The Bank of Ghana (BoG) has issued a directive to all financial institutions in the country, instructing them to immediately halt their remittance termination partnership with Taptap Send.

The directive affects commercial banks, Dedicated Electronic Money Issuers (DEMI), Enhanced Payment Service Providers (EPSP), and the Ghana Interbank Payment and Settlement System (GhIPSS). This decision, effective from November 8, 2024, is expected to be in force for a period of one month.

The BoG’s directive, detailed in a letter addressed to all relevant stakeholders, comes in response to regulatory breaches identified in Taptap Send’s operations. According to the central bank, Taptap Send was found to be operating a Cedi Remittance Wallet, a service that directly contravenes the Foreign Exchange Act and the updated guidelines for inward remittance services in Ghana.

The Bank of Ghana’s decision was driven by concerns that Taptap Send’s Cedi Remittance Wallet violates the country’s foreign exchange regulations. Specifically, the Foreign Exchange Act stipulates that foreign currencies sent into Ghana must be deposited into the accounts of local banks and financial institutions. Once deposited, the cedi equivalent is then credited to the receiver’s account in Ghana. This process ensures that the foreign exchange remains within the banking system and is properly regulated.

In its letter, the BoG cited the relevant section of the Foreign Exchange Act, stating “The Foreign Exchange Act 3 (1) requires that a person shall not engage in the business of dealing in foreign exchange without a license issued under this Act.” By offering a Cedi Remittance Wallet, Taptap Send bypassed the required process, leading to a potential disruption of the regulated foreign exchange system.

Stern Warning to All Financial Institutions

The directive from the Bank of Ghana serves as a stern warning to all financial institutions and payment service providers operating in the remittance space. The central bank emphasized that it will not hesitate to impose severe sanctions on any institution found to be in violation of the country’s foreign exchange regulations. This move is intended to serve as a deterrent and ensure compliance with existing laws, ultimately safeguarding the integrity of Ghana’s financial system.

By enforcing the guidelines of the Foreign Exchange Act, the Bank of Ghana aims to maintain control over the inflow of foreign currency into the country and prevent unregulated practices that could lead to market distortions. The central bank’s proactive stance underscores its commitment to preserving the stability of the financial sector and ensuring that all players operate within the legal framework.

Taptap Send has rapidly become a preferred choice for many Ghanaians sending money from abroad. The platform’s popularity can be attributed to its user-friendly mobile application and competitive pricing. Taptap Send’s business model focuses on providing low-cost remittance services, making it an attractive alternative to traditional money transfer operators.

The company has established itself as one of the fastest-growing mobile remittance services globally, leveraging a venture-backed funding model. Key investors in Taptap Send include high-profile names such as Reid Hoffman, the Omidyar Network, and Helios. The company has also distinguished itself by assembling a talented team from top-tier tech companies and industry leaders, including Twitter, Uber, Amazon, McKinsey, Deloitte, and Vodafone.

However, despite its innovative approach and growing market share, Taptap Send’s recent regulatory troubles highlight the complexities of operating in the highly regulated financial services industry, especially in markets with stringent foreign exchange controls like Ghana.

The Impact on the Remittance Industry

The BoG’s directive to halt remittance termination partnerships with Taptap Send could have significant implications for the remittance industry in Ghana. Given the platform’s widespread use, many customers may face disruptions in sending money to loved ones back home. This temporary halt may also affect the competitiveness of the remittance market, where Taptap Send has been a strong player due to its low fees and ease of use.

For Taptap Send, the directive could result in a loss of market share as customers may be forced to switch to alternative remittance service providers during the suspension period. Competitors like Western Union, MoneyGram, and WorldRemit may see an increase in transaction volumes as a result of this development.

On the other hand, the Bank of Ghana’s action could strengthen the regulatory environment and level the playing field for all remittance service providers. By enforcing compliance with the Foreign Exchange Act, the central bank aims to ensure that all players adhere to the same standards, thus maintaining the stability of the foreign exchange market.

The one-month suspension period provides an opportunity for Taptap Send to address the regulatory concerns raised by the Bank of Ghana. The company will need to align its services with the country’s foreign exchange laws if it intends to resume operations in the Ghanaian market. This may involve restructuring its remittance offerings or obtaining the necessary licenses to operate legally within the existing regulatory framework.