Ghanaians will later this year start paying less for all Visa Card and Mastercard transactions because of two separate historic deals the national payments switch, the Ghana Interbank Payments and Settlement Systems (GhIPSS) has reached with the two global industry giants.
GhIPSS has already signed a deal with Visa to ensure all Visa Card transactions in Ghana will be processed locally by GhIPSS, hence, eliminating any costs related to dollar payments to entities that used to process such transactions abroad.
GhIPSS is set to sign a similar deal with MasterCard later this year, and that will also eliminate dollar related costs.
At the signing of the Visa deal, GhIPSS CEO, Archie Hesse explained that the partnership promises to deliver some savings for both local banks and their customers since it eliminates payments made in dollars to the previous processing entities abroad.
Moreover, GhIPSS, being a state-owned payment switch, is mandated by the Bank of Ghana to have a commitment to public good, so it will deliberately work towards cutting cost for both banks and individual customers, while taking advantage of the increase in the volumes of transactions on its platform from the two historic deals.
Affordability for customers
Currently some banks charge a monthly fee of between GHS7 and GHS10 for Visa Cards and MasterCards issued to customers. Other have zero-rated the month fees after charging a one-time issuance fee.
The other cost line for customers is the transaction fees when they use their card on the ATM of other banks. Some banks have completed zero rated transaction fees for their own customers but charge between GHS12 and GHS15 per transaction on Visa and Mastercards issued by other banks when those cards are used on their ATM machines.
Techfocus24 gathered that banks incur cost in moving money to populate their ATMs; moreover, the money put in the ATM could have also been invested for profit. So, if the customers of other banks use the ATM and take some of those moneys, the banks must charge to cut their cost and also pay Visa and MasterCard some transaction fee.
But with the intervention of GhIPSS, some of these costs to customers will also be reduced.
Financial Inclusion
Archie Hesse noted that the deal will also deepen financial inclusion on a number of legs:
- Banks which have non-Visa ATMs can now be confident that since the processing of Visa transactions is local, they can now make their ATM’s Visa compliant to serve more people for less.
- Visa services can now be extended to people below the middle class since the cost on it will be reduced.
- Lastly, Visa Card can be combined with GhIPSS’ ghlink Card to enable users receive international remittance directly on their combined Ghlink-Visa Cards.
- Again, holders Ghlink-Visa cards will be able to shop online with their cards.
The same benefits will be derived from the yet to be signed deal with Mastercard.
Archie Hesse is confident that beyond benefitting banks and its customers, the partnership with Visa and later with Mastercard will open even more doors for Fintechs to also innovate and further deepen financial inclusion.
Fast problem resolution
Another expected benefit from these deals is a drastic reduction in the turn-around time for problem resolution.
Currently, when a customer has an issue with transactions on Visa or Mastercard, the standard time for resolution is between 15 to 45 days, which is too long a time for a customer to wait, particularly in cases where the customer has a deadline to meet.
The main reason for the delay is because the process involves entities overseas. But as the processing of Visa and Mastercard transactions will be localized at GhIPSS, the turn-around time for resolving such problem could even be 24 hours to a few days, as GhIPSS already has the technology for quicker problem-solving.
Vice President, and Cluster Head of Visa West Africa, Andrew Uaboi said: “This collaboration
underlines our unwavering commitment to driving financial inclusion expansion across Ghana. We believe that by leveraging our global network and innovative payment solutions, we can empower individuals and businesses, fostering economic growth and prosperity for all.”
He also assured Ghanaians that in line with the public good policy of the Bank of Ghana and GhIPSS, Visa will be committed to making a contribution to ensure that the cost of its service is reduced for both banks and customers under the umbrella of this partnership.
It is expected that Mastercard will also show similar commitment to GhIPSS’ public good policy in the interest of Ghanaians.
