will be disclosed after payment, as per the regulator’s directives.

It will be recalled that hitherto, the mobile money space was regulated by the Branchless Banking Guidelines, under which the license was issued to banks to partner telcos for the service. It was, therefore, bank-led.

The the new guidelines mean the license now goes to the telcos so it is now telco-led, and each of the telcos has therefore established separate semi-autonomous companies to ran their mobile money services.

This means the over 40,000 mobile money merchants around the country can now offer some retail banking services, where customers could go and make deposits and expect quarterly interest to be paid on their balance.

The cash will still go to the partner banks but this time round, it will be lodged in interest-bearing accounts and the banks will pay agreed interest into a separate dedicated account, where telcos can access with the bank’s approval and payout to customers as and when.

Head of MTN Mobile Finance, Eli Hini told Adom News the per annum interest will be calculated monthly but paid quarterly so that customers would not have to wait until the end of the year to enjoy their interest.

He explained that “this means at the end of every month, the interest will be calculated on your remaining balance, and even if you spend that balance after the interest has been calculated, you still qualify for the interest at the end of the quarter.”

Eli Hini listed some of the services expected on MoMo as savings and loans, insurance, advanced payments, government and statutory payments as well as investments like treasury bills and other through mobile money wallets.

He is confident that MoMo is a perfect solution to prevent money laundering and terrorist funding due to the traceability of sources of funds and other security features, adding that it also cuts down on the country’s expenses in currency printing.