The Ghana Interbank Payments and Settlements Systems Limited (GhIPSS) is a fully owned subsidiary of the Bank of Ghana, established a few years ago to create a modern national payments system. Since its establishment, it has built the architecture for electronic payment and settlement systems to operate on, in the form of three major initiatives, all of which have brought significantly improved speed, accuracy and sheer convenience to the services provided by Ghana’s banking industry.
One is the e-zwich, a biometric electronic smart card system introduced some three years ago which serves both as an automated teller machine card usable at any bank branch and as an electronic payments card accepted at thousands of merchant outlets around the country. Another is the Cheque Codeline Clearing (CCC) system introduced in 2009 which replaces physical verification and this cuts the time for the cheque clearing process by two-thirds. The third and most recent is the Automated Clearing House (ACH) introduced in November 2010 as an electronic clearing house for fund transfer of direct debits and credits among participating banks.
With these three initiatives, GhIPSS has brought Ghana to the brink of a transformation with regard to how financial transactions are conducted.
The flagship initiative of GhIPSS is the e-zwich card. All the universal banks have hooked up to this biometric card system and altogether nearly 450 out of the over 600 branches they run between them now offer e-zwich services.
Similarly, all the rural and community banks have hooked up and nearly all of their collective 550 branches and agencies offer e-zwich services. Add to this, more than half of the licensed savings and loans institutions and their branches. Now even micro-finance institutions have started to sign up.
Even by the beginning of 2010, more than 310,000 e-zwich cards had already been issued, with a third of them having value loaded onto those cards. Some 3,000 merchants have also been registered to accept payments through e-zwich cards replete with point of sale devices. Importantly, transactions carried out through the e-zwich system are settled the same day that the transactions are carried and by the start of work the next day, the banks have updated their files; which means they can operate on their current financial positions. Even payroll payments through e-zwich which went online in September 2008 are being done in less than 24-hours.
The National Service Scheme, the National Youth Employment Programme and the Students Loans Trust are joining the bandwagon. Now GhIPSS is looking at getting the Civil Service on board, although this presents major logistics problems.
Crucially, the e-zwich system is virtually always up and running. Since the system initially went on-line to the public in May 2008, the total downtime of the system, when there was no connectivity, can be measured in hours.
“Less than 1.5% of the e-zwich transfers do not go through,” asserts Yooku Korsah, GhIPPS Chief Operating Officer. “The very few problems we have had with connectivity arise because the system in part uses public infrastructure. Thus, for example, there could be temporary lack of connectivity between a merchant and the GPRS system on which e-zwich runs but this does not imply any inherent inadequacies with the switch platform itself.”
Actually, despite its use of sophisticated technology, it is in rural Ghana, rather than the urban areas, that people stand to get the most benefits from e-zwich.
“Access to your money is not a problem in, say, Accra because there are lots of banks and lots of banks branches all around the city,” explains Fred France, GhIPSS’s Chief Executive. “But when you travel to the village you may not have any branch of your bank available for several kilometers which means you have to have cash with you from the city. But with e-zwich you can simply load value onto your card before you travel and cash it even at the closest banks to your destination.”
This translates into potentially more spending in rural Ghana by urban dwellers, which in turn spurs economic activity in the hinterlands, apart from the sheer convenience for the travelling card holder.
The quality of support for the system’s usage has improved tremendously over the past couple of years, even though there are obvious logistical challenges. Now GhIPPS chieftains are looking at how to accelerate the gains of using e-zwich.
“The usage of existing e-zwich infrastructure should be encouraged for pension payments,” suggests Fred France.”Government as the largest employer and recipient of payments should lead by example. Also social marketing should be used to build a savings culture.”
He also wants the banks to market e-zwich to merchant and customers alike and enlighten them as to its e-zwich platform, not GhIPPS itself, which only provides the infrastructure. There is also the need to comply with guidelines and directives issued by the Bank of Ghana in providing incentives for all participants.
Importantly, other electronic payment card systems are allowed to co-exist with e-zwich. “This is an alternative payment system and it is not aimed at replacing cash or other existing payment cards,” emphasizes Korsah.
GhIPSS’ second initiative, the new Cheque Codeline Clearing (CCC) platform, is having an even more dramatic effect on Ghana’s payment process. Introduced in 2009, it eliminates the worries that Ghanaians have hitherto had in accepting cheques and is thus making this method of payment much more popular and acceptable than ever before. This electronic cheque clearing system, which was initially only implemented by most universal banks in Accra and Tema, has become operational in the rest of the country since the beginning of 2010.
The new cheque clearing platform has significantly speeded up the cheque clearing process and this is encouraging people and institutions to accept payments by cheque rather than cash. Under the CCC system the physical cheque issued is kept at the bank branch of deposit or clearing centre after it has been scanned. The scan captures the front and back images of the cheque and the Magnetic Ink Character Recognition (MICR) Codeline data, which includes the cheque number, bank short code, account number and the amount. The scanned image then replaces the cheque itself and is cleared electronically which is considerably faster than the physical clearing process.
The new system allows cheques to be cleared within two working days of the transaction and banks whose banking halls stay open till late in the evening are even able to clear a customer’s cheque within a day of its being deposited. Under the former physical clearing system it took three working days to clear a cheque within Accra and Tema. Worse still, cheques issued in one town and received in another took anywhere between two and three weeks to clear, a situation which greatly discouraged acceptance of “up-country” cheques. Now cheques are cleared in a day or two, no matter where they were issued or where payment is being received.
The most recent initiative by GhIPSS is the Automated Clearing House (ACH), a paperless option for the processing of cheques, using the electronic clearing of debits and credits with a low cost of transaction. The ACH concept works with the instruction of a customer (whether individual or institutional) to its bank to make payment on its behalf to its clients on a specific date. On the said date, the paying bank debits the account of the customer with the instructed amount to be paid.
The paying bank then creates and transmits the transaction through GhIPSS to the recipient bank. The receiving bank then verifies the transaction and subsequently credits the transaction to the account of the client. All of these activities take place electronically and in real time.
“It is very useful for the payment of mortgages or hire purchase and utility bills because you will not need to issue post dated cheques or trip every time to make this payment,” says Archie Hesse, Business Development Manager of GhIPSS. “Also for companies who offer credit facilities and have to contend with thousands of cheques every month, the ACH is a great relief.” Organisations can also use the system to make huge regular payments, such as salaries, commissions and dividends, in real time.
Unlike cheques which now clear in two days, funds paid through the ACH can be accessed straight away.
With all this, GhIPSS is taking Ghana into a modern new era where financial transactions can be carried out faster, more efficiently, more safely and more conveniently for payee and beneficiary alike.
One is the e-zwich, a biometric electronic smart card system introduced some three years ago which serves both as an automated teller machine card usable at any bank branch and as an electronic payments card accepted at thousands of merchant outlets around the country. Another is the Cheque Codeline Clearing (CCC) system introduced in 2009 which replaces physical verification and this cuts the time for the cheque clearing process by two-thirds. The third and most recent is the Automated Clearing House (ACH) introduced in November 2010 as an electronic clearing house for fund transfer of direct debits and credits among participating banks.
With these three initiatives, GhIPSS has brought Ghana to the brink of a transformation with regard to how financial transactions are conducted.
The flagship initiative of GhIPSS is the e-zwich card. All the universal banks have hooked up to this biometric card system and altogether nearly 450 out of the over 600 branches they run between them now offer e-zwich services.
Similarly, all the rural and community banks have hooked up and nearly all of their collective 550 branches and agencies offer e-zwich services. Add to this, more than half of the licensed savings and loans institutions and their branches. Now even micro-finance institutions have started to sign up.
Even by the beginning of 2010, more than 310,000 e-zwich cards had already been issued, with a third of them having value loaded onto those cards. Some 3,000 merchants have also been registered to accept payments through e-zwich cards replete with point of sale devices. Importantly, transactions carried out through the e-zwich system are settled the same day that the transactions are carried and by the start of work the next day, the banks have updated their files; which means they can operate on their current financial positions. Even payroll payments through e-zwich which went online in September 2008 are being done in less than 24-hours.
The National Service Scheme, the National Youth Employment Programme and the Students Loans Trust are joining the bandwagon. Now GhIPSS is looking at getting the Civil Service on board, although this presents major logistics problems.
Crucially, the e-zwich system is virtually always up and running. Since the system initially went on-line to the public in May 2008, the total downtime of the system, when there was no connectivity, can be measured in hours.
“Less than 1.5% of the e-zwich transfers do not go through,” asserts Yooku Korsah, GhIPPS Chief Operating Officer. “The very few problems we have had with connectivity arise because the system in part uses public infrastructure. Thus, for example, there could be temporary lack of connectivity between a merchant and the GPRS system on which e-zwich runs but this does not imply any inherent inadequacies with the switch platform itself.”
Actually, despite its use of sophisticated technology, it is in rural Ghana, rather than the urban areas, that people stand to get the most benefits from e-zwich.
“Access to your money is not a problem in, say, Accra because there are lots of banks and lots of banks branches all around the city,” explains Fred France, GhIPSS’s Chief Executive. “But when you travel to the village you may not have any branch of your bank available for several kilometers which means you have to have cash with you from the city. But with e-zwich you can simply load value onto your card before you travel and cash it even at the closest banks to your destination.”
This translates into potentially more spending in rural Ghana by urban dwellers, which in turn spurs economic activity in the hinterlands, apart from the sheer convenience for the travelling card holder.
The quality of support for the system’s usage has improved tremendously over the past couple of years, even though there are obvious logistical challenges. Now GhIPPS chieftains are looking at how to accelerate the gains of using e-zwich.
“The usage of existing e-zwich infrastructure should be encouraged for pension payments,” suggests Fred France.”Government as the largest employer and recipient of payments should lead by example. Also social marketing should be used to build a savings culture.”
He also wants the banks to market e-zwich to merchant and customers alike and enlighten them as to its e-zwich platform, not GhIPPS itself, which only provides the infrastructure. There is also the need to comply with guidelines and directives issued by the Bank of Ghana in providing incentives for all participants.
Importantly, other electronic payment card systems are allowed to co-exist with e-zwich. “This is an alternative payment system and it is not aimed at replacing cash or other existing payment cards,” emphasizes Korsah.
GhIPSS’ second initiative, the new Cheque Codeline Clearing (CCC) platform, is having an even more dramatic effect on Ghana’s payment process. Introduced in 2009, it eliminates the worries that Ghanaians have hitherto had in accepting cheques and is thus making this method of payment much more popular and acceptable than ever before. This electronic cheque clearing system, which was initially only implemented by most universal banks in Accra and Tema, has become operational in the rest of the country since the beginning of 2010.
The new cheque clearing platform has significantly speeded up the cheque clearing process and this is encouraging people and institutions to accept payments by cheque rather than cash. Under the CCC system the physical cheque issued is kept at the bank branch of deposit or clearing centre after it has been scanned. The scan captures the front and back images of the cheque and the Magnetic Ink Character Recognition (MICR) Codeline data, which includes the cheque number, bank short code, account number and the amount. The scanned image then replaces the cheque itself and is cleared electronically which is considerably faster than the physical clearing process.
The new system allows cheques to be cleared within two working days of the transaction and banks whose banking halls stay open till late in the evening are even able to clear a customer’s cheque within a day of its being deposited. Under the former physical clearing system it took three working days to clear a cheque within Accra and Tema. Worse still, cheques issued in one town and received in another took anywhere between two and three weeks to clear, a situation which greatly discouraged acceptance of “up-country” cheques. Now cheques are cleared in a day or two, no matter where they were issued or where payment is being received.
The most recent initiative by GhIPSS is the Automated Clearing House (ACH), a paperless option for the processing of cheques, using the electronic clearing of debits and credits with a low cost of transaction. The ACH concept works with the instruction of a customer (whether individual or institutional) to its bank to make payment on its behalf to its clients on a specific date. On the said date, the paying bank debits the account of the customer with the instructed amount to be paid.
The paying bank then creates and transmits the transaction through GhIPSS to the recipient bank. The receiving bank then verifies the transaction and subsequently credits the transaction to the account of the client. All of these activities take place electronically and in real time.
“It is very useful for the payment of mortgages or hire purchase and utility bills because you will not need to issue post dated cheques or trip every time to make this payment,” says Archie Hesse, Business Development Manager of GhIPSS. “Also for companies who offer credit facilities and have to contend with thousands of cheques every month, the ACH is a great relief.” Organisations can also use the system to make huge regular payments, such as salaries, commissions and dividends, in real time.
Unlike cheques which now clear in two days, funds paid through the ACH can be accessed straight away.
With all this, GhIPSS is taking Ghana into a modern new era where financial transactions can be carried out faster, more efficiently, more safely and more conveniently for payee and beneficiary alike.
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