The price of convenience: How digital savings is reshaping financial behaviour

By Prof. Samuel Lartey

www.pefghana.org

Over the past decade, mobile money has evolved from a simple payment tool into a powerful pillar of Ghana’s financial system. With more than 40 million registered mobile money accounts and transaction values running into trillions of cedis annually, digital wallets have become the primary financial interface for individuals, traders and small businesses. Today, mobile money platforms do more than facilitate transfers. They offer savings products that earn interest and instant loans that provide quick access to credit.

Yet this growing influence comes with a paradox. While some mobile money savings products are beginning to offer competitive returns, borrowing through mobile platforms often attracts very high interest costs.

This contrast is shaping how Ghanaians save, borrow, invest and plan for the future, with direct consequences for household welfare, business sustainability and national economic development.

Mobile Money Savings and the Incentive to Save

Traditionally, most mobile money wallets in Ghana did not pay interest. This has begun to change with the introduction of structured savings wallets, most notably MyGhanaPay Savings, which allows users to earn monthly interest when funds are transferred from the main wallet to a savings subwallet.

Depending on the partner bank, monthly interest rates can reach approximately 2.5 per cent, compared with about 1.5 percent paid quarterly on the main wallet balance.

 

Product Type	Interest Frequency	Typical Rate
Main Mobile Wallet	Quarterly	~1.5%
Dedicated Savings Wallet	Monthly	Up to ~2.5%

These products create a stronger incentive to save by rewarding discipline and reducing the temptation to spend idle balances. For salaried workers, informal traders, and microentrepreneurs, such savings wallets can support emergency funds, school fee planning, and working capital accumulation.

Mobile Money Credit and the Cost of Borrowing

In sharp contrast to savings returns, borrowing through mobile money platforms remains expensive. Most mobile loans are short-term, typically 30 to 90 days, and carry monthly interest or fees ranging from about 5 per cent to 15 percent.

Loan Type	Monthly Cost	Approximate Annualised Cost
Telecom-linked digital loans	~6–7%	~80%
App-based digital lenders	8–15%	100–180%
Traditional bank SME loans	3–5%	~35–60%

For example, a borrower who takes GH¢1,000 at 10 percent monthly interest pays GH¢100 in interest every month. If the loan is rolled over for a year, interest payments alone can exceed GH¢1,200, more than the original loan amount.

Benefits of Mobile Money Interest-Based Products

Despite concerns, mobile money interest structures offer several clear benefits.

First is accessibility. Mobile money savings and loans are available to users without traditional bank accounts or collateral, promoting financial inclusion.

Second is speed and convenience. Loans are approved within minutes, which is critical for emergencies and short-term business needs.

Third is savings mobilisation. Interest-bearing savings wallets encourage small, regular savings, especially among informal-sector workers who may not use traditional banks.

Fourth is economic participation. By enabling millions to save and transact digitally, mobile money deepens participation in the formal economy and supports tax collection, payments and remittances.

Challenges and Risks

The challenges, however, are significant.

1. High borrowing costs remain the most critical concern. Many users focus on the speed of access rather than the total cost of credit, leading to debt stress and rollovers.
2. Limited transparency is another issue. Some digital lenders do not clearly disclose annualised interest costs, making comparisons difficult.
3. Short loan tenures can also be problematic for businesses. Using high-cost short-term loans for long-term needs strains cash flow and reduces profitability.
4. Finally, over-reliance on mobile credit can discourage long-term savings if borrowers repeatedly use future income to service expensive debt.

Impact on Savings Behaviour

The current structure both encourages and discourages saving.

On the positive side, interest-bearing savings wallets reward disciplined savers and provide an alternative to keeping money idle. This can improve household resilience and financial planning.

On the downside, easy access to high-cost loans can reduce the incentive to save. Some users rely on borrowing to solve short-term problems instead of building emergency funds, which weakens long-term financial stability.

The net effect depends largely on financial literacy and product design.

Impact on Borrowing Behaviour

Mobile money credit strongly encourages borrowing due to its convenience and low entry barriers. This helps smooth consumption and address urgent needs.

However, high interest rates discourage productive borrowing for investment. Entrepreneurs may avoid expansion or innovation because debt servicing costs are too high. In some cases, businesses raise prices to cover interest expenses, thereby affecting competitiveness and consumer welfare.

Implications for Business and Entrepreneurship

Micro, small and medium enterprises form the backbone of Ghana’s economy, contributing about 70 percent of GDP and over 80 percent of employment. For these businesses, access to affordable finance determines survival and growth.

Mobile money loans help bridge short-term liquidity gaps but often reduce margins. A trader who finances inventory with a 10 percent monthly loan must generate very high turnover just to break even. Over time, this limits reinvestment, job creation and business formalisation.

National Economic and Socioeconomic Impact

At the national level, mobile money contributes significantly to GDP through transaction fees, digital services and increased financial activity. It has expanded financial inclusion and reduced cash handling risks.

However, widespread high-cost borrowing can suppress long-term consumption and investment. Households under debt pressure reduce spending, while businesses delay expansion. If left unchecked, this can slow economic growth and increase inequality.

The Bank of Ghana’s move to license and regulate digital credit providers is therefore critical. Transparent pricing, consumer protection and longer-term, lower-cost digital credit products would allow mobile money to support sustainable development rather than short-term consumption alone.

Conclusion

Mobile money interest rates in Ghana reveal a tale of two financial realities. On one side, emerging savings products are beginning to reward discipline and encourage financial planning. On the other hand, high-cost digital credit threatens household stability and business profitability.

For individuals, the lesson is clear. Saving through interest-bearing wallets should be prioritised, while borrowing should be approached cautiously and strategically. For businesses, mobile loans should remain a short-term tool rather than a growth strategy.

For policymakers and providers, the challenge is to balance innovation with affordability. If savings incentives are strengthened and borrowing costs made more transparent and competitive, mobile money can move beyond convenience to become a true engine of inclusive and sustainable economic growth in Ghana.

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