Ghana is an epitome of technological growth and has one of the fastest-growing financial technology (Fintech) ecosystems in Africa. As everything becomes increasingly interconnected, the way we conduct commercial and recreational activities is completely changing.

In Ghana, Financial Technology (Fintech) startups are on a path of growth with enormous opportunities.

The growing mobile and smartphone usage provides an excellent opportunity for the promotion of financial inclusion by Fintechs, to people without access to traditional financial services.

Regulation of Fintechs in Ghana

The financial technology (Fintech) ecosystem in Ghana is regulated by the Bank of Ghana. The key legislation that governs payment service providers, dedicated electronic money issuers, their affiliates and agents is the Payment Systems and Services Act, 2019 (Act 987).

The Act requires companies seeking to carry out payment service business or issue electronic money to be duly licensed by the Regulator.

Licensing Requirements

i.       Company Profile

In order to operate as a fintech startup in Ghana, the first step is for the company to be duly incorporated under the laws of Ghana at the Registrar Generals Department (RGD).

An overview of the company, it’s company incorporation documents and summary of services to be offered must be submitted to the Regulator as part of the licensing process.

ii.     Governance

The company must provide information about the shareholders, their respective percentage holding in the company, nationality, copies of share certificates and attestation from a notary public confirming foreign ultimate beneficial owners with 10% or more of the total share ownership or voting rights.

The profile of the Directors and key management personnel as prescribed under the Payment Systems and Services Act, 2019 (Act 987) as well as an organizational chart must also be provided. The Payment Systems and Services Act, 2019 requires that businesses seeking to operating as a Payment Service Providers must have a minimum of three (3) directors.

iii.    Business Plan

A comprehensive business plan covering the business overview, market analysis, products and services to be offered, the company’s on-boarding process, proposed fees to be charged and a five -year projection for the business must also be submitted by the founders as part of the application process.

iv.   Systems and Technology

The following Information, Communication and Technology (ICT) systems must be employed:

• ICT policy framework
• Security and control (including transaction monitoring tool, fraud monitoring and detection tool and at least two factor authentication)
• Business continuity program
• Data Protection Certificate
• ISO 27001 certification and compliance where applicable
• PCI DSS Certification and compliance where applicable
• EV-SSI tools where applicable
• Network and Vulnerability assessment/penetration test
• ICT risk assessment and mitigation measures

v.     Enterprise Risk Management

The company is required to submit its risk and mitigation measures which cover all operational, market liquidity, fraud, legal, credit and funding risk where applicable, Business Impact Assessment (BIA) and an Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) policy.

vi.   Consumer Protection Policy

The Company must also submit its consumer protection policy which should be guided by the Consumer Recourse Mechanism Guideline for Financial Service Providers Act 2017 (Act 987).

License Categories and Permissible Activities for Payment Service Providers and Fintechs in Ghana

There are different categories of licenses for payment service providers and fintechs, based on their nature of business and permissible activities.

1.   Electronic Money Issuer:

The permissible activities under this licence category includes Issuance of electronic money, recruitment and management of agents, creation and management of wallet. Wallet based domestic money transfers including transfers to and from bank accounts, cash in and cash out transactions, investment, savings, credit products only in partnership with banks, insurance and pension products only with authorised insurance and pension companies.

2.   Payment Service Provider (PSP) Scheme

The activities permitted under this category of license are routing of payment transactions, authorisation, and settlement requests from merchants, acquiring and issuing banks.

3.   Payment Service Provider (PSP) – Enhanced License

The PSP (Enhanced License) allows for the Aggregation of merchant services, processing services, provision of hardware and software, printing and personalisation of EMV Cards, Inward International remittances services, merchant acquiring, POS deployment, and Payment aggregation.

4.   Payment Service Provider (PSP) – Medium License

Payment Gateway and Portals/Payment aggregation which is connected to Enhanced PSP. Training and support of merchants. Printing of non-cash payment instrument, development of market platforms, payment application/solutions for Credit, Savings and Investment products in partnership with Banks.

5.   Payment Service Provider (PSP) – Standard License

A payment application solution/ development, merchant development platform, a payment solution.

6.   Payment and Financial Technology Service Provider (PFTSP)

The permitted services under the PFTSP license include Digital product development, delivery and support services for Payment, Savings, Insurance, Investment, Credit scoring predictive analytics, AML/CFT centralized platform, Fraud management services, Know Your Customer (KYC) and Customer Due Diligence (CDD) authentication services.

Conclusion

Startup businesses seeking to operate within the Ghanaian fintech industry must comply with the legal and regulatory framework governing the industry to prevent regulatory sanctions and reputational damage which may impact their revenue.

O-Laryea Law provides free consultation to fintech startups, entrepreneurs and investors in Ghana. We can assist with legal and regulatory guidance to enable you succeed in the fintech industry in Ghana.