Penetration Rate of E-Zwich in the Financial Service Industry

A Case Study of Merchants and Users in the Accra Metropolis

Master's Thesis, 2017

86 Pages, Grade: 68.0










1.0 Background of the Study
1.1 Statement of the Problem
1.2 Research Objectives
1.3 Research Questions
1.4 Significance of the Study
1.5 Scope of the Study
1.6 Organisation of the Study

2.0 Introduction
2.1 Penetration of E-Zwich in Ghana
2.1.1 Measurement of E-Zwich Penetration Rate
2.2 The Financial Service Industry
2.2.1 E-zwich in the Banking and Finance Sector
2.2.2 E-Zwich in the Financial or Capital Markets
2.2.3 E-Zwich in the Insurance Companies
2.3 Electronic Payment Systems
2.3.1 Evolution of Electronic Payment Systems
2.3.2 Automated Teller Machines (ATM)
2.3.3 Creditcards
2.3.4 Debit Instruments
2.3.5 Mobile Money Payment Systems
2.3.6 Telephone Banking
2.3.7 Internet Banking
2.4 Challenges of Adopting Electronic Payment Systems.
2.5 Benefits of the Use of E-Zwich
2.6 Using E-zwich to enhance Financial Services
2.7 General Constraints that influences the E-Zwich
2.7.1 Security.
2.7.2 Infrastructure
2.7.3 Legal and Regulatory Matters
2.7.4 Socio-Cultural Issues
2.8 Constraints on Merchants’ Use of E-Zwich
2.8.1 Migration Disincentive
2.8.2 Inadequate Proposition of Value
2.8.3 Merchants’ Degree of Economics
2.8.4 Insufficient Aggregate Demand of Customers
2.9 Constraints on Users/Customers’ use of E-Zwich
2.9.1 The Cash Tradition
2.9.2 Frequent Breakdown of E-Zwich Machine
2.9.3 Inaccessibility of Cash from POS Device

3.0 Introduction
3.1 Research Design 3.2 Population of the Study 3.3 Sample Size and Sampling Technique 3.4 Sources of Data 3.5 Data Collection Instruments 3.5.1 Interview 3.5.2 Interview Guide 3.5.3 Questionnaire 3.5.4 Documentary Research 3.5.5 Observations 3.6 Data Analysis 3.7 Validity and Reliability of Data

4.0 Introduction
4.1 Personal Statistics of Respondents
4.2 Shop and Merchants’ Responses on E-Zwich POS Availability
4.3 E-Zwich Card Usage
4.4 Frequency of Patronage as informed by Shop Owners and Merchants
4.5 Customers’ Demand to pay bills through E-Zwich Card
4.6 The Adoption of E-Zwich in the Financial Service Industry
4.7 E-Zwich’s Reliability and Convenience
4.8 Individuals’ Preferred Option of Electronic Payment Systems vis-à-vis E-Zwich
4.9 Constraints of the E-Zwich
4.10 General Assessment of the E-Zwich vrr

5.0 Overview
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations





Table 2.1 Patronage indicators of the E-zwich Payment System

Table 4.1 Gender and Age Distribution of Respondents

Table 4.2 Shops and Merchants’ Response on Availability of E-Zwich Device/Terminal at Premises

Table 4.3 Ownership of E-Zwich Card

Table 4.4 Shops and Merchants’ Response on Customers’ Patronage of E-Zwich

Table 4.5 Customers’ Demand to pay bills through E-Zwich Card (Shop Owners’ Point of View)

Table 4.6 Recognition of E-Zwich in the Financial Service Industry

Table 4.7 Level of Reliability and Convenience of E-Zwich

Table 4.8 Usage of E-Zwich vis-à-vis other Electronic Payment Systems

Table 4.9 Assessment of E-Zwich


4.1 Usage Frequency of E-Zwich

4.2 Level of Recognition of Other Electronic Payment Systems

4.3 Constraints of the E-Zwich


This work is dedicated to Mr. Chetan Shah and Miss Joycelyn N. Abrokwah for their support in the successful completion of this work.


I would like to express my gratitude and appreciation first and foremost to the Almighty God for a successful completion of this thesis. The next appreciation goes to my supervisor in the person of Mr. Edward Yeboah who has made me acquire further knowledge in understanding the need to come up with a research on an issue and how to be very analytical in presenting my facts. Indeed he has been very helpful to my chosen career at this stage and I’m very grateful to him. I would also like to acknowledge the various contributions received from officials of Ghana Interbank Payment and Settlement Systems for spending some time to respond to some questions regarding the E-Zwich. I am also indebted with gratitude to Madam Sophia Yaa Boakyewaa Affotey, Peter Antwi and Isaac Danso of Ecobank, The Royal Bank and Enterprise Life Assurance Company respectively for their selfless contributions to this work. They really aided me as very reliable representatives of the Financial Service Industry and they would never be forgotten going forward. My final gratitude also goes to everyone not mentioned above but have helped to make this thesis a reliable source of information and a useful tool for development.


The economy of Ghana is seen to be adjusting itself gradually with the innovation of advanced systems of payments as a result of a steady rise in technology and this has made the economy very reactive to any new electronic payment system. Also for the above reason, competition is now getting very keen especially in the financial service industry of Ghana as to which electronic payment system or categories of payment systems best satisfies the desires of merchants and users. The purpose of this research is to investigate and analyse the strength of the E-Zwich payment system and detemiine its level of adoption amongst users and merchants in the financial service industry. Questionnaires administered to some banks, insurance companies and other players within the financial service industry enabled the researcher to ascertain infomiation on the actual activity that goes on concerning the E-Zwich. Most merchants indicated their mistrust in the E-Zwich and rather preferred to champion their own traditional systems of electronic payments whiles other merchants believed that the penetration of the E-Zwich would be satisfactory if steps are put in place to efficiently manage it as any other reliable electronic payment system. Quantitatively, a convenience sampling approach was employed to ascertain certain responses from a total of 100 responses as questionnaires were administered. The study indicated that just a few of them have the card and this few represented mainly National Service personnel due to the compulsory nature of using the card indicating an overall low patronage of the E-Zwich card.


1.0 Background of the Study

In some decades ago, people were seen to be exchanging goods for other similar goods and services for other similar services in payment of their transactions and these were the times when money was not in existence. This medium of trade was called the barter trade system, though well recognised, was not convenient due to certain disadvantages it had. Some of these disadvantages were the double coincidence of wants, difficulties in exchanging goods of bulky or large quantities and situations where goods or services lacked the ability of being properly divided to suit the particular goods or services rendered. Due to necessity, the Bimetallism era evolved before 1875 where a free coinage was maintained for both silver and gold and then used as the medium of exchange. Several countries at the time such as USA, China, Gemiany and France all adopted the use of gold and silver as an international means of payment which was strictly reliant on the contents of gold or silver one had. After that period, countries also experienced a period known as the classical gold standard where gold was assured and known as an unrestricted coinage for payments of goods and services. In support of gold which began to gain a higher value prominence, notes then became fully recognised as it helped to resolve lots of financial service exchange problems such as paying for goods or services according to their value.

Obviously in Ghana, this evolution was not fully complete as people were known to be hiding their money in places that were not deemed at safe and in the long run, loosed their money in such events as a result of robbery or flood. Others also adopted the process of giving their money to individuals for safe keeping which was not the best as these people could either abscond with their money or in worst cases die along the line. Banks then started sprouting up and the most common of these was the Bank of British West Africa which opened in 1896 and started operating in the then Gold Coast. Today we have several banks which have come to help solve issues of payments in the form of transfers, standing orders, direct credits and other payment assistance. These banks have also helped to reduce theft of people’s money as well as loss of these moneys as a result of fire outbreaks in homes and wherever money is kept apart from the banks. The Central Bank of Ghana also considered a much more appropriate system of enhancing some form of customer confidence in the financial service industry and making sure that people’s transactions were safely administered. This eventually brought about the E-zwich which was announced in April 2008 for the settlement of various transactions amongst the Ghanaian banks. It was initially known as the interbank switch which was purchased from an organisation in South Africa called the Net 1 UEPS. According to Issahaku, 2012, the brand name for this payment system is known as the E-Zwich which serves as the common platfomi (i.e. the National Switch) that is seen to link the payment systems of all banks including rural banks and savings and loans in Ghana and due to its uniqueness, it was setup to be in tune with a biometrically recognised indexing where all ten fingers of the account holder were captured for security, holder recognition and safety reasons.

The financial service industry as the main target industry earmarked to promote the use of the e-zwich is that industry that promotes the various financial transactions between customers and financial institutions. The industry comprises insurance companies, banks, audit and accountancy firms, the Ghana Stock Exchange, credit unions, Investment Companies and other government institutions. These institutions have in a way adopted the use of the e-zwich as given the backing by the Bank of Ghana to help make financial transactions much more convenient through electronic means. As a hallmark of the e-zwich by the Bank of Ghana to help deliver quality financial services to the unbanked and under­banked, the financial service industry is a critical area where the Bank of Ghana has targeted to propagate the use of the e-zwich by Ghanaians.

Though the e-zwich might have certain challenges as this work is aimed at delving into, it does come along with vital benefits to project the image of the financial service industry. According to Boateng in 2015, one of the main advantages of the E-zwich payment system is its ability to support electronic payments across banks and other financial institutions. This implies that it has the feature of the Automated Teller Machine (ATM) card where you have your money loaded unto the card technically but with the e-zwich, we can liken it to the fact that an account holder or a user has his/her bank account with him and can only be accessed by him alone due to the biometric indexing upon registration.

Despite the fact that the E-Zwich payment enhances the quick receipt of cash and payment of same, researchers such as Antwi et ah, 2015 are of the view that the situation of the E- Zwich’s low patronage by users and merchants is less than a decade and therefore in a nutshell there is the need to appreciate that such an introduction could possibly take some time in order to attain the expected patronage. This is a point the researcher chooses to disagree with Antwi et al. especially looking at this from the point of view of the MTN Mobile Money (МММ) electronic payment system in particular. The Bank of Ghana through GhIPSS introduced e-zwich in 2008 and 2018 becomes a decade which obviously not much has been able to be achieved by e-zwich considering the financial service industry. In July 2009, МММ was introduced by MTN by the non-banking sector and obviously has gained recognition by competing with a system like the e-zwich which eventually tends to affect the penetration of the e-zwich in the financial service industry. This implies that the penetration of the E-Zwich has become a matter of concern which needs to be carefully addressed to justify the need for its introduction and adoption.

1.1 Statement of the Problem

In 2008, the sudden introduction of the e-zwich by the Bank of Ghana was a positive uncommon move as the financial service industry was bent on being keen in adopting such an outset notwithstanding the fact that the use of cash for payment of goods and services is still on the rise currently in Ghana. Several banks and other firms in the financial service industry were seen to be organising sessions that allowed their staff to be trained by GhIPSS officials as a means of being more competitive but to date, there is still the dominance of the use of physical cash in making payments even though the objective of the e-zwich outset was to enhance personal security during payments, minimize the rate of handling cash and making Ghana a cashless economy eventually.

According to Dělali Kumaga (2010), he was of the view that the needed education needed to realize the full potential of the e-zwich seemed not to be fairly distributed and also given its associated challenges and for that matter giving an unsatisfactory penetration rate in the financial service industry of Ghana. It has also been noted by Taddese and Kidan (2005) that most African countries lack the legal and regulatory framework as well as the infrastructure meant for electronic payments of such nature to perform to expectation which then draws a quick attention to the rate of penetration of e-zwich in the financial service industry and possibly the set-backs associated to the system as encountered by merchants and users. For instance, there have been instances where users of the e-zwich smart card have reported to merchants within the financial service industry the inconsistencies associated to the POS device. Some users complain that their fingerprints have not been successfully recognised by the device. As a result, some of these users eventually had to be refused being served by either shop keepers or firms within this industry as obviously nothing could be done to assist these users. Some too turn away because the POS device reveals wrongly to them that they are the wrong owners of the card they bear (Abdul-Rahman et ah, 2009). Eventually, these users go out there and share their experiences to other businessmen and women who in turns get deterred from using the e-zwich, thus influencing the penetration.

These issues that have an inverse bearing on the penetration rate of e-zwich could only be a few of the numerous drawbacks of the e-zwich’s penetration. There is also the question as to whether users who report these issues are just cases less risky to the overall expected penetration rate of the e-zwich or are enough evidences of issues relating to merchants and users. This thesis therefore intends to assess the penetration rate of the e-zwich in the financial service industry and how users and merchants are connected to the targeted penetration of the e-zwich.

1.2 Research Objectives

To detemiine the penetration rate of E-Zwich in the financial service industry within the Accra Metropolis.

1. To assess the usage and ownership of the E-Zwich by users in the Accra Metropolis
2. To investigate the possible challenges faced by the E-Zwich payment system and the financial service industry players who have adopted the E-Zwich within the Accra Metropolis.

1.3 Research Questions

This work is expected to answer the following questions:

i. Which categories of people currently own the e-zwich smart card in the Accra Metropolis and do they use it at all?

ii. What challenges are faced by the e-zwich payment system and those institutions which have adopted the E-Zwich within the financial service industry of the Accra Metropolis?

1.4 Significance of the Study

For very good reasons, it has been observed that the use of the e-zwich payment system given the support of the financial service industry has a tendency of placing a higher recognition on the payment system considering its ability to reduce financial workload, risk and inconvenience in moving about with physical cash and other associated financial perils. People would not have to go through the hectic situations of joining queues which sometimes become very frustrating in various banks just to transact a simple business and government tends to enjoy reduced costs of printing notes in large quantities and values especially when the cashless idea system has been implemented.

The findings of this research thereon would be of vital use to GhIPSS and the Bank of Ghana who are the main stakeholders of the e-zwich. Other stakeholders are the firms in the financial service industry who would carefully ascertain the rate of penetration since their adoption of the e-zwich and determine the need to control the allocation of resources meant for e-zwich.

Furthermore, this research work would serve as another source of reference for other relevant studies or research work by the academia. The financial service industry would also be informed on the overall penetration rate of the e-zwich.

1.5 Scope of the Study

It is an inevitable practice that several transactions right from an individual’s home, his society, place of worship, his organisation or any transaction directly related or not to the economy is only made effective by the use of cash and this gives this research work a wide scope relevant for decision making. However, the critical area of this work centred on users and merchants of the e-zwich as well as the administrators (GhIPSS) as they preferably are the best source of information and critical area of analysis of the penetration rate e-zwich.

Also various users of the e-zwich within the Greater Accra region were targeted to aid this study.

1.6 Organisation of the Study

This study was organised in five chapters. Chapter One focused on the introduction which covers the background and other significance of the entire study. Chapter Two looked at a critical review of the literature and studied other relevant aspects regarding the e-zwich as captured by other scholars. Chapter Three delved into the various methods that were engaged in detemiining all relevant data that made this study very useful. Chapter Four sought to present the result based on reliable analysis of data captured. Chapter Five captured the summary of the various findings, came out with a conclusion and presented recommendations based on the findings.

1.7 Limitations of the Study

The researcher was faced with a difficulty in accessing one major secondary data from GhIPSS. In order to provide further findings to this study and also determine the penetration rate of the E-Zwich from the perspective of GhIPSS, the researcher attempted to collect data in respect of both patronage and rate of penetration through E-Zwich card usage but available data related only to yearly issue of cards to the general public.


2.0 Introduction

This chapter seeks to tackle some relevant issues of previous research conducted in the area of the e-zwich, its patronage and rate of penetration. The study would also focus on the evolution of electronic payment systems and their associated challenges, the major financial service industry and their adoption rate of e-zwich, the exploration of some vital concepts regarding the e-zwich vis-à-vis the adoption of some other payment systems.

Currently, several people are seen to prefer to make payments with the use of cards than through the use of physical cash across the globe but Ghana seems to fall in the exception category as till date, the use of cash is rather on the increase. As pointed out by Ackorlie (2009), Ghana is seen to be a country which is moving at a slower pace in the quest to boost micro-economic activities. In Ackorlie’s study, he opined that in order for Ghana to be established as a cashless society, there is a need to reduce the role played by the use of physical cash. However, it is worth mentioning that Vissiliou (2004) explains that electronic payments such as the e-zwich is seen to be that form of financial exchange that occurs between a buyer and a seller and enhanced by an electronic means of communication. This implies that the value attached to the use of the e-zwich exceeds the user’s convenience and safety and goes to extreme areas to assist in national development. This research work focuses on the activities of both users and merchants, their relationship as far as e-zwich is concerned and how these features influence the penetration rate of the e-zwich.

2.1 Penetration of E-Zwich in Ghana

The introduction of the e-zwich by the Central Bank of Ghana in 2008 was a wake-up call to promote a cashless economy through the settlement of various transactions amongst banks in Ghana. According to Ejiofor and Rasaki (2012), a cashless economy is any society where economic transactions are made mainly by the use of electronic systems and not by cash. Banks were therefore seen to be adopting strategies on how to adopt the e-zwich to help make Ghana such an economy which for them, it was quite a competitive tool to tap into in order to be a step ahead of other banks. This infomis that the e-zwich as a new service was seen to be a system of payment that provided a competitive advantage which brought about a signal that the Bank of Ghana was in a quest to minimize the use of physical cash for payments.

The penetration of the e-zwich just like all other electronic payment systems can be made effective given its reliability, convenience and security notwithstanding the full adoption coupled with technical support from the financial industry. Furthermore, for an efficient retail system of payment to be achieved, issues such as service quality, charges of the financial industry for e-zwich services, e-zwich reliability and flexibility, security and confidentiality among others are to be well shaped to enhance the smooth penetration for such an electronic payment system (Pariwat & Flataiseree 2004).

In March 2015, the Ghana Interbank Payment and Settlement Systems (GhIPPS) called for certain policies that were aimed at discouraging transactions which were cash-based in order to aid in further penetration of the e-zwich. At a point, government was faced with difficulties in creating a pool that would contain all enterprises within the informal sector for the purposes of taxation. According to Mr. Archie Hesse, the Chief Executive of GhIPPS at the time, he believed that the penetration of the e-zwich and subsequent full adoption would be a good policy to ensure that the informal sector which controlled about 50% of Ghana’s total cash and also the sector that contained people with no bank accounts would help address government’s issue if these people were encouraged by a policy to switch to the use of cards and other forms of electronic payment systems.

With regards to the assessing the penetration rate of e-zwich in Ghana as a whole, there have been heavy investments and several promotional programmes that have been channelled towards the penetration of the e-zwich as well as other electronic payments systems in the financial service industry but amidst all these, there seems to be a low rate of penetration of the e-zwich which means that more cash is still being used by banks, cooperatives, insurance companies, traders and other institutions.

2.1.1 Measurement of E-Zwich Penetration Rate

The penetration rate of e-zwich concerns itself with the extent to which e-zwich has lived up to expectation by the Bank of Ghana through GhIPSS, been well adopted by users and merchants and the extent to which the financial service industry has adopted the e-zwich as a tool for various payments. A general picture of this can be depicted by the patronage of e- zwich as various researchers have raised concerns of its patronage statistics vis-à-vis its penetration. In other words, its penetration rate in the financial service industry is dependent on its patronage which also does not necessarily imply that the electronic payment system is living up to stakeholders’ expectations. According to Antwi et al. (2015) the e-zwich is less efficient taking into consideration its consolidation together with other electronic payment design properties, a statement which is fully supported by Agyeiwaah et al. (2014) and also a point that justifies that the measurement of the rate of penetration need to be critically analysed before conclusions are made. In the work of Agyeiwaah et al. (2014), they made mention of the fact that the e-zwich payment system can go offline within the whole day and even into the next day and this is as a result of technical breakdown in the network which they further argued that this was as a result of the system design properties that hindered on supporting several payment modes and a clear scenario that affects penetration.

It is also a point worth considering that though the patronage of the e-zwich could perhaps be on the high to justify a sound penetration but in situations where the e-zwich payment system malfunctions as a result of the internet in most cases, it might be difficult to confirm that the e-zwich has truly penetrated the financial service industry. According to Antwi et al. (2015) and Boateng (2015), these researchers were of the view that the e-zwich system of payment experiences frequent breakdowns as a result of its dependence on the internet and this brings questions as to the extent of penetration of the system. Based on the above, some researchers such as Agyeiwaah et al. (2014) and Boateng (2015) seem to have agreed with the consensus of several researchers that the e-zwich’s patronage is poor and very discouraging and therefore an explicit fact. Their reasons are that the e-zwich payments system faces technical challenges; the advantages of the system does not reflect the daily operation of users and merchants and that the public awareness is poor. These are all vital issues that need to be considered when measuring the penetration rate of the e-zwich.

Nonetheless, the above does not necessarily pave way to conclude that the challenges faced by users and merchants are indicators that possibly might affect e-zwich’s penetration rate. According to Azinga & Mensah (2016), they do not agree with the view of researchers that the e-zwich payment system obviously has a discouraging patronage but they are of the view that such expected patronage is expected to grow over time and the system could experience a massive growth if improvements are made to the strategies for growth of the payment system. It is therefore imperative to state that as the penetration rate of e-zwich is dependent on the patronage, Azinga & Mensah (2016) in their work came up with certain variables that indicate the level of patronage for a period of six years as ascertained from GhIPSS. These indicators relates to the usage of the e-zwich card based on business activities in the financial service industry and explains quantitatively the degree of gradual penetration of the e-zwich for a period of 7 years (i.e. from 2008 - 2014). These indicators are NST (Number of Sales Transactions), NCD (Number of Cash Deposits), NCW (Number of Cash Withdrawals), NCCT (Number of Card-to-Card Transfer), sv (Sales Value), CDV (Cash Deposit Value), cw (Cash Withdrawals) and CCT (Cash-to-Cash Transfer).

Abbildung in dieser Leseprobe nicht enthalten

Note: NST, NCD, NCW & NCCT relates to numbers whilst sv, CDV, cw & CCT relates to values

2.2 The Financial Service Industry

This industry consists of institutions that provide economic services and basically manage money on behalf of customers and clients where possibly. They comprise of credit unions, insurance companies, investment firms, audit firms, accountancy firms, the Ghana Stock Exchange, banks, government institutions and all other financial institutions. According to PricewaterhouseCoopers (Ghana) Limited, the financial service industry in Ghana has been categorized into three main sectors which are listed below

a. Banking and Finance Sector,
b. Financial Markets or Capital Markets and
c. Insurance.

Given the core mandates of these institutions to serve as an avenue to supply quality financial services to the general public, they are periodically being guided by the Bank of Ghana directly or indirectly through GhIPPS to adopt strategies aimed at further simplifying the use of the e-zwich by users. For instance in early 2014, all banks were directed by the Bank of Ghana to see to it that the Point of Sale Temiinal for the e-zwich was adopted and installed at their various branches to create further proximity of the use of the card. In addition, other institutions were also directed by the Bank of Ghana to issue the e-zwich card to their customers by then end of the second quarter in 2014.

2.2.1 E-zwich in the Banking and Finance Sector

The Banking and Finance sector in Ghana is regarded as a pivotal area within the financial service industry where the e-zwich has been highly adopted. It is also an area where all policies relating to the e-zwich from the Bank of Ghana are seen to be piloted at the early stages to detemiine the various interaction of users and merchants of the payment system, inferences drawn as per analysis and evaluations made where necessary. According to Ofori-Dwumfour & Dankwah (2013), electronic banking is seen to have evolved to present a much simpler way of carrying out business transactions. By this way, banks serve as an avenue where payments for goods and services with the use of the e-zwich smart card are encouraged in order for users to assess these banks on their services and other products. The adoption of the e-zwich by these merchants tends to intensify competition within the banking sector that enables them to expand their reach. Other studies conducted by Bassey (2008) further infomis that the adoption of electronic forms of payments such as the e-zwich by banks provides the country as a whole an opportunity to launch its financial services into acceptable areas of development as customers can easily access such services wherever they are.

The Banking and Finance Sector also serves as that platform where workers who are paid through the e-zwich smart card can easily access their salaries or other allowances. Certain procedures are laid down for these workers allowing them the opportunity to load unto their cards the paid amounts and effecting a receipt according to their preference of withdrawal. In such a situation, users go to these banks with their e-zwich smart card, present their smart cards to a teller and based on the amount preferred to receive, their requests processed after the cash is loaded unto the card and subsequently presented to them. A typical example is the current allowances paid to National Service personnel through the e-zwich smart card which commenced in February 2015. Upon information from their place of work or National Service Scheme (NSS) offices that NSS allowances have been made, the user herein the National Service personnel takes the card to any bank which provides e-zwich services, presents the card to a teller for loading of cash and per the amount he has requested through a form, the amount is paid out of the loaded cash. Similarly, to make this much easier, some banks offer to open an account for the NSS personnel in order to link the e- zwich card to the account, thus making future banking transactions a lot more convenient.

2.2.2 E-Zwich in the Financial or Capital Markets

A Financial Market refers to a market where trading of financial securities and stock take place. This includes the trading of currencies, bonds, equities and other derivatives which are all done on the Ghana Stock Exchange. They mainly comprise the capital markets and the money markets where other markets such as the bonds market, currency markets, derivatives market together with the institutions concerned and the kinds of operations they undertake. Transactions that occur in such a market are made fully in wholesale. Some countries have different regulations and patterns that expect their financial markets to comply with and operate within, some of which are the market structure, operational patterns and different kinds of securities. In Ghana, the money market is seen to be the main dominating market as a result of the volatility of the capital markets. Kweigyah (2011) further explains that there is instability in the interest rates, foreign exchange rates, inflation and in goods and services making the capital market to be unattractive.

Within the financial markets or capital markets, e-zwich possibly has the capability of paying dividends and other lump sums to investors. Because of the unique biometric feature the e-zwich has, an e-zwich card bearer should be capable of buying some securities just after the POS user verification process has been complete which means that instead of trading in the financial market with the use of cash, an investment manager for instance would prefer to use the e-zwich in transacting a money market deal but the question is, at the moment, has the e-zwich been adopted by the financial market? If yes, how far has it penetrated and if no, then there would be the need to detemiine the causes of the general low rate penetration.

However, according to Antwi et al. (2015), their study is of the view that currently, the patronage as well as penetration of the e-zwich considering sectors such as the financial or capital markets is quite appreciable and speaking from a logical point of view, the patronage of the e-zwich is less than a decade which is presumed to be the period in which every new system such as the e-zwich is expected to grow to full capacity.

2.2.3 E-Zwich in the Insurance Companies

This aspect of the financial service industry provides some form of coverage usually in the form of compensation as a result of damage, financial difficulties or loss in exchange for some premium payments. Dorfman (2008) is of the view that insurance is a financially approved arrangement that seeks to redistribute the cost that is associated to unexpected perils. It has to do with securing oneself through making some sacrifices today in order to achieve some form of protection against any unexpected occurrences. Other studies conducted by Pal et al. (2007) indicate that insurance occurs when an insured makes a periodic payment known as the premium to an insurer, herein the insurance company, to take a risk of bearing to make a large payment to the insured in the event of an unforeseen circumstance.

In Ghana, the insurance sector can be categorized into two which are the life insurance and the non-life insurance sectors. Some of these companies are the Enterprise Life Assurance Company, Best Insurance Company, Provident Life Assurance Company, ESICH Life Assurance Company, Star Assurance Company, and State Insurance Company among others who are all being regulated by the National Insurance Commission. Some of their services are life assurance, fire insurance, motor insurance, lady care, education, fire, theft and other forms of assets cover. Because this is a periodic payment by the insured to the insurance company, the e-zwich serves as a platform that enables such payments to be made. Users of the e-zwich smart card can load their money unto the e-zwich smart card in order to enable them pay their premiums. It is imperative to note that in June 2014, ESICH Life Assurance Company began a pilot program to adopt the e-zwich where an efficient payment option has been provided to ESICH Life for customers to easily access the premium payment section on the smart device for easy and convenient payment. The POS device has been progranmied to be mobile in a way that the merchant herein the agent of ESICH life moves about with it to the very door-step of the customer and collects all premiums.

With the above example, there is the need to determine the rate of penetration of the e-zwich in the general insurance sector.

2.3 Electronic Payment Systems

It is important to agree with Asokan et al. (2000) as their research explains that commerce concerns itself with the interactions between a payer and a payee who use money as the major medium for the exchange of goods or services or both. In this case, there is the need for cash to be transferred before a service is rendered or a delivery of goods is made. This same concept is virtually seen in electronic payments systems where for instance money loaded onto a smart card is either transferred by a payer or a buyer of goods to a payee or a supplier of goods or money cashed at a merchant’s location and presented to the supplier. This also applies in the provision of services.

Thus electronic payments come into effect when real money is transferred by a user to a merchant on behalf of a supplier. We can also deduce from the above that the major benefit derived from the adoption of electronic payment systems is that it strives to mobilize all excess cash in the hands of the people in an economy and saves them on their behalves thus ensuring that all these cash are banked. A study ascertained from Moody’s Analytics (2013) indicates that a country’s GDP rises at 0.2% annually just as a result of the usage of cards for transactions. As per the corporation’s analysis, real GDP of the global community rises at such a rate in a year averagely beyond what the GDP rate would have been if the use of cards were not seen to penetrate such economies.

2.3.1 Evolution of Electronic Payment Systems

The evolution of Electronic Payment Systems can be dated to as far back as 1918 when Banks at the time preferred to transfer physical cash within themselves and customers. According to Graham (2003), payment through electronic means started to gain recognition in 1918 and this was a period when currency was moved for the very first time by through telegraph by the Federal Reserve Bank. This procedure was adopted by several banks in order to help create the awareness of the need to use simple cards that contained cash technically. In 1946, there universal credit card was thought of and introduced by John Biggins who was a banker in Brooklyn, New York. As a marketing strategy, his plan was to introduce by experimentation the provision of credits to the local community where his bank was located. Fie named this method ‘Charge-Iť which enable the patrons of the bank to be offered with credits. This went on for a while until the first and independent credit card was created by the Diners Club International in 1950. It was a universal payment card that had capabilities of settling costs related to travels and entertainment. All these cards were made out of celluloid and cardboard.

The credit card industry experienced a massive growth through influencing various economies and other relevant industries until 1958 when there was the emergence of the American Express (Amex) into the industry. Though established somewhere in 1850, Amex entered the industry with its own product which was a charge card designed to cater for entertainment and travel expenses. This card was very unique as it was purple in colour. Amex later introduced the first card which was made of plastic and much more reliable than the cards that were made of cardboard.


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Penetration Rate of E-Zwich in the Financial Service Industry
A Case Study of Merchants and Users in the Accra Metropolis
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Richard Asante (Author), 2017, Penetration Rate of E-Zwich in the Financial Service Industry, Munich, GRIN Verlag,


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