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Changing phase of payments through MoMo - Eliminating fraud and maximising benefits

By: Ama Amankwah Baafi
Consumer awareness is key to fighting MoMo fraud
Consumer awareness is key to fighting MoMo fraud

The introduction of mobile money service (MoMo) has allowed many African countries, including Ghana, to go increasingly cashless, such that there is no need for one to carry cash.
It has brought much relief to the hitherto unbanked in Ghana and people who have no formal education are able to do financial transactions through mobile phone technology.

Mobile money is the transfer of funds via mobile phones, a technology that has been widely adopted for payments of goods, services and wages in most parts of Africa.

Especially in some rural areas where there are no formal banking system, inhabitants have turned to MoMo in sending funds to family and friends to provide them with some relief.

A traditional bank account is not needed to use the service and transactions are not limited to a bank or agent and gives a user total security and convenience of accessing his / her money on his mobile phone at any time and wherever he or she is.

Most MoMo operators normally operate in kiosks, particularly in neighbourhoods where the nearest bank or ATM is far away. Daily, customers visit the kiosks to pay their bills and transfer money.

A momo user at Adabraka Official Town in Accra, Ms Mercy Tiwaa, said it took minutes to transfer money from Accra to her wards in school and to her mother in her hometown.

“The funds are instantly credited to them and they can use it for anything they need. Formerly, I had to send money to my mother through traders from our hometown, and which sometimes never reached on time. So momo is lifesaving,” she said.

Even relatives overseas easily transfer money home through a mobile phone company using the recipient’s phone number.

Another user, Ms Monica Lamptey, said, “Initially I thought it was a scam when I received notice of a transfer from my brother abroad in my momo wallet until I asked and I was told it was possible, and he also called to confirm. In fact, I was overjoyed.”
Momo has no doubt offered employment to most people.

State of momo 
More than 70 per cent of adults in Ghana were unbanked prior to introducing MoMo about 10 years ago, but MoMo has added over 10 million adult population and has helped the financial institutions reach a lot more customers for financial intermediation efforts through savings and loans.

Data by the Bank of Ghana (BoG) on payment system showed that the value of mobile money transactions for the first quarter (January-March) of 2019 was GH¢66,356.41 million (26.75 per cent) and a volume of 436,723,487 (39.56 per cent).

The value for the same period last year stood at GH¢52,352.80 million and a volume of 312,926,881.

Total mobile voice subscription for the first quarter of 2019 was 40,934,875  against 38,858,542 in the same period in 2018.

The 2017 payment systems oversight annual report by the BoG indicated that the value of retail payments (excluding cash) increased by 43.18 per cent to GH¢381.43 billion in 2017 from GH¢266.39 billion in 2016.

The growth in the value of the retail payment instruments was on account of increase in the value of mobile money services (98.50 per cent and e-Zwich 45.34 per cent).

The report also noted that MoMo had overtaken cheques as the main non-cash retail payment instrument with 981.6 million volume of transactions, followed by debit card (60.4 million), e-Zwich (8.4 million), cheques (7.3 million) and Direct Credit Transfer (6.1 million) in 2017.

Currently, there are three MoMo operators that offer MoMo services; MTN Ghana, AirtelTigo and Vodafone Ghana.

A Senior Manager at MTN Mobile Financial Service, Commercial, Mr Abdul Majeed Rufai, in an interview said MoMo had been very instrumental in customer engagement on the network by reducing customer churn and giving customers a lot more reason  to stay on the network.

He said last year, MoMo performed remarkably well, contributing 17.7 per cent of the group revenue.

“Overall revenue was up by 60 per cent year on year. MoMo active subscribers were up 17.8 per cent ,driven partly by adoption of mobile money payment systems. The increased adoption has helped solidify and strengthen our number one position in entrenching financial inclusion in Ghana,” he said.

Mr Rufai noted that MoMo had impacted generally on the savings culture in Ghana, because currently, with customers receiving interest on their money in their MoMo wallet, a lot more people were able to save money, and that had contributed to about GHȼ2.6 billion in float with the banks.

“This money would have been lying in people’s pockets, under beds and other non-traditional means without interest,” he stated.

Challenge of fraud
The MoMo platform has, however, been saddled with fraud, which requires the telecommunication companies (telcos) to develop robust infrastructure to deal with the emerging risk.

Some users complain of losing their monies and it has become difficult for security agencies to track down the perpetrators because of the use of forged identities, such that the Ghana Police Service says it can investigate and prosecute only 10 per cent of cases reported.

In 2017, one of the telcos reported that it received about 365 complaints of fraud monthly from its subscribers. The scale of attempts at fraud are staggering as it also indicated that it filtered all the SMS messages that passed through its platforms and blocked more than 400,000 scammed messages daily from reaching their recipients.

A victim, Mr Sule Mohammed, said he lost about GH¢3,000 cedis through MoMo fraud in the process of selling his car.

“Within minutes of transferring the money requested to the MoMo number provided, it was gone. I contacted my service provider but it was too late,” he lamented.
Consequently, although many people in Ghana now have a mobile phone, some say they do not trust the technology and still prefer to handle all transactions in person.

Maximising MoMo benefit                                                                                                                                                        

According to Mr Rufai, the threat to the growth of MoMo was in the area of social engineering, which required a lot more education to sensitise the public to the need to keep their wallet safe.

“They should not disclose their PIN to anyone (which should be secret), should not allow anyone to do transaction on their behalf and should not to entertain calls or text messages from any number to discuss their wallet or respond to any promotion they have not participated in.    

He urged the government to adopt the mobile money service (MoMo) as a means of receiving payments for services and promotion of same by the government, the Bank of Ghana (BoG) and the various players in the industry.

In line with global trends and at the back of the country’s quest to drive down technology in every aspect such as the paperless port processes, national identity card, automation of land administration processes and mobile money interoperability, it has become necessary for the government and all other stakeholders to adopt the MoMo technology in order to ensure financial inclusion and improve on the lives of Ghanaians.

Mr Rufai said the adoption of MoMo as a means of payment could maximise its benefits to national development.

“The future is endless. We see less use of cash for everyday transactions, premium payment for insurance, loan disbursement, pension contribution, savings, etc. all going through MoMo,” he said.