REGENT UNIVERSITY COLLEGE OF SCIENCE AND TECHNOLOGY

THE ADOPTION OF THE E-ZWICH SMART CARD AS A SUBSTITUTE TO CASH TRANSACTIONS. A CASE STUDY OF REGENT UNIVERSITY COLLEGE OF SCIENCE AND TECHNOLOGY

BY

KONADU, GRACE ASARE (0650207)

A DISSERTATION PRESENTED TO REGENT UNIVERSITY COLLEGE OF SCIENCE AND TECHNOLOGY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF A BACHELOR OF SCIENCE DEGREE IN ACCOUNTING AND INFORMATION SYSTEMS.

DECLARATION I, Konadu Grace Asare hereby declare that except for the references (other peoples work which have been duly acknowledged) this work is a true representation of the outcome of my own research under the supervision of Mr. Emmanuel Hasford. This work has never been submitted either in part or whole for the award of any degree in Ghana and/or elsewhere.

. (Supervisor) Emmanuel Hasford

. (Student) Konadu Grace Asare

Date

Date

DEDICATION All glory and honor goes to God for giving me the strength, health, wisdom and determination to go start and complete this project work. I dedicate this dissertation to my dearest dad and role model, Elder Charles Konadu, for his words of encouragement, tough love, and invaluable advice towards the success and completion of this work.

ACKNOWLEDGEMENT I am indebted to many people whose immense contribution led to the success of this study. I believe my efforts alone will not have been enough to complete this project successfully.

Special appreciation goes to my supervisor, Mr. Emmanuel Hasford, whose insightful comments and guidance encouraged a good write up. I also acknowledge Mr. Albert Akanferi who gave me invaluable assistance during the times that I could not reach Mr. Hasford.

Again, I duly acknowledge and appreciate the various authors especially Mr. Lawrence Attoh whose works served as props to support my research findings.

I also express my profound gratitude to all personalities whose advice, suggestions and contributions helped to make this project work a success especially my family, Mr. Xavier Mensah, Mr. Azumah Mamudu and members of Regent University College of Science and Technology.

ABSTRACT The E-zwich payment system is a national electronic payment system introduced by the Bank of Ghana in conjunction with the then Government of Ghana in 2007 to primarily integrate the various financial institutions into one system in order to ensure safe and fast transfer of funds and reduce if not eliminate cash transactions. The E-zwich smart card was therefore issued through the financial institutions to potential users to enable them instigate cashless business transactions. From personal observations and written articles however, the researcher noticed that the E-zwich smart card was not being used in effecting business transactions. In fact, a recent report showed that only 10% (340,000) of the cards purchased GhIPPS has been issued and that monthly transactions has never exceeded 10,000. The research was therefore conducted to ascertain reasons why the E-zwich smart card has not been accepted as a substitute to cash transactions using members of Regent University College of Science and technology as the case study. The study revealed that 93% of respondents do not use the E-zwich smart card although they own a card. Inadequate point of sale terminals, false negatives, cancellation of transactions mid-way and false balance were the major challenges identified. The researcher therefore recommends free distribution of point of sale terminals, comprehensive and effective real time system, intensive education and orientation programs and a very efficient customer care centre.

Table of Contents DECLARATION .........................................................................................................................i DEDICATION ........................................................................................................................... ii ACKNOWLEDGEMENT ......................................................................................................... iii ABSTRACT .............................................................................................................................. iv LIST OF TABLES ...................................................................................................................... v LIST OF FIGURES ................................................................................................................... vi CHAPTER ONE INTRODUCTION 1.1 Background to the Study 1.2 Problem statement 1.3 Purpose of the Study 1.3.1 Main Objective 1.3.2 Specific Objectives 1.4 Research Questions 1.5 Scope and Limitation 1.6 Significance of the Study 1.7 Organization of the Study 1.8 Profile of Regent University College of Science and Technology CHAPTER TWO LITERATURE REVIEW 2.1 Background to Cashless Transactions 2.2 Types of Cashless Transactions 2.2.1 Card Media 2.2.1a Credit Card 2.2.1b Debit Card 2.2.2 Communication Media 2.3 Cashless Transactions in Ghana 1 1 1 3 3 3 4 4 4 5 5 6 8 8 8 9 9 10 10 10 11

2.4 The E-zwich Smart Card 2.5 Benefits of the E-zwich Smart Card 2.6 Challenges of the E-zwich Payment System 2.6.1 Inadequate Point of Sale Devices 2.6.2 False Negatives 2.6.3 False Balance 2.6.4 High cost of Point of Sale Device 2.6.5 Cancellation of Transactions Mid-way 2.7 The Future of E-zwich Payment System 2.8 Conclusion CHAPTER THREE RESEARCH METHODOLOGY 3.0 Introduction 3.1 Study Population 3.2 Study Sample 3.3 Data Collection Methodology 3.3.1 Sampling Techniques 3.3.2 Data Requirements 3.3 Research Tools 3.4 Data Analysis CHAPTER FOUR DATA ANALYSIS, INTERPRETATION AND CONCLUSION 4.1 Personal Information of Respondents 4.1.1 Age 4.1.2 Occupational status 4.2 Usage of the E-zwich Smart Card 4.2.1 Proportion who own an E-zwich Smart Card

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4.2.3 Proportion that have money on their E-zwich Smart Card 4.3 Proportion of Income Placed on the Card 4.4 Frequency of Usage of the E-zwich smart Card 4.5 Challenges associated with the use of the E-zwich Smart Card CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION 5.1 Summary and Conclusion 5.2 Recommendations REFERENCES APPENDIX: QUESTIONNAIRE LIST OF TABLES Table 1: Age of Respondents Table 2: Proportion who own an E-zwich Smart Card Table 3: proportion who have money on their E-zwich Smart Card Table 4: Proportion of Income Place on the E-zwich Smart Card LIST OF FIGURES Figure 1: Graphical Representation of Respondents Occupational Status Figure 2: E-zwich smart Card holder who Have money on their card Figure 3: Frequency of Usage of the E-zwich Smart Card Figure 4: Challenges Associated with Usage of the E-zwich smart Card

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CHAPTER ONE INTRODUCTION 1.1 Background to the Study For some time now, Ghana just like any other developing economy has been known to be a cashbased economy. That is, using cash in effecting day to day business transactions. Although the introduction of the banking sector led to a proportion of transactions being done via the use of cheques, payment order, etc, a very high proportion of transactions are still being facilitated by cash. Cash is preferred because of its ability to facilitate immediate transactions, zero financial costs incurred in the use of the notes and coins as against the banking form of payment which involves a ledger fee for transactions effected; and confidence people have in cash due to its long historical usage. However, the use of cash had its associated disadvantages. Such that, a longer time is spent in counting and verifying cash, cases of theft and loss of cash escalated over an increasing rate and inconveniences associated with transactions involving lower denominations which inadvertently leads to an increase in inflation. For instance, after the redenomination of the cedi in 2007, the price of sachet water rose from 300 cedis-equivalent to the current 3 Ghana pesewas to 500 cedis-equivalent to the 5 Ghana pesewas (40% increase) due to reluctance by the Ghanaian public to accept the 1 Ghana pesewa coin which consequently led to a shortage in the denomination. Furthermore, printing of the notes and coins for use by the public involved very high financial consequences. According to a report published in The Daily Dispatch on 15 th June 2007 by Ben Ephson and Kwamina Kum, the estimated cost of printing due to the redenomination of the cedi was US$39,760,000.00 (GH57,652,000.00). This and many other
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reasons sped up the need to introduce a system that is secure, cost effective and very user friendly. Thus, after several months of deliberations between the government of Ghana and the Bank of Ghana, a decision to introduce a national electronic payment system was born. E-zwich is an electronic payment system launched in 2008 with the primary aim of promoting branchless banking and financial inclusion. It provides a common electronic platform linking the payment systems of all licensed banks and non-bank financial institutions in the country. It also enables loading and spending of electronic cash which allows users the opportunity to make use of the card to transact business offline in underdeveloped areas where communication infrastructure and power may be lacking. One of the expectations of the Bank of Ghana after its introduction was that it (E-zwich) will reduce cash transactions and encourage savings by the average Ghanaian in the long run. Thus, increasing the current population signed on to the banking sector by a margin of 20%. Therefore, the Central Bank issued directives to all registered financial institutions to integrate all existing switches into the E-zwich as well as issue smart cards to their customers as part of efforts to facilitate the smooth implementation of the national payment system by June 27 2008. The E-zwich smart card has all the features of cash. Some of its features are: it is durable, portable, divisible and has the added advantage of being more secured as compared to cash due to the use of the fingerprint as the only method of authenticating payments when using the smart card. To use the E-zwich card to make purchases, the merchant (seller) must have an E-zwich point of sale device which can be used to check the authenticity of the card with respect to ownership and availability of electronic cash, receive payments and issue receipts.

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1.2 Problem Statement The euphoria generated by the introduction of the E-zwich led to mass registration of potential users and distribution of the E-zwich smart card. However, as time went by and the euphoria waned off despite intensive advertisement, the number increased at a decreasing rate. The number of E-zwich smart cards purchased by the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS) the managers of the E-zwich system was a whooping three million out of which only 340,000 (about 10%) have been issued. Also, monthly transactions via the use of the E-zwich smart card have never exceeded 10,000 despite the circulation of more than 3,000 point of sale terminals (Business News, February 2010). In contrast, GBC, a private consumer smartcard company in Hungary managed to deploy 17,000 point of sales and process 8 million transactions a month during the first phase of their operational strategy. As stated by Samuel Appiah in his article published in The Mail Whoever thought of making Ghana a cashless or near cashless state with the introduction of the E-zwich smart card last year might have had good intentions, but good as they may have been, those intentions have come unstuck. This brings about the question as to why after three years the E-zwich payment system has not been able to drastically reduce if not eliminate, cash transactions in the Ghanaian economy. At this rate, the system that was expected to be a national asset may end up as a white elephant just like other government projects. 1.3 Purpose of the Study 1.3.1 Main Objective

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To examine why the E-zwich smart card has not been accepted as a substitute to cash transactions. 1.3.2 Specific Objectives 1. To determine the proportion of members of Regent Ghana who use an E-zwich smart card. 2. To determine the proportion of income that is placed on the E-zwich card. 3. To determine the frequency at which the E-zwich smart card is used in effecting business transactions. 4. To determine the challenges associated with the use of the E-zwich card. 1.4 Research Questions 1. What is the proportion of members of Regent Ghana who use an E-zwich card? 2. What is the proportion of income that is placed on the E-zwich card? 3. What is the frequency at which the E-zwich smart card is used in effecting business transactions? 4. What are the challenges associated with the use of the smart card? 1.5 Scope and Limitation Although reaching a more objective conclusion at the end of this study should involve consideration of the views of the financial institutions and various organizations that will own a point-of-sale device involved in the E-zwich system, the study will be limited to the users of the card specifically in the tertiary sector of Ghanas educational system. This is due to the fact that,

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staff in the form of lecturers and supporting staff; and students in different age groups are represented there. The study will however be limited to members of Regent University College of Science and Technology (students and staff) due to constraints in the form of time and financial resources. 1.6 Significance of the Study The study is important because it will serve as an eye opener as to reasons why the E-zwich smart card with its several benefits has not been able to drastically reduce cash transactions from the Ghanaian economy. Also, considering the fact that the accounting department of every organization is responsible for the management of financial transactions in that organization, information derived from the study can serve as a factor to consider in deciding whether or not the E-zwich smart card should be used as a control tool in managing cash which is the most fragile asset of every organization. Finally, it can be used as a source of reference for further research relating to the subject in academia. 1.7 Organization of the Study The study has been organized into five chapters. Chapter one gives a general introduction to the study. It discusses the background to the study, the statement of the problem, the study objectives, the significance of the study, and the scope and limitation of the study. Chapter two seeks to address scholastic articles relating to the study in the form of literature review. Sub-headings relating to electronic payment definitions, various types of electronic payments, E-zwich, etc. will be analyzed.
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Chapter three looks at the methodology, analysis, interpretation of data techniques used for the collection of data and a description of the population (Members of Regent-Ghana). Chapter four seeks to address the presentation of the findings and analysis and interpretation of data collected. Chapter five summarizes the findings, draws conclusions and makes recommendations with regards to the study. 1.8 Profile of Regent University College of Science and Technology Regent University College of Science and Technology (Regent Ghana) is a private tertiary institution in Ghana that was incorporated in 2003 and officially inaugurated in June 2005 by the then Minister of Education. It was founded by Professor E. Kingsley Larbi who also pioneered the establishment of Central University College also in Ghana. The school has four campuses spread across Accra namely; Trinity Campus, Kings Campus, City Campus and Roquah Campus. Lectures are spread across the four campuses which ensure continuous socialization of the students and lecturers in different departments and schools. Current student and faculty population is approximately 1200 and 80 respectively. The institution has two main schools comprising several departments that offer a variety of undergraduate courses. These are; School of Business and Economics which adopts a multidisciplinary approach in the study of business related courses with computing, and School of Informatics and Engineering which was established as a pacesetter institution in Ghana to provide high quality and ICT-based university education bearing in mind the developmental and technological needs of the African continent. Several courses are also offered at the post graduate level.
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The University is currently affiliated with the following universities; Kwame Nkrumah University of Science and Technology (Ghana), Maastricht School of Management, Deggendorf University of Applied Science, Wheelock College, Acadia University, Lulea University and Dalton State College.

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CHAPTER TWO LITERATURE REVIEW This chapter reviews literature (theoretical and empirical) relevant to the study. Areas of review include background to cashless transactions, types of cashless transactions, cashless transactions in Ghana, the E-zwich smart card, challenges of the E-zwich payment system and measures taken to curb these challenges by the GhIPPS. 2.1 Background to Cashless Transactions The vending adage, No cash, no purchase is now being replaced by No cash, no problem! (Attoh, 2008). Over the past decade, Africa and indeed the world as a whole has experienced major innovations in payment systems due to advancements in computer technology and deregulation of financial markets. The innovations have brought about various alternatives to cash for transacting business. Now, individuals have a wide range of payment instruments to choose from such as credit cards, debit cards, cheques, electronic cash cards and to some extent, mobile phones (Banda and Mdwazika, 2007). Therefore, cashless transactions is the payment of goods and services using an acceptable electronic debit or credit card, mobile phones, cheques and other devices that do not involve the use of cash or physical money. With the developed economies already leading in the use of card payment systems, widespread interest in expanded opportunities for cashless transactions are beginning to become more prevalent in the rest of the world (Kasavana, 2004). According to Kasavana (2004) and Banda (2007), the slow rate of the

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adoption of cashless transactions in the past can be attributed to customer reluctance to use cards for small dollar (low value) transactions, lack of operator experience with new technology, perceived high costs, users attachment to the use of physical cash and zero costs incurred in using cash from the users perspective. These concerns have obviously been laid to rest as evident in the recent escalation in the use of cashless media such as pay-at-the-pump for gasoline, speed pass purchasing and most recently the adoption of credit and/or debit cards acceptance at restaurants. From a vendors perspective, the cost of hardware, software and transaction processing errors have declined to make cashless transaction a much more appealing option. In fact, a report by Nilson (2003) states that credit card transactions are expected to be one of the growth areas for the payment processing industry in the United States. According to the report, economists point to the fact that credit card transactions volumes doubled between 1992 and 1998. In 2003, credit and debit card payments exceeded cash payments for the first time; thereby rendering card purchasing the preferred payment method of US customers. This trend is predicted to accelerate with credit purchases growing at a rate of 7% per annum and debit transactions expanding at the unprecedented rate of 21% annually (Kasavana, 2004). 2.2 Types of cashless transactions The payment of goods and services in cashless transactions can be done using the card media, the communication media such as mobile phone and the internet. Ideally, stakeholders seek a cashless medium that is secure and can be used to complete transactions at the same time as (or faster than) cash transactions. 2.2.1 Card media

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There are a variety of card products that can be used to complete cashless transactions. The more obvious examples of card media are debit card and credit card.

2.2.1a Credit card A credit card is a thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size that contains identification information such as signature or picture and authorizes the person named on it to charge purchases or services to his account- charges for which he will be billed periodically. In other words, it represents an established credit line against which payments are deferred through creation of a loan from a sponsoring financial institution. Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase. It is the main means of conducting cashless transactions in the United States from a study conducted in 2005 due to its widespread acceptance (Briones and San Jose, 2005). 2.2.1b Debit Card The word debit in accounting means to subtract. Therefore, the debit card is an electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services (investopedia.com, 2010). This removes the hassle of clients going to the bank to join long queues just to make withdrawals as they can just go to an ATM or pay electronically at merchant locations. A debit card may be an ATM card, check cards and a combination (check and ATM) card. It is considered to be a convenient and more secured form of payment as a code is necessary to access the account funds, while checks can be easily stolen.

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2.2.2 Communication media The use of mobile phones in transacting business is gradually becoming a very popular means of cashless transactions especially among the developing economies whose citizen database is still an issue. M-Commerce (or mobile commerce) is any transaction involving the transfer of ownership or rights to use goods and services which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device (Tiwari and Buse, 2007). Simply put, it is the act of transacting business using the mobile phone without exchanging physical cash. 2.3 Cashless Transactions in Ghana Business transactions in Ghana are gradually evolving from the once exclusively cash-based transactions to the adoption of cashless media of business transactions. Since the introduction of the banking sector, there has been several cashless media that has been introduced. It is however necessary to state that the banks have not been the only sector to introduce cashless media innovation as several NGOs and telecommunication industries like MTN and Airtel are also generators of some cashless media. The use of checks as a means of payment of goods and services began almost immediately after the introduction of the banking sector. These checks however were/are being used for the payment of more expensive purchases rather than small purchases. Thus, it had almost no influence on the cash-based economy of Ghana. The first attempt at initiating an innovative medium of cashless transactions was the introduction of sika card by SG-SSB formerly SSB. This card which was similar to a world-wide smart card was expected to reduce dependency on physical cash as it will be used for payments of
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goods and services as well as debiting for cash at designated merchant point (Ghana web, 17th May 1997). However, this card was only used by Ghanaians as a tool for retrieving cash and debiting their accounts. Currently, there are countless number of cashless media in Ghana. The telecommunications industry in Ghana, specifically MTN and Airtel, previously Zain, have introduced some cashless media that is being patronized by Ghanaians. These are the MTN MobileMoney and Airtel Money. MTN MobileMoney and Airtel money are a cash management service available on the mobile phone or internet. They are about facilitating money transfer for the Ghanaian market. However, the service can also be used for the reloading of airtime units and for payment of utility bills, goods and services (All about Airtel Money, 2008). These services are provided to MTN and Airtel subscribers in conjunction with banks and operated through authorized Merchants who will facilitate the service on behalf of the partner banks. Although these products could have made a great impact as a cashless media, Ghanaians are reluctant in using these media as they still make physical purchase of MTN or Airtel airtime and payment of utility bills even though a whopping 50% extra bonus can be enjoyed by using the MTN MobileMoney to buy airtime ((What is MobileMoney, n.d.). Justification for this reluctance is unknown since the study was not focused on these cashless media. ProCredit Ghana (2007), Bank of Ghana and other banks in Ghana are also into discussions about the implementation of the use of credit transfers in Ghana for the payment of utility bills, school fees and all other bills. This medium, according to ProCredit, will be faster, convenient and reliable.
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Another product by a financial institution in Ghana is Mondex by Ghana Commercial Bank-a smart card that was expected to be used for the purchase of goods and services but was discontinued due to low patronage. Total Tomcard is the first and only fuel re-chargeable card on the Ghanaian market (Introducing our Tomcard, n.d.). It is a smart fuel card such that it is a secure mode of payment and enables customers to control their fuel expenditure. With the Tomcard, a customer can purchase fuel, lubricants, items in the bonjour shops and other products and services available in Total service stations equipped with the Tomcard facility. This cashless media has received so many great reviews that according to a report by Lawrence Attoh (2008) 51.4% of the Tomcard users strongly agree with the convenience associated with its usage. Other cashless media are the Point of Sale payment system by Womens World Banking Ghana, ATM Visa electronic cards by several banks such as Standard Chatered Bank and the E-zwich smart card. 2.4 The E-zwich Smart Card With the recent upsurge in the number of cashless media being introduced into the economy, the then government of Ghana in association with the Bank of Ghana, the regulator of the banking and financial sector, decided on the need to introduce a national payment system that can serve as a means of changing the cash-based system of Ghana to a cashless society in the long run. This led to the rolling out of the E-zwich, a national payment and settlement system that creates an electronic clearing house for all banking and financial institutions, as well as a biometric card which is a very secure way of paying for goods and services. This smart card anchors a biometric identification technology that allows card holders to perform business and financial transactions
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such as fund loads and transfers, and payment for goods and services including bills, both offline and online (Hesse, 2008). This biometric identification technology that uses the fingerprint only as an authentication identity reduces the need to use figures for this same purpose.

In its first year of operation, the E-zwich system has made significant progress, considering the usual teething problems of attitudes to the adoption of new technologies. At present, there is a nationwide interoperability among all participating institutions with a total of 200, 177 client cards issued to bank customers.

Additionally all 26 universal banks have E-zwich available on average to 70% of their branches while 7 out of 14 savings and loans companies, 59 out of the 146 community and rural banks, and 94 out of the major post offices in the country have all been hooked onto the electronic platform. Instructively, six banks have completed and have in operation technology that enables their customers to access cash in their traditional bank accounts electronically at any point of sale device (Nonor, 2009).

To get access to the E-zwich smart card, a person does not need to be an account holder of a bank since the card acts as a bank account. A valid photo identity such as a voters identity card, drivers license or passport is needed in opening the E-zwich account. The process takes between 5 and 10 minutes during which the all ten finger prints of the person are taken. This enables the card holder to use a different finger for authentication if one is not recognized. Also, loading and re-loading of funds onto the card can be at any bank, rural bank or savings and loans company branch irrespective of which financial institution issued the card. The holder can furthermore perform a balance enquiry at any E-zwich point of sale terminal or ATM anywhere in the

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country. Should the card get missing there is no need to panic since the electronic money cannot be accessed without the owners fingerprint authorization (E-zwich FAQ, 2008).

2.5 Benefits of E-zwich Smart Card It is easier to obtain an E-zwich card than a traditional account since all one requires is ones fingerprints and a valid photo identification It can perform all the functions of physical cash since it is a national project by the Bank of Ghana. Unlike other ATM cards issued by the various banks, the E-zwich card is compatible with the ATM of all banks as well as with any E-zwich point of sale terminal due to the integration of all bank switches into the E-zwich payment system. A cardholder can perform all transactions associated with a traditional bank account: paying for goods and services, money transfers, cash withdrawals, bill payments, and receiving salaries and pensions at any E-zwich POS terminal in Ghana. In the words of David A. Hesse, In introducing the E-zwich, Ghana has taken the global lead in electronic clearing and payment system and, coupled with a resilient economy which has weathered the global energy and food crises, business prospects have never been brighter. With the discovery of oil, Ghana is about to lay claim to her rightful place as the business and financial hub of Africa. 2.6 Challenges of The E-zwich payment system
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2.6.1 Inadequate Point Of Sale Devices The issue of inadequate point of sale terminals is perhaps the most pressing challenge of the Ezwich payment system. According to Opanin Kwabena Mensah in his article; E-zwich, Another White Elephant? he states that many of the challenges (encountered in the E-zwich) have come as a result of the difficulty in getting access to Point of Sale (POS) devices,. Although a measly 340,000 cards has been issued out of 3 million cards purchased in advance by GhIPSS, only 3000 POS terminals have been successfully deployed to match these cards issued (E-zwich becoming a Colossal Waste of Resources?, 2010). This obviously poses the challenge of difficulty in accessing a POS terminal if a card holder wants to make purchases with his or her smart card since the ratio of a terminal to the smart cards is 1 is to 113 cards. 2.6.2 False Negatives A false negative means that the system after reading the fingerprint returns a message that they are not the true owners of the card. This is another problem that is having an adverse effect on the use of the E-zwich smart card. Such that, the biometric identification technology employed does not allow use of the card without authentication by the owner via use of the fingerprint. Thus, if the owner is being portrayed by the system as a fraud, it brings about inconvenience and a momentary feeling of embarrassment. This according to a column of peacefmonline.com has led to the unattractiveness of the system in the eyes of these card holders. 2.6.3 False Balance The issue of the point of sale device displaying a balance that does not reflect the true balance of the card is reported another challenge as stated by Opanin Kwabena Mensah. This technical discrepancy is termed as false balance as the balance is either more than the holders true balance
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or less than his or her balance. Usually however, the false balance is lesser than the card holders true account balance. This also causes an inconvenience as planned purchases are not fully undertaken due to this challenge.

2.6.4 High Cost of Point of Sale Device This is another challenge hindering the success of the E-zwich smart card. It is no wonder that only about 3000 of these devices has successfully sold. In a statement by Archie Hesse to Luv fm in relation to the unavailability of the Point of Sale terminals he said one of the issues they (Ezwich merchant and retailers) keep talking about is the exorbitant cost of the Point of Sale device. This challenge makes the card look like mere plastic in the wallets of holders since the merchants and retailers are not willing to part with money they dont really have for a point of sale device. 2.6.5 Cancellation of Transactions Mid-way In the course of processing a transaction, there have been reports that it gets cancelled, sometimes repeatedly, before it eventually completes the particular transaction. This undermines the expected benefit of the E-zwich card being able to reduce the time incurred in undertaking business transactions using physical cash. This, according to Kwabina Mensah, usually occurs when an internet connection is unavailable even though the promoters claimed that the E-zwich point of sale devices comes with the functionality to transmit data via GPRS even when there is no internet connectivity. 2.7 The Future of the E-zwich Payment System

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In order to reduce if not eliminate these challenges, GhIPSS have come up with policies to aid in reviving the interest of Ghanaians in the E-zwich payment system such as allowing card holders who keep an active E-zwich account to earn interest on the money kept in the account, intensifying education especially in the rural areas, installing the point of sale devices free of charge in some strategic institutions like the educational sector for a year and, in the words of Archie Hesse with respect to the measures being undertaken to encourage purchase of the point of sale devices; One of them (measures) is to pay for it (point of sale) over a three-year period, either an arrangement with their bank or through GhIPSS. On July 22nd 2010, a story titled Metro Mass Transit accepts E-zwich on peacefmonline.com revealed that commuters who use the Metro Mass Transit buses will now be able to pay fares using the E-zwich cards starting august 2010. However, these so called policies have done little if not nothing at all to encourage usage of the E-zwich smart card. In fact, as at January 2011, commuters are still paying cash when using the Metro Mass Transit buses. It is however important to note that the Ezwich card as a medium for money transfer is the it thing among public tertiary students as the volume of transactions recorded on four university campuses (University of Ghana, Institute for Professional Studies, University of Cape Coast and Kwame Nkrumah University of Science and Technology) account for 25% of the value of transactions on the ATMs across the country (Business News, 26th February 2010). Although this means good news for electronic funds transfer, it does nothing to eliminate cashless transactions as these students are using the ATMs and smart cards to receive funds and withdraw cash for business transactions. 2.8 Conclusion

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Obviously, the E-zwich payment system will serve a giant purpose for the Ghanaian economy if enforceable tactical and strategic plans are put in place. If not done, the project will end up a white elephant just like several other government initiated projects that have cost the country several millions of Ghana cedis.

CHAPTER THREE RESEARCH METHODOLOGY

3.0 Introduction This chapter consists of the description of the study population, sample, analysis and interpretation of data techniques used in the collection of data. 3.1 Study Population The study was conducted among Ghanaians since the E-zwich payment system is a national project. However, the study focuses on members of Regent University College. Therefore, the study population was all members of Regent University College in the form of lecturers, supporting staff and students who are approximately 1,280. 3.2 Study Sample Sample for the study was eighty (80) of the entire membership of Regent University College. Since the institution has four campuses spread across Accra, participants were chosen at random on the various campuses to partake in the study.
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3.3 Data Collection Methodology 3.3.1 Sampling Techniques The researcher employed cluster sampling and random sampling for the study. The cluster sampling was employed for the study knowing that Regent University College has four campuses and therefore, information will have to be derived from each of the four campuses to prevent bias. The simple random sampling technique was also employed on the various campuses because it gives each member of the population an equal chance of being selected for the study. 3.3.2 Data Requirements The study used both primary and secondary source of data. Primary data was derived from the participants in the form of the members of Regent University College. The secondary data was derived from journals, books, World Wide Web, Regent University College files and unpublished articles. 3.3 Research Tools The main tool used for the collection of primary data was questionnaires. The questions were semi-structured; containing both closed ended questions and open ended questions. The closed ended questions provided respondents with options to choose from as answers whiles the open ended questions allowed the respondents to give their own opinions and/ or answers. This technique (semi-structured) helped to keep the study focused on its primary objectives whiles allowing respondents to provide desirable answers that answers the research questions.

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Retrieval rate of questionnaires that were administered was 100%. Such that, all the questionnaires distributed were answered and returned. Another tool used for data collection was interviews. However, this was used to guide respondents in answering the questions on the questionnaires.

3.4 Data Analysis Data gathered from the field survey was analyzed using Statistical Package for Social Sciences (SPSS) software and Microsoft excel spreadsheet (2007). The SPSS was used for data transformation, running of cross tabulation, percentages and ratios while the Microsoft excel was used for designing bar graphs, histograms and pie charts.

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CHAPTER FOUR DATA ANALYSIS, INTERPRETATION AND PRESENTATION This chapter presents the background of respondents, findings of the study, as well as the discussions from the field survey. 4.1 Personal information of respondents. In order to get some background information about the respondents, questions about their age and occupational status were asked. Below are the results received in relation to their background information. 4.1.1: Age Table 1: Age group 20-29 30-39 40-49 50-59 60 and above Age of Respondents Frequency 60 15 5 0 0

Percentage 75% 18.75% 6.25% 0 0

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Total

80

100%

Source: Field survey, December 2010 As indicated in the above diagrams, majority of the respondents in this study were those in the 20-29 age group representing as much as 75% of the total sample. The second highest was the 30-39 age group (representing 18.75%) and the third highest was the 40-49 age group. The other group had no representation in the sample. This does not necessarily mean that that age group does not exist in Regent University College but may be due to the fact that the their total population was so small that as at the time of the random sampling, none of them was represented. 4.1.2: Occupational status Figure 1: Graphical representation of Respondents occupational status

Occupational status
13.75%
7.50% 43.75% 10% 25% Student Working student Lecturer Administrative staff other

Source: field survey, December 2010 From the above diagrams, it can be seen that almost half the total sample (43.75%) are full time students. Working students make up 25% of the total sample. Lecturers and administrative staff
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interviewed in the course of the study make up 10% and 7.5% respectively of the total sample. Others in the form of teaching assistants, security personnel and cleaners make up 13.75% of the total sample. 4.2. Usage of the E-zwich smart card In order to answer the research question as to the proportion of regent members who use an Ezwich card, respondents were asked whether or not they own an E-zwich smart card, how long they have owned the card and whether they have money on their E-zwich smart card. Below are the graphical representations and tables of the responses received from the field survey. 4.2.1: Proportion who own an E-zwich smart card. To measure the proportion of regent members who own an E-zwich smart card the study used Yes and No as the options from which the respondents can choose from in answering the question Do you own an E-zwich smart card? Table 2: Proportion of members of Regent Ghana who own an E-zwich smart card. Responses Yes No No response Total Frequency 60 19 1 80 Percentage 75% 23.75% 1.25% 100%

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The diagrams above show the result accumulated from the field survey with respect to whether or not the respondent owns an E-zwich smart card. From the responses received, 75% of the respondents answered yes when asked if they have an E-zwich smart card, 23.75% answered no. One respondent representing 1.25% of the total sample gave no response to the question due to lack of knowledge about the E-zwich payment system.

4.2.2: The proportion of members of Regent University who have money on their E-zwich card. To measure the proportion of members of Regent University who have money on their E-zwich card, the respondents were asked a close ended question about the above subject with the options to chose from being Yes and No. Where the respondent answered to No to subject 4.2.1, they were asked to write N/A (not applicable). Table 3: proportion who have money on their E-zwich smart card. Response Frequency Percentage Yes No No response Total 5 55 20 80 6.25% 68.75% 25% 100%

From the above diagram, it can be clearly seen that approximately 6% of the respondents answered Yes when asked if they have money on their E-zwich smart card. More than 68% of the respondents however answered No to the same research question. The remaining 25% gave
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no response to the question. This was due to the fact that the question was a conditional one. Such that it implied that if they answered yes to having an E-zwich card, then do they have money on it? Therefore, those who answered no to whether they have an E-zwich smart card left this question unanswered. Below is a diagrammatic representation of this data.

Figure 2: E-zwich smart card holders who have money on their card.

100% 80% 60% 40% 20% 0% 91% No

Yes
9%

E-zwich smart card holders who have money on their card

It can be seen from the above diagram that 91% of the respondents who answered yes to having an E-zwich smart card have no money on the card. The remaining 9% however have money on their smart card. 4.3: The proportion of income placed on the E-zwich smart card

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This was aimed at finding out the proportion of the respondents total income that is placed on the E-zwich smart card. The options available in the questionnaire and the responses received are shown below. Table 4: Proportion of Income placed on the E-zwich Smart Card Income proportion Frequency Percentage 0% 1-20% 25-40% 45-60% 65-80% 85-95% 100% No response Total 74 5 0 0 0 0 0 1 80 92.5% 6.25% 0 0 0 0 0 1.25% 100%

Source: field survey, December 2010 The diagram above indicates the results of the field survey in relation to the proportion of income placed on the E-zwich smart card. It can be seen that more than 90% of the respondents do not place any proportion of their income (0%) on their E-zwich smart card. The respondents whose proportion of income placed on the E-zwich smart card fall between 1-20% make up about 6% of the total sample. No respondent placed more than 20% of their income on the E-zwich smart card. One respondent gave no response which makes up about 1% of the total sample. 4.4: Frequency of the E-zwich smart card usage

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To determine the frequency at which the E-zwich smart card is used, the respondents were asked how often they use the E-zwich smart card. The responses received in relation to the options given are as shown below:

Figure 3: Frequency of usage of the E-zwich smart card

Usage of the e-zwich smart card

Daily Weekly

Monthly
Every six months 92.50% Yearly

Never
No response

As expected, the same proportion that had 0% income proportion on their E-zwich smart card answered Never when asked how often they use the card. Out of the five respondents who have a proportion of their income on the E-zwich smart card (1-20%), two (2.5%) use the Ezwich smart card on an average of every six months. One respondent (1.25%) uses the card monthly and the final two (2.5%) use the card on a yearly basis. One respondent gave no response to the question.
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4.5:

Challenges associated with the use of the E-zwich smart card.

This was aimed at determining the challenges facing users of the E-zwich smart card. Although a small proportion of the respondents placed money on their smart card as at the time of the survey, it was made known to the researcher via means of face to face interaction with the respondents that some of the challenges listed below were responsible for their refusal to use the E-zwich smart card. Below are the challenges compiled from the survey and their frequency:

Figure 4: Challenges associated with the use of the E-zwich card

Challenges
12.50% 12.50%

0%

Inadequate point of sale devices

False negatives
31.25% Cancellation of transactions mid-way False balances No challenges

98.75%

Almost all the respondents (98.75%) reported that inadequate point of sale devices or terminals is a major challenge in transacting business using the E-zwich smart Card. 31.25% also reported false negatives as a major challenge. A false negative means that the terminal after reading the fingerprints returns a message that they are not the true owners of the card (AfricanLiberty.org). 10% of the respondents reported false balances and cancellation of transactions mid-way as another challenge. False balance means the terminal reports a balance that is either less or more than the true balance of the card holder. No respondent reported not having any challenge.
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CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS This chapter summarizes the major findings from the analysis of data interpretations, conclusions from the study and the necessary recommendations towards the prospects and growth of the Ezwich payment system in Ghana. 5.1 Summary and Conclusion The study was conducted to determine why the E-zwich smart card has not been accepted as a substitute to cash transactions in the Ghanaian economy with prime focus on the members of Regent University College of Science and Technology (Regent-Ghana). Eighty respondents who are members of Regent-Ghana were engaged in the study. These members were in the form of lecturers, students, administrative staff, working students and others. The respondents, spread across the four campuses of the institution were chosen randomly on the various campuses. The study was conducted to answer the following research questions:

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1. What is the proportion of members of Regent Ghana who use an E-zwich card? 2. What is the proportion of income that is placed on the E-zwich card? 3. What is the frequency at which the E-zwich is used in effecting business transactions? 4. What are the challenges associated with the use of the smart card? 5. Are there any recommendations in relation to the study? In the course of the study however, other research questions were also addressed that aided in answering the above research questions. These questions were: 1. What is the proportion of members of Regent Ghana who own an E-zwich smart card? 2. What is the proportion that has money on their E-zwich smart card? 3. What is the perception of members of Regent Ghana about the necessity of the introduction of the E-zwich smart card? From the study, it was revealed that 75% of members of Regent-Ghana own an E-zwich smart card. The members who do not own an E-zwich smart card (24%) reported via face to face interaction that it either got missing and they did not find it necessary to replace it or they discarded it because they were not making use of it. The remaining 1% of members of RegentGhana however do not know about the E-zwich payment system as at the time of the survey. This therefore implies that adequate advertisement was conducted by the Bank of Ghana and GhIPPS. It was also revealed that about 91% of members of Regent Ghana who own an E-zwich smart card do not have money on the card. Thus, the card meant to be used primarily for business transactions is just another item in their purses and wallets. The remaining 9% who do have
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money on their card however, place a measly percentage of between 1 and 20% of their income on the card. Therefore, the proportion of members of Regent Ghana who use an E-zwich smart card is just 9% with 1-20% being the range of their proportion of income placed on the card. This inadvertently goes to prove that the E-zwich smart card has not been accepted as a substitute to cash transactions. Furthermore, the study aided the researcher to determine the frequency at which members of Regent-Ghana transact business using the E-zwich smart card. It was determined that about 93% of the members never use the E-zwich smart card. The highest rate of usage is on a monthly basis but this is being undertaken by just 1% of the total population. 2.5% of the population uses the E-zwich card every six months whiles another 2.5% use the card on an average of once every year. This in effect goes to emphasize the previous paragraphs conclusion that the E-zwich smart card has not been accepted as means of undertaking business transactions. Although about 90% of the members of Regent-Ghana expressed belief that the introduction of the E-zwich payment system was necessary and acknowledged that there are so many benefits that can be derived from its usage, they responded that the challenges associated with the use of the card far exceeded its benefits. Almost all the respondents reported inadequate point of sale devices as the basic challenge faced when using the E-zwich smart card. According to the respondents when they initially held the card, their expectation was to walk into any shop and make purchases with the card but as time went by and the point of sale terminal proved to be scarcer, they either stopped using it or used it as and when they get access to the terminals.

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A false negative means that the terminal after reading the fingerprints returns a message that they are not the true owners of the card. This situation proves to be a very embarrassing and awkward moment for some of the card holders. In fact, as much as 31% of members of Regent-Ghana reported encountering this challenge. Cancellation of transactions mid-way is the challenge that reported the third highest frequency. 10% of the members of Regent-Ghana claimed that in the course of transacting payments with the card, the process stopped abruptly and the whole process had to be repeated-sometimes more than once- before completion. This in effect tends to waste their time which could have been used for other activities and thus, belittling the expectation of the E-zwich card to minimize time used in transacting business. A false balance is the situation where by the terminal after authentication displays a balance either less or more than the actual balance of the card holder.

This challenge ties up with the previous challenge in terms of frequency. Usually however, the balance is less than the actual balance of the card holder. This tends to create inconveniences since they may not get to buy as much as they expected to. 4.2 Recommendations

In order to ensure rapid growth rate of the E-zwich payment system which inadvertently will gear the Ghanaian economy towards the realization of its dream of becoming a cashless economy, the researcher has put up the following recommendations based on the findings of the study; 1. The E-zwich point of sale devices should be distributed freely to the traders and merchants as soon as possible. Although this will mean another huge cost burden to the

41

government, the long term benefits will eventually exceed the cost incurred in making the project a success. 2. An efficient and effective customer care centre should be established. This centre will then ensure that whatever technical hitches that may occur will be sorted out immediately when reported either by coaching the merchant through the procedure of rectifying the problem or working on the problem themselves from their centre without necessarily going to the domicile of the complainant. 3. A comprehensive and effective real time system should also be developed in order to eliminate the inconveniences associated with encountering false balances. 4. The government, policy makers and concerned groups should embark on an intensive educational and orientation campaign about the use of non-cash payment systems, its benefits and also eliminate the traditional ideology that holding cash makes one rich. REFERENCES Accra Daily Mail (2010), E-zwich Roll out Plan Revised in Ghana. Retrieved from www.mweb.com on December 28th 2010. Ahovi K. (2009), The rising fortune of E-zwich. Retrieved from www.kofiahorvonline.com on January 10th 2011. All about Airtel Money (2008), Attoh L. (2008), Prospects and Challenges of Cashless Transactions. The case of Total TomCard.

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Campuses record high volume of E-zwich ATM transactions retrieved on November 28th 2010 from http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=198278. Daily Graphic (2008), Will E-zwich improve banking in Ghana? Retrieved from www.ModernGhana.com on January 5th 2011. Daily Guide (2010), Metro Mass Transit Accepts E-zwich. Retrieved from www.peacefmonline.com on January 10th 2011. Gorka B., Christina S. J. (2005), the reasons behind the United States reliance in Checks: a proposal towards cost efficiency. http://www.stern.nyu.edu/om/courses/ofs/checks_briones_sanjose.doc. Retrieved on the 24th of January 2008 Hesse D.A. (2009), The E-zwich electronic clearing and payment system. Retrieved on October 20th 2010 from http://www.iflr1000.com/LegislationGuide/192/The-E-zwich-electronic-clearingand-payment-system.html IMANI Center for Policy and Education (2010), E-zwich becoming a Colossal Waste of Resources? Retrieved from www.myjoyonline.com on October 20th 2010. Kasavana M.L. (2004), Cashless Vending. The National Automated Merchandising Association, Chicago, Illinois Mensah, O.K. (2010), E-zwich, Another White Elephant? Retrieved from The Chronicle (weekly journal) dated September 7th, 2010. Nonor, D. (2009), E-zwich-Driving Towards a Cashless Economy. Retrieved on the December 28th 2010 from http://www.allAfrica.com/Ghana:E-zwich-Driving Toward Cashless Economy.
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Storm, P. (2004), Cashless transactions without credit cards, debit cards or checks. US Patent issued on January 13th, 2004. www.patentstorm.us. Retrieved on November 10th 2010. The Mail (2009), E-zwich mess A hoax, scam or a flop. Retrieved on the February 10 th 2011 from ModernGhana.com. What is MTN MobileMoney (n.d.), Retrieved from www.mtn.com/gh on January 5th 2011.

APPENDIX: QUESTIONNAIRE The adoption of the E-zwich smart card as a substitute to cash transactions. A case study of Regent University College of Science and Technology. Dear respondent, I am a student of Regent University College of Science and Technology, pursuing a first degree in Accounting and Information Systems. I kindly request that you respond to this questionnaire with information to complete the above study. You are assured that information derived will be used purposefully for this study and in utmost confidentiality. Thank you for your co-operation. Sincerely,
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 Grace Asare Konadu

Instructions: Please tick the option that best reflects your answer. Where the question and available options does not reflect your opinion please write N/A (not applicable). Personal Information 1. AGE: [ ] 20-29 [ ] 30-39 [ ] 40-49 [ ] 50-59 [ ] 60 and above

2. What is your occupational status? [ ] student [ ] student and worker [ ] lecturer [ ] administrative worker

[ ] other (please specify) 3. Do you own an E-zwich smart card? [ ] Yes [ ] No

4. If yes, how long have you had the card? [ ] 1-12 months [ ] 13-24months [ ] 25months and above

5. Do you have money on your E-zwich card? [ ] Yes [ ] No

6. What percentage of your income have you placed on the card? [ ] 1-20% 95% [ ] 25-40% [ ] 100% [ ] Nothing [ ] 45-60% [ ] 65-80% [ ] 85-

7. How often do you use the card?

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[ ] daily Never

[ ] weekly

[ ] monthly

[ ] every six months [ ] yearly

[ ]

8. Do you face any challenges when using the card? [ ] Yes [ ] No

If yes, what are the challenges? 9. Do you think the introduction of the E-zwich smart card was necessary? Give reasons for your answer. .. 10. Do you have any recommendations you think might help make the system a better one?

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