Dr. Henry Kofi Wampah
The Bank of Ghana (BoG), in collaboration with the Ghana Interbank Payment and Settlement Systems Limited (GhIPPS), is advocating for more use of direct debit systems for individuals and organisations in their business transactions in a bid to drive economic growth.
Dr. Henry Kofi Wampah, Head of the central bank, speaking at a direct debit stakeholders’ forum in Accra under the theme ‘Direct Debit, a smart way to maximise collections’, said that stakeholders in the financial sector must make all the necessary efforts in order to nurture and grow the product in Ghana, as it has been done in various advanced countries -- which has proved instrumental in their economic growth.
“The direct debit product is a very instrumental and useful product that must be encouraged and nurtured to grow and flourish in Ghana. If well-promoted, it promises to provide convenience and certainty to the payments landscape of businesses, government, and individuals.
“In the 2015 edition of World Payment report, direct debit was identified as one of the rapidly growing non-cash payment alternatives globally for utility payments, insurance premium payments and tax payments. This growth must be made to reflect in Ghana as well,” he said.
He further pledged the central bank’s unflinching support and commitment in making sure that all the necessary regulations needed to ensure smooth running of the system are implemented.
A direct debit is an instruction from a customer to their bank authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice of the collection amounts and dates.
Also among the panelists was the Chief Executive of Stanbic Bank, Alhassan Andani, who said that challenges faced by individuals and businesses in using cheques, standing orders and other means of cashless transactions make it necessary for the development of a more reliable and efficient way of doing business, hence the evolution of the direct debit system.
“Recurrent payments within the Ghanaian banking sector have evolved over the years from cash through cheques to standing order instructions, with all their inherent challenges. These challenges have led to the development of more efficient electronic means of payment and collections, such as direct debits,” he said.
Isaac Kofi Amoah, Head of Strategic Programmes at GhIPPS, the institution providing the infrastructure and software for the system, took the participants through how the direct system works.
“The direct debit is when a client goes to a shop or an institution and requests their product and the institution in turn signs an agreement, which is called mandate. Once you sign that mandate you agree that you will pay a certain amount every month to cover up the total amount you owe.
“So what happens is that you provide the needed accounts details on the mandate. The mandate will then be sent to your bank to inform your bankers that you have authorised them to take a particular amount from your account/s within a certain specified period,” he said.
He added that the forum is to create awareness about the product and inform the public about its benefits to individuals, institutions and the economy in general.
