Mobile Money: communication or banking service?

Just under the recent past John Mahama administration, there was a huge turf war between the National Communications Authority (NCA) and the Ghana Revenue Authority (GRA) as to who is mandated by law to monitor and collect revenue from the telecoms industry. The tussle led to the taxpayer losing hundreds of millions of Ghana cedis in separate contracts and or licenses to various private organizations, some of whom were paid huge sums for virtually no work done.

The situation was so obscene that some of these contractors and licenses got away with termination clauses in contracts that woefully shortchanged the taxpayer, and so when the time came for their contracts to be terminated, they got away with even more millions, in spite of the fact that till date, it has not been explained how some of them got paid even though they did not fulfil their core mandate of monitoring telecoms traffic and revenue in real time.

Today, the two organizations, NCA and GRA, whose needless fight and scramble over telecoms revenue cost the taxpayer, have decided to now look at what the law says about monitoring telecoms revenue and therefore work together as required by law to establish a Common Monitoring Platform (CMP) for the purpose. Meanwhile, it still remains that no one got punished for the huge financial loss to the state caused by their needless tussle when the law clearly states they must work together.

Now that they are working together, they have mandated themselves, on the authorities of their two respective ministries; Ministry of Communications and Ministry Finance, to use the CMP to do four key things in real time: telecoms traffic monitoring, telecoms tax revenue assurance, telecoms fraud management and mobile money monitoring. The first three generated their own kind of controversies, which have been addressed somewhat, but the fourth one, mobile monitoring have started another turf war, this time between the Ministry of Communication on one side, and the financial service regulator, Bank of Ghana (BOG) on the other hand.

The contention is whether mobile money is a communication service or a financial service or both, and who is mandated by law to monitoring.

Ultimatum

At the launch of the CMP on Monday, October 22, 2018, the Communications Minister Ursula Owusu Ekuful, whose toughness and resilience led to the establishment of and compliance with the CMP for the first time in Ghana’s history, brandished another muscle by issuing a clear 48-hour ultimatum to telcos to release their mobile money traffic to the CMP operator, KelniGVG, or face sanctions stated in the Communications Service Tax Law, Act 864.

She insisted that to the extent that telcos offered mobile money service on their communications network and only to subscribers on their networks, it is a communications service and therefore subject to monitoring by the platform created by the communications sector regulator, NCA. Meanwhile, prior to that ultimatum and insistence by the minister, NCA’s position on mobile money had always been that it is a financial service so subscribers who have issues with mobile money should report to the financial service regulator, BOG. Those were the words of the NCA Director-General, Joe Anokye at a Mobile Money Forum during the Cybersecurity week late last year. And it reflects the long-standing posture of the NCA on mobile money.

The minister’s toughness is admirable, particularly because it finally got telcos in the country to kowtow to the implementation of the real-time monitoring system, after many years of resisting it and allegedly sponsoring critics to call it useless, fraudulent, dangerous to customer privacy, risky for national security and all that. But one would have thought that instead of casually concluding that mobile money is a communications service, and therefore subject to monitoring by NCA, the ministry would have looked at things critically to prevent a tussle similar to what happened between NCA and GRA all because someone casually concluded that telecom revenue assurance is for them and not the other.

MoMo companies

First of all, there is a new Electronic Money Issuers Regulations and Mobile Money Merchants Guidelines, under which the mobile money departments of the various telcos were mandated to register as limited liability financial service companies, separate from the communications service role of the various telcos. MTN now has MTN Financial Service Limited, Vodafone has Vodafone Ghana Mobile Financial Services Limited and AirtelTigo has Airtel Ghana Commerce Limited. These are stand-alone financial service organizations who ride heavily on the back of networks of their sister companies (the telcos) to reach millions of Ghanaians with financial services and are regulated by the only constitutionally mandated banking service regulator in the country, BOG. It is important to note that BOG derives its authority directly from the 1992 Constitution and not just an Act of Parliament.

Indeed, the mobile money companies offer several other financial services like insurance among others, and those are regulated by the appropriate respective industry regulators. Some of these services are offered in conjunction with core industry players so it falls under the purview of their respective regulators anyway. Even with the core mobile money service, the mobile finance companies still work with traditional banks who, by law, serve as the custodians of the physical cash floating on the mobile money platforms.

Mobile banking

Besides that, some of the banks, like Ecobank and Guarantee Trust Bank are doing direct mobile banking, also riding on the back of customers’ mobile phone numbers to reach them with banking services. The big question is, would the banks whose mobile services ride on telephone numbers also be mandated to send mobile money traffic to the CMP; are the mobile financial services being offered by the banks also communication services captured under Act 864 as the minister said?

FinTech

There is a third group of mobile finance services providers called the FinTech (Financial Technology) companies. They include Expresspay, Hubtel, Zeepay and many more. What happens to them as well? Are they to also send traffic to the CMP for monitoring, because they also ride on the back of mobile phone numbers and communication service? Without mobile phone subscription, these FinTech guys have no business and yet no one has coughed about them also sending real-time mobile finance traffic to the government’s CMP.

Privacy

Other questions emerging are around whether mobile money is even subject to communication service tax or a different kind of tax they are already paying; and what kind of mobile money data is expected to be sent to the CMP. Because mobile money is not a core network service, the data generated from it include who is sending what amount to whom. So if the CMP is built not to pry into customer privacy, as Ghanaians were sufficiently assured, then what is that kind of data going to do on the CMP? The financial service regulator has not complained about not getting the data required from mobile money operators for whatever purpose, so what exactly is the CMP fixing as far as mobile money is concerned?

Duplication?

Is it just another case of duplication and or usurping of roles just to justify why the CMP service provider is being paid so much? Are we just starting another turf war just to give taxpayer money to separate organizations to provide the same service? Why did the Communications and Finance Ministries have to wait till now only to issue some ultimatum which did not even work, when they could have included all parties, including BOG, National Insurance a Commission and probably others, in the discussion towards the implementation of the CMP? Did we have to wait and issue ultimatums, the basis of which does not seem to have any grounding in law?

One hopes that government is not engaging in another scramble for telecoms revenue in a manner that will cost the taxpayer money that could have been used for something better. Ghana Beyond Aid also means there is need to cut the waste. It is good enough to have removed all the contractors and licensees with duplicated roles. But there is no need in marring that with another duplicated role just because someone casually thinks mobile money is a communication service and must, all of a sudden, be monitored by the communications service industry regulator.

Collaboration

If there are areas of collaboration, the respective regulators can sit down and look at them, instead of each one doing their separate things and playing tough when toughness is not the solution but dialogue.

As far as checks show, mobile money services are regulated by the financial service regulator everywhere in the world. But it would still be good to know what happens in other jurisdictions, like Kenya, where mobile money is really big and well developed; whether it is regulated by the telecoms regulator or the financial service regulator or both; if both, what aspects of it are regulated by which regulator and stuff like that.

This writer is reliably informed that after the minister’s ultimatum, NCA and BOG went into talks to try and find a common ground. But things seem to have fallen apart and now MOC and BOG are flying needless salvos at each other, even though they are both governments. The cat and dogfight must stop and let’s find a common ground if one exists. BOG has said it is willing to work with any regulator provided the laws allow it. But per the existing law, they cannot allow customer privacy to be breached. So MOC and its agencies must do the right thing and get the law that allows CMP access to private data generated on the mobile money platform. Flexing muscles and issuing ultimatums wouldn’t cut it.