Domestic financial infrastructure is primed for a significant leap forward with the signing of a partnership agreement between the national switch, Ghana Interbank Payment and Settlement Systems (GhIPSS) and global electronic payment services provider, Visa.
The landmark collaboration, formalised at GhIPSS headquarters in Accra and set to launch in May 2024, will leverage the combined strengths of the former’s local expertise and latter’s global reach – and promises to revolutionise domestic payments with enhanced efficiency, reduced costs and a smoother dispute resolution process.
“This partnership signifies a pivotal moment for Ghana’s payments ecosystem. By joining forces with VISA, we unlock a gateway for improved efficiency, lower transaction costs and seamless dispute settlement. Additionally, this collaboration opens doors for future collaborations, paving the way for further advancements in the Ghanaian financial landscape,” declared Chief Executive at GhIPSS, Archie Hesse.
One of the key advantages of this partnership lies in the increased volume of transactions it facilitates. With GhIPSS being a locally-owned entity, settlements will be conducted entirely in the cedi – eliminating the need for foreign currency conversions and their associated charges.
While local transactions occur in cedis, banks traditionally pay service providers in foreign currencies. However, with the GhIPSS-VISA partnership, everything will be cedi-denominated; further minimising costs and complexities for financial institutions.
This translates to significant cost savings for VISA agents – particularly banks, ultimately benefitting customers through lower transaction fees.
Furthermore, GhIPSS operates with a strong public good mandate, ensuring that transaction costs remain accessible for both individuals and businesses.
“We are committed to keeping transaction costs low,” emphasised Mr. Hesse.
“As part of this commitment, GhIPSS integrates a public good element into all our operations. If we identify excessively high transaction costs, the central bank has authority to mandate that GhIPSS reduce them to an appropriate level. Our cost per transaction remains one of the lowest among our peers, and despite recent economic fluctuations we’ve maintained this level for the past three years,” the GhIPSS boss further stated.
This comes as payment and settlement transactions on the continent continue to be characterised by inefficiencies, especially multiple offshore counterparties.
In Africa, interchange fees – charged by the card network to the merchant’s bank each time a card is used – can range from around one percent to three percent of the transaction value, with higher rates often applied to cross-border transactions.
Mr. Hesse further hinted at the possibility of ‘dual cards’ which can connect to local institutions that are not traditionally on Visa’s network as well as those on Visa’s infrastructure. This, in addition to a GhIPPS Academy, he said, will contribute to driving up financial inclusion.
On his part, Vice President and Head of West Africa (English Speaking) Cluster at Visa, Andrew Uaboi, said the development is a testament to Ghana’s importance as a market within the region.
“At Visa, we believe in Ghana’s potential as one of our most important markets. Ghana’s rise as a regional leader in digital payments is no accident. Its vibrant economy, tech-savvy population and commitment to innovation make it fertile ground for growth, and Visa is proud to be a part of this journey. We are committed to working with our partners here to build a more inclusive and prosperous digital economy for all Ghanaians,” he said.
In 2022, the total transactions on Visa’s network – including payments and cash volume – soared to US$14.1trillion across four billion cards, up from US$13trillion in 2021.
