Will people continue using mobile money after Ghana’s e-levy (payment transfer tax) is implemented?

To get a better understanding of this, I asked 73 commodity traders who use mobile money for business transactions a simple question: Will they use mobile money after the electronic tax is passed?

For some of these traders, mobile money is useful particularly when sending or receiving payments for commodities over long distances. The alternative will be to carry cash and risk being robbed before reaching their trading destinations.

For context, I wrote this analysis in December, 2021.

This time period was after Government of Ghana (GoG) announced plans to tax electronic payment transfers. At the same time, that was before the actual policy implementation on May 1 2022. At the time, there wasn’t a clear sense of the entire transaction coverage of the policy.

However, GoG had made it clear to the public that mobile money transfers will definitely be taxed for the first time in the country.

What risks and opportunities does this present for payment businesses in the mobile money space in Ghana? Time will tell.

3 Key Takeaways

• People are considering alternatives. Right now, the tax has triggered a search for alternative payment solutions. If the tax is passed, 56% of traders said they’ll stop using mobile money. I imagine many who plan not to use mobile money, will still want to transact electronically. They’ll need convenient AND low-cost ways of doing so. This consideration will likely heighten when many users realise the tax applies to payment channels outside of money mobile. Once that happens, the question becomes: Will some users enter the “yes” camp or will they instead settle with cash? Does this give Vodacash, AirtelTigo Money and other payments solutions a customer acquisition opportunity?
• Mobile money’s stickiness is relevant. For those who still plan to use it, mobile money is still crucial and integral regardless of its additional cost. 35% said they’ll still use mobile money. To them, either mobile money is still better than other payment options or it’s seen as a no-other-option situation.
• SMEs and their Clients will need to resolve the fee issue. Interestingly, for some, usage is linked to the condition that the customer bears the additional transaction fee. This likely introduces additional friction for business use.

Sentiments vary between people.
Opinions on their future usage is mainly around how people think the tax will be used.

Overall, 56% made it clear they will stop using mobile money, if the tax is passed.
“I’ll switch to the black market”
“I don’t see the link between the tax and development”
“I’ll destroy my SIM card”
“I’ve already switched to cash”

A further 35% said they’ll still use mobile money, citing either a lack of alternative payment channels or their aspiration to see the possible benefits from the transfer tax.
“It’s better than the alternative”
“There’s no options”

“It’ll depend” for just 9%.
“Unless the customer accepts the fees”
“Too much a charge to bear alone”

The known and unknown. What this research tells us is their stance towards mobile money for business transactions in the near future regardless of how they actually use it currently. However, due to the informal nature of the research, this group of traders may or may not be representative of the population. Also, I do not know who among them already uses mobile money, who doesn’t.. This means that, it could very well be possible that most traders in this research don’t use mobile money at all currently and have only expressed their opinion on whether that’ll change or not after the transfer tax is passed.

Thanks for reading!

I consult on related research and data analytics projects like these. If you want to collaborate on a project, please email me using dave[my surname] at gmail dot com.