CHAPTER I INTRODUCTION 1.1BACKGROUND OF THE STUDY E-zwich is the brand name for the common platform (The National Switch) that links the payment system of all banks, and non-bank financial institutions. An example is the Savings and Loans companies, credit unions, money transfer institutions and Rural Banks in Ghana. The E-zwich smart card is a new and very secured way of paying for goods and services throughout the country based on biometric (finger print) identification. E-zwich allows smart card holders and merchants to load and spend funds as well as settle various transactions. Individuals can perform various banking and retail functions using the card. These include cash withdrawals, payment for goods and services, money transfers and bills payment from any e-zwich smartcard Point of Sale (POS) or Automated Teller Machine (ATM) across the country. The e-zwich smartcard is more versatile than the traditional bank issued cards. One can just walk into any bank, rural bank and Savings and Loans company and get e-zwich smartcard without having to open an account. The process 1
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CHAPTER I
INTRODUCTION
1.1BACKGROUND OF THE STUDY
E-zwich is the brand name for the common platform (The National Switch) that links the
payment system of all banks, and non-bank financial institutions. An example is the Savings
and Loans companies, credit unions, money transfer institutions and Rural Banks in Ghana.
The E-zwich smart card is a new and very secured way of paying for goods and services
throughout the country based on biometric (finger print) identification. E-zwich allows smart
card holders and merchants to load and spend funds as well as settle various transactions.
Individuals can perform various banking and retail functions using the card. These include
cash withdrawals, payment for goods and services, money transfers and bills payment from
any e-zwich smartcard Point of Sale (POS) or Automated Teller Machine (ATM) across the
country. The e-zwich smartcard is more versatile than the traditional bank issued cards. One
can just walk into any bank, rural bank and Savings and Loans company and get e-zwich
smartcard without having to open an account. The process should take between five and ten
minutes and a photo Identity card (voter’s ID card, driver’s license, passports or school ID
cards) will be required. All clients using the e-zwich for transactions will be authenticated
through one of their finger on the e-zwich Auto Teller Machine or Point of Sale device.
During registration, all ten finger prints are taken. Individuals will be able to use another
finger if one is not recognized.
Precisely, the e-zwich card cannot be used by another person because of the finger print
authentication requirement in case of misplacement when you report to your bank; you will
be re-issued with a new card and your balance on the card restored by a maximum of forty-
eight hours. E-zwich will reject any attempt to utilize your old card even by yourself.
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E-zwich’s uptake has been encouraging, and it is believed that should the project go
according to plan, the dream of the country to become a cashless economy could become a
reality. But, for the project to be successful, a lot more must be done, including financial
education for the largely unbanked population. In fact, branchless banking has a great
potential to extend the distribution of financial services to poor people who are not reached
by traditional bank branch networks; it lowers the cost of delivery, including costs both to
banks of building and maintaining a delivery channel and to customers of accessing services
(e.g. travel or queuing times).
Using agents rather than banks for remote cash transactions will also bring massive cost
reduction to both the bank and the customer. As noted by Consultative Group Action to
Assist the Poor (CGAP), “Banco de Credito in Peru estimates that a cash transaction at a
branch costs abakistan estimates that, I the Orangi slum of Karachi, the setup cost of a bank
branch would be 30 times more than the setup cost per agent, which is about US$1,400.
Monthly running costs average about US$28,000 for a branch, compared with US$300 for an
agent, but also, a much larger share of monthly running costs is variable for an agent than for
a branch”.
1.2 STATEMENT OF THE PROBLEM
The introduction of E-zwich by the Ghana Interbank Payments and Settlements Systems
(GHIPSS) has broadened the scope for branchless banking in the country. E-zwich is the
brand name for the common platform, the National Switch, that GHIPSS has introduced to
all licensed banks and non-bank financial institutions e.g. savings and loans companies, credit
unions, money transfer institutions, and rural banks in the country, offering electronic
payment facilities.
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In an attempt to solve the problems faced by the financial institutions and the general public
in counting huge sums of money in their transactions and also the lost of money by some
individuals through disaster and other means, has contributed to the introduction of e zwich
smartcard by the Bank of Ghana.
The researcher stands to find out the effect of the smartcard on financial institutions, the
benefits of the card to the general public and why many people have not signed up on the
program.
Hence, the need for a study on the prospects and challenges of the e-zwich smartcard.
1.3 OBJECTIVES OF THE STUDY
The main objectives of the study are;
1. To identify the effects of the e- zwich smartcard on the financial sector.
2. To identify the difficulties and benefits faced by the general public in using the card
3. To determine why most people have not hooked on to the program.
1.4 SIGNIFICANCE OF THE STUDY
The study is significant in the sense that it will enable the researcher bring to the general
public the benefits derive and some challenges faced in using the smartcard and how it will
be addressed by the Bank of Ghana. The study also will help the bank of Ghana as to why
most people have not hooked on the program and the necessary measures will be put in place.
This study when completed will serve as a source of reference to researchers who will like to
engage in further research work or who need information on this same topic or related topics.
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1.5 SCOPE AND LIMITATIONS OF STUDY
The scope of the study is to research on the prospects and challenges of the e-zwich. This
research paper is limited by a number of factors which include time constraints, inadequate
funds and insufficient material sources.
Other comments and statements that have been passed by some financial, non financial
institutions, individuals and the Bank of Ghana will also be taken into consideration. Also
findings and conclusion will be base on the response from the 50 sample size of the general
public as well as response from the sample firms used. The process of obtaining information
from all the various sources may not be achieve due to financial constraints.
1.6 DEFINITION OF TERMS
1. Bank – ‘a business that keeps money for individuals or companies, exchange
currencies, make loans, and offers other financial services’. Encarta dictionaries.
2. Financial Institutions – are generally business enterprises whose primary functions
include receiving sums of money from individuals and organizations and managing
the funds received so as to generate more money to enable them to meet the financial
demands of their depositors or creditors as well as serve as sources of financial
support and others.
3. E-zwich – is the brand name for the common platform, the national switch that links
the payment systems of all licensed banks and non-banks financial institutions.
Bog.gh.com.
4. Prospects – Vision of future, direction faced, possibility of something happening
soon. Encarta dictionary.
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5. Challenges – ‘invitation to take part in the context, questioning of something, demand
for identification.’ – Encarta dictionary
6. Smart Card – ‘a small plastic card containing a micro chip that can store personal data
such as bank account details used for identification and for payment of purchases.’ –
Encarta dictionaries.
7. Merchants – ‘Somebody who buys and sells goods especially as a whole seller or
internationally.’ – Encarta dictionary.
1.7 ORGANIZATION OF THE CHAPTERS
The study consists of five main chapters. These are;
Chapter 1: this chapter covers the introduction of the study, purpose of the study,
significance of the study, scope and limitations of the study and organization of chapters.
Chapter 2: this chapter presents a review of existing and related literature on the e-zwich
introduced by Bank of Ghana.
Chapter 3: deals with the research methodology. This includes type of research used,
population, sampling method, data collection method and the method of data analysis.
Chapter 4: consists of the presentation, an analysis and discussion of data collected from
administered questionnaires, some financial institutions and individuals.
Chapter 5: It is the final part of this paper. It deals with the summary, conclusion and
recommendations.
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CHAPTER TWO
2.DEFINITION OF SMARTCARDS
A smart card, chip card, or integrated circuit card (ICC), is defined as any pocket-sized
card with embedded integrated circuits which can process information. This implies that it
can receive input which is processed - by way of the ICC applications - and delivered as an
output. There are two broad categories of ICCs. Memory cards contain only non-volatile
memory storage components, and perhaps some specific security logic. Microprocessor cards
contain volatile memory and microprocessor components. The card is made of plastic,
generally PVC, but sometimes ABS. The card may embed a hologram to avoid
counterfeiting. Using smartcards is a popular form of strong authentication for Single Sign-
On within large organizations. (Wikipedia, the free encyclopaedia).
A "smart card" is also characterized as follows:
Dimensions are normally credit card size. The ID-1 of ISO/IEC 7810 standard defines
them as 85.60 × 53.98 mm. Another popular size is ID-000 which is 25 x 15 mm.
Both are .76 mm thick.
Contains a security system - tamper-resistant properties (e.g. a secure
cryptoprocessor, secure file system, human-readable features) and is capable of
providing security services (e.g. confidentiality of information in the memory).
Asset managed by way of a central administration system which interchanges
information and configuration settings with the card through the security system. The
latter includes card hotlisting, updates for application data.
Card data is transferred to the central administration system through card reading
devices, such as ticket readers, ATMs etc. (http://en.wikipedia.org/wiki/Smartcard)
The researcher is a final year business administration student of Valley View University. This study forms part of a project for the award of Bachelor of Business Administration Degree by the University. The questionnaire seeks to collect data on the prospects and challenges of E-switch smart card introduced by the Bank of Ghana.
I therefore count on your cooperation to assist me finish my paper by filling out the questionnaire below. The information gathered will be used solely for the research. Thank you.
Effects of e-zwich on the financial sector
1. Has the e-zwich helped in the operations of the bank A. Yes ( )B. No ( )
2. How profitable has the impact of e-zwich been over the years in the Banks operationA. Very profitableB. Quite profitableC. Unprofitable
3. What percentage will you assign to the profitability of these facilitiesA. 10 – 30% ( )B. 40 – 70% ( )C. Above 70% ( )
4. On the average how many people utilize the e-zwich smartcard in your branchA. 1 – 50 ( )B. 50 – 100 ( )C. Above 100 ( )
5. Do customers face any problem in using the smartcard?
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A. Yes ( )B. No ( )
6. If yes, what measures are being taken to solve that problem?
7. If no, why have most people not sign up on the program
8. What advantages has e-zwich smartcards over other smartcards already in existence
9. What can be done to improve upon the use of the e-zwich smartcard nationwide?
10. What role do you think the card will play in the a) Next 2
b) Next 10 years: ____________________________________________________________
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APPENDIX B
QUESTIONAIRE
The researcher is a final year business administration student of Valley View University. This study forms part of a project for the award of Bachelor of Business Administration Degree by the University. The questionnaire seeks to collect data on the prospects and challenges of E-switch smart card introduced by the Bank of Ghana.
I therefore count on your cooperation to assist me finish my paper by filling out the questionnaire below. The information gathered will be used solely for the research. Thank you.
1. GenderA. Male ( )B. Female ( )
2. Which age bracket do you belong? A. 18 – 29 ( ) B. 30 – 39 ( ) C. 40 – 49 ( ) D. 50+ ( )
3. What is your occupation A. (Student) B. (civil servant) C. (self-employed)
4. Do you have any Bank Account?A. Yes ( )B. No ( )
5. If yes, state the Name of the Bank__________________________________________
6. If No why________________________________________________________________________________________________________________
7. Do you have an e-zwich smartcard?A. Yes ( )B. No ( )
8. If No, why have you not roll-up onto the program?
9. Have you used your smartcard in the last one month?A. Yes ( )B. No ( )
10. Was the smartcard working the last time you used it?A. Yes ( ) B. No ( )
11. Which comment best describe your views on reliability of the smartcard?A. Very Reliable ( )B. Quite Reliable ( )
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C. Not Reliable ( )
12. How convenient is the card to you?A. Very convenient ( )B. Quite convenient ( )C. Not convenient ( )
13. Do you think the computerization of all financial and non financial institution to the smartcard has brought efficiency in their operations?
A. Yes ( )B. No ( )
Comment on any_______________________________________________________________________________________________________________________________________
14. Do you think the networking of the financial and non financial institutions to the smartcard would improve the payment and settlement system?A. Yes ( )B. No ( )
15. How would you rate e-zwich smartcard publicity in the country?A. ExtensiveB. GoodC. Poor16. How often do you deposit money on your e-zwich smartcard?