Ghana Leads The Way In Access To Financial Services Through Biometric Smartcard

In what is the first major implementation of its kind in the world designed to ensure financial inclusion, Ghana has introduced a smartcard based on biometric technology to promote wider access by the unbanked public to financial services. The Bank of Ghana (central bank), in collaboration with the banking industry has launched a national payment system infrastructure and a common platform or switch for all commercial banks, the numerous rural banks and savings and loans companies. This new payment system goes by the name “e-zwich”. The launch was performed by Ghana’s President, John. Agyekum Kufuor on April 28, 2008. The centerpiece of the e-zwich system is a biometric smartcard that can be used online and offline for financial transactions.

The e-zwich smartcard is unique in the sense that it requires little numeracy due to its biometric feature and has all the required security safeguards. Transactions are authenticated using the finger print of the cardholder. This feature eliminates the problem of identity theft that prevails in many countries where card transactions are usually authenticated through PINs. With the new payment system Ghana has leapfrogged the existing technology in use in many advanced countries.

An e-zwich smartcard would also be much easier to obtain than opening a traditional bank account. All you basically need are your fingerprints to get the smartcard. The e-zwich smartcard contains both a current account and savings account wallet. Holders can undertake transactions such as paying for goods and services, money transfer, cash withdrawals, third-party bill payments, and receiving salaries or pensions at any e-zwich point of sale terminal in the country. This means that people can undertake basic financial transactions at shops and petrol stations, post offices, etc. The system also has a mobile banking application to allow banking transactions to take place on the mobile phone.

In implementing e-zwich, Ghana is demonstrating leadership in an area that has confronted policy makers the world over by offering a comprehensive solution to the problem of the unbanked.

What is so remarkable about the Ghanaian experiment is the level of cooperation that has been obtained by all the financial institutions in what is otherwise a very fiercely competitive banking sector. As the Governor of the Bank of Ghana, Dr. Paul A. Acquah puts it, “it was not easy getting all the banks (large and small, local and foreign) to agree to this common platform. Our banks have developed products like ATM networks and debit cards which are largely limited to their own customers or members of their own network with limited coverage and access. The system was therefore becoming increasingly segmented and we had to do something about it. However, once it was clear to the banks that the new payment platform would allow them access to a larger customer base and increase their profitability in the process, they were very cooperative. It was a win-win situation. More importantly, the banks were part of the process of drawing up the request for proposals, evaluating the bids and selecting the solution provider (Net 1 Technologies). The whole process was very transparent”. A private company, the Ghana Interbank Payment and Settlement System (GHIPSS) was formed to manage the new payment and settlement infrastructure with the banks as part of the governing board.

The e-zwich payments system is an innovative and bold move by Ghana to enhance financial inclusion and deepen the financial system, but then again Ghana (the first African country to gain independence in 1957) is quite used to being a pioneer on the African stage. It was recently the first sub-Saharan African country other than South Africa to issue a sovereign bond on the international capital market. This time round, Ghana, one of the frontier emerging market economies in Africa is also leading the world in the application of biometric technology on a comprehensive scale to enhance access to financial services by the population.

MAY 2, 2008