The Bank of Ghana has revealed that the eCedi, the Central Bank digital currency it intends to issue, will be free of transaction fees for consumers, just like using cash.
Additionally, the banking regulator said in a report on Tuesday that the eCedi was the digital equivalent of the physical cedi by design and as such would not bear interest (i.e. that it has a zero interest rate), just like cash.
Through this approach, the BoG hopes that the eCedi will be a strong competitor to cash, promote competition in the payments market and facilitate the provision of innovative value-added services to individuals and businesses by banks and payment service providers. payment at affordable fees and charges. .
However, the BoG argues that the eCedi model recognizes and takes into account the value added service provided by banks, SDIs and payment service providers to facilitate access and use of eCedi and compensate accordingly .
“In line with the philosophy of liberalizing the Ghanaian financial services sector, BoG does not intend to interfere with the business models of banks, FinTech companies and merchants regarding fees for eCedi-related services” , says the report.
“This approach should promote competition in the payments market and facilitate the provision of innovative value-added services on the back of the eCedi ecosystem.
“However, BoG will ensure that consumers are treated fairly in all aspects of eCedi transactions by ensuring that banks, SDIs, payment service providers and merchants comply with relevant regulations and standards in consumer protection”.
It was not stated in the report whether the proposed Electronic Transfer Tax (E-Levy) will be charged on payments for value-added services offered by vendors.
According to the report, the BoG has designed two types of wallets for eCedi:
• Hosted wallets, ie server-based storage systems operated by financial institutions;
• Hardware wallets, ie secure portable storage devices owned by individuals.
“The most optimal form factor for the eCedi wallet is the smartphone application developed by commercial banks, FinTech companies and other service providers. Other devices can be used depending on the user’s preferences and payment scenarios. These can be smart cards (including biometric ones) or wearable devices such as smartwatches that contain communication capabilities and a secure element,” the report states.
Similarly, debit cards and USSD devices (feature phones) that are associated with the existing payment landscape in Ghana can be adapted for eCedi. Thus, users can obtain the type of wallet that suits their needs from a bank or other financial service provider.
Dealing with unregulated/privately issued digital currencies
The Central Bank recently warned the general public to exercise caution when it comes to cryptocurrency transactions, revealing that no cryptocurrencies are permitted to operate in Ghana’s banking and payments sector. .
Accordingly, the central bank also hopes that the eCedi will also address the risks associated with such unregulated digital “currencies” or virtual assets issued by the private sector.
“The control of Big Tech companies (e.g. Apple, Facebook or Amazon) with respect to the provision of payment services and the issuance of private digital currencies is a significant challenge for regulators today,” the report states. .
“These global private ‘currencies’, as well as locally issued cryptocurrencies, cause a wide range of risks, including monetary, legal, operational, consumer protection, and financial stability. Digital currency issued and guaranteed by the central bank meet the demand for currencies without posing systemic risks”.
The report also ensured that the eCedi balances transaction transparency with consumer data privacy while being fully compliant with Know Your Customer (KYC) and Anti-Money Laundering/Combating the Financing of Terrorism (AML/ CFT).