Everyday, new products, processes and services are birthed, increasing the significance of the protection of intellectual property (IP) rights. A robust intellectual property protection (IPP) regime encourages innovation and creation, and will effectively ensure the protection of ideas while presenting creators and innovators the opportunity to monetize their works.

Intellectual property refers to creations or expressions of the mind and it encompasses intangible assets such as literary and artistic works, designs, symbols, names etc. This could take the form of a process or product with commercial value. Based on a number of factors, IP rights accorded creators may be patents, copyrights, industrial designs, trademarks, among others, and are usually granted for a defined period of time. These rights give recognition, protection and financial benefits to creators for their creations.

In Ghana, the regulatory framework for the protection of intellectual property is shaped by a number of local and international legislation. Relevant local laws include:

• Copyright Act, 2005 (Act 690)
• Patents Act, 2003 (Act 657)
• Trademarks Act, 2004 (Act 664)
• Industrial Designs Act, 2003 (Act 660)
• Protection Against Unfair Competition Act, 2000 (Act 589)
• Layout-Designs (Topographies) of Integrated Circuits Act, 2004 (Act 667)
• Geographical Indications Act, 2003 (Act 659).

Ghana is also a member of some international bodies (eg World Intellectual Property Organization) and a party to a couple of international treaties and conventions such as the;

• Harare Protocol on Patents and Industrial Designs
• Harare Protocol and Implementing Regulations
• Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol)
• Patent Cooperation Treaty
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The ratification of international treaties and conventions such as the TRIPS Agreement meant that local laws had to be modified to match up to the minimum requirements spelt out in these treaties and conventions. Although there has been incorporation of these into local laws, the evolvement of local laws to catch up with emerging technologies and practices has been rather slow.

Technology is advancing and evolving at an exponential rate, and Ghana is fast becoming a tech hub. To be able to encourage and sustain growth of the local technology industry and the influx of globally competitive firms, we require a proactive, clear and robust legal framework on intellectual property protection; a supportive infrastructure for the implementation of laws and policies; and a heightened state of awareness and empowerment of the relevant stakeholders/agencies on matters of intellectual property and related developments.

In August 2021, the Bank of Ghana (BoG) issued new guidelines for the domestic processing of card transactions with payment cards issued in Ghana. Among the causes of low levels of adoption and use of cards, the Central Bank identified the cost of transactions as a contributor (attributable largely to offshore processing of card transactions), which the guidelines seek to address.

The objectives of the guidelines are to:

1.  require the localization of the processing of payment card transactions in Ghana with payment cards issued in Ghana;
2. provide a framework for licensing and regulation of payment cards processing; and
3. provide an enabling environment for payment card processing and usage in Ghana.

The guidelines require international card schemes to operate locally, with payment card transactions processed domestically and charged in Ghana cedis. To operate locally, international card schemes can opt for either one of the following:

1. incorporate a Ghanaian entity and apply to be licensed as Enhanced Payment Service Providers (EPSPs) in accordance with Act 987; or
2. partner with existing EPSPs, or a Payment Service Provider (PSP) Scheme or any other entity designated by BoG as a payment system.

An EPSP, PSP Scheme or Designated Payment System which intends to partner an international card scheme to process domestic payment card transactions will be required to obtain approval from BoG, and comply with a list of requirements set out in the guidelines including having a PCI DSS certification (Level 1), implementing fraud monitoring tools, systems and reporting applications, instituting anti-money laundering compliance programmes, and implementing systems to ensure the protection of data and its integrity, as per the Data Protection Act, 2012 and international best practices.

Significance of the Guidelines in the PSP Ecosystem

The guidelines have a potential effect of expanding the permissible activities of EPSPs beyond card processing to include switching and routing of payment transactions and instructions. Licensed PSPs could also see an expansion of the scope of business, owing to the partnerships proposed in the guidelines.

International card schemes that choose to be licensed in Ghana would be licensed as EPSPs, and offer permissible activities of PSP Schemes.

It is envisaged that these guidelines would reduce the cost of transacting with payment cards issued in Ghana, for users within the country.

With the fast growth of the payments ecosystem, together with the uncertainty faced by regulators across the globe in trying to keep up with technological advancements, it is worth mentioning that the Guidelines for Domestic Processing of Payment Card Transactions with Payment Cards Issued in Ghana is a step in the right direction.

While great care is taken to cater for the various ways new legislation may interact with existing regulatory regimes, new laws may occasionally introduce unintended regulatory uncertainty or duality that may require clarification from the regulator and/or legislation to resolve.

The new Payment Systems & Services Act, 2019 (Act 987) may potentially have introduced a dual regulatory regime for Banks and Specialized Deposit-Taking Institutions who wish to, or currently engage in the provision of payment systems and services, and/or the issuance of electronic money.

Banks and Specialized Deposit-Taking Institutions are primarily regulated by the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) which prescribes their permissible activities to include acceptance of deposits, lending, financial leasing, investment in financial securities, money transmission services, issuing and administering of means of payment, guarantees and commitments, etc.

Prior to the enactment of Act 987, Banks that wanted to roll out payment systems and services simply needed approval from Bank of Ghana. Payment services were activities broadly linked to Bank accounts and consequently considered to be, by default, a Banking activity. Banks were thus performing payment activities within their Banking license, and the Bank of Ghana would approve or check upon such activities within their supervisory powers. With the advent of Act 987, Banks have been placed under a new regulatory umbrella.

While e-money issuers and payment service providers require a payment service provider (PSP) license from the Bank of Ghana (BOG) to operate under Act 987, Banks and Specialized Deposit-Taking Institutions do not. For clarity, the payment service provider (PSP) licenses under Act 987 are reserved for FinTechs including e-money issuers.

However, Banks and Specialized Deposit-Taking Institutions already licensed by the Bank of Ghana under Act 930 require, according to the new Act, express authorization to perform payment services or to issue e-money from the Bank of Ghana. Act 987 provides in section 10 that bodies regulated under the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930) shall not engage in payment service business unless authorized by Bank of Ghana to do so. Further to this, according to section 22 of Act 987 which covers authorization of e-money issuers, a body corporate regulated under Act 930 shall only engage in the electronic money business with authorization from Bank of Ghana. 

The e-money issuer authorization process requires Banks and Specialized Deposit-Taking Institutions to create subsidiaries for the performance of the permitted activities under Act 987 and to complete an application process almost as involving as that of FinTechs.

To wit, any Bank, Deposit-Taking Microfinance, Savings & Loans, or other specialized Deposit-Taking institution seeking to issue electronic money must establish a subsidiary for the purpose of their e-money business and apply for an authorization from the Bank of Ghana to engage in those activities using this subsidiary.

The effect of these provisions for payment service and e-money issuer authorizations in Act 987 is that, Banks and Specialized Deposit-taking institutions are being regulated twice by the same regulator under two arms of the Bank of Ghana, being the Payments Systems Department and the FinTech and Innovation Unit of the Bank of Ghana respectively.

It is going to be interesting to see how the Bank of Ghana draws a fine line between services that fall under the new Act 987 and services that are considered banking activities by default. What happens to previously granted approvals for existing services when this line is drawn?

One issue the Bank of Ghana would have to grapple with is how to properly regulate these entities separately under both Acts without overwhelming the entities and the Banks in the process.

It could be argued that it is superfluous to go to a regulator for authorization to run services that were previously approved by the same regulator. On the other hand, Act 987 is clear when it mandates Banks and Specialized Deposit-Taking institutions to obtain authorization before running services captured in the act. The Act even goes as far as imposing sanctions on corporate bodies that do not comply. The legal maxim “generalia specialibus non derogant”, meaning the “general does not detract from the specific”, captures this argument succinctly. Thus, before the law addressing the specific permissible activities (Act 987) was passed, Banks were governed by the general rule that in rolling out new products, regardless of where they fell within their permissible activities, they needed approval from BOG. However, with the passing of the specialized Act 987, the applicability of the general principle is uncertain. The uncertainty lies in the fact that the same regulator, though in different capacities, regulates Banks under both laws, that is, giving approval to Banks to roll out products and services which may include payment service provision under Act 930 and giving authorization to Banks to perform payment service provision under Act 987.

The real question here is, is approval under Act 930 enough to cover services that are regulated under 987?  While this will be a question for the courts to answer, these issues bring to question the relevance of a separate regulation to oversee payment services conducted by Banks and Specialized Deposit-taking institutions. The relevance of this separation may lie in the sensitive nature of the financial services space. The regulator may want to keep a tight rein on supervision to efficiently identify and manage new systemic risks which may be introduced through increasing innovation and digitization in the provision of payment systems and services. This is particularly pertinent given the recent Banking sector crisis and clean-up. Pursuant to this, there may very well be a justifiable need to regulate the payment services aspects of Banking separately.

Need established, the execution of this regulation is extremely crucial. The key to proper execution lies in the availability of information and clear processes and guidelines for compliance which is seemingly lacking as the law stands today. Do Banks and Specialized Deposit-taking institutions need to seek authorization to continue the previously approved activities? Should they go to the Fintech and Innovation Office or Payment Systems Department within the BOG? The right answers to these questions are uncertain.

It can be argued that Act 987 notwithstanding, prior approvals provided by the Bank of Ghana to Banks and Specialized Deposit-taking institutions are not invalidated by the new Act as neither the Bank of Ghana nor Act 987 have expressly or consequently revoked those approvals. It gets trickier when we consider what the new authorization requirement means for maintenance or extensions on the existing approved products.

For existing approved products, the pathway to regulatory compliance is not a straight one. There are two possible detours in that respect; a demand of a strict compliance with the Act or a more permissive approach which would allow Banks and Specialized Deposit-taking institutions to conduct payment services using the prior approvals without regularization.

A strict interpretation of the Act would require that these entities regularize the prior approvals obtained, within a window given by the Bank of Ghana, whether the products previously approved are altered, being maintained, improved or not. This would mean that Banks and Specialized Deposit-taking institutions that perform the previously approved payment services without the authorization of the Bank of Ghana under the new Act would be engaged in illegal activity.

A more permissive approach would mean that these Banks and Specialized Deposit-taking institutions (that is in respect of prior approved products) may maintain, operate, and use these products relying on the approvals given by the Bank of Ghana. However, this position would shift if the Banks and Specialized Deposit-taking institutions decide to include extensions or upgrade the existing product; effectively making them a new product. Then, an authorization would be certainly required for such improvements under Act 987.

While the Act is very clear on the need for Banks and Specialized Deposit-taking institutions to be authorized under the new Act, the implementation of this requirement is quite cloudy and questions how realistic this implementation can be.

That said, for regulatory advisors, it is always better to err on the side of caution, especially considering the penalties for Banks and Specialized Deposit-taking institutions carrying out payment services without the regulatory authorization.

Failure of Banks and Specialized Deposit-taking institutions to obtain authorization to issue e-money is an offence under Act 987 and could result in fines between GHS 48,000.00 and GHS 84,000.00. The penalty for carrying on payment services without authorization from the Bank of Ghana is an administrative penalty of GHS60,000.00

As always, it is better to be safe than GHS 84,000.00 sorry.

Authors: Yinsongti Tindana & Jessie Abugre

Ghana’s new Payment Systems and Services Act, 2019, (Act 987) has created waves in the fintech space in Ghana. FinTechs are now required to hold a license from at least one of five license categories (Enhanced PSP, medium PSP, standard PSP, PSP card scheme, and E-money Issuer) in order to commence or continue operations in Ghana.

Transitioning FinTechs (who were operating before the enactment of Act 987 in May, 2019) have until December 31, 2020 to obtain their license; while new entrants cannot start offering their services without first obtaining the appropriate license for their intended activities.

The licensing requirements span key considerations across corporate governance, systems and technology, enterprise risk management, and consumer protection; and are tailored to the permissible activities and risk profile of each license category. Some key requirements apply across categories, and among these is the local participation requirement.

Section 8 (4) of Act 987 states that a license applicant shall have at least thirty percent local equity participation. Simply put, any company seeking licensing approval to provide payment services in Ghana must have at least 30% of its shareholding owned by Ghanaians.

Even though Act 987 is fairly new, the issue of local participation and content is not. Local Participation refers to the level of indigenous ownership in an industry.

For emerging economies like Ghana, this is a valuable policy tool in the quest to ensure inclusive development that benefits local communities, industries and the country as a whole in various high-value industries. Many of these high-value emergent industries require significant injections of capital and expertise that the country may not be able to supply locally. Thus, the country may open that sector up for foreign investment.

However, in order to ensure that the returns to these investments benefit its citizens, the government may enforce local participation requirements to mitigate investments that result in 100% profit repatriation such that its citizens see very little if any benefit of these investments. Local participation requirements are usually enforced through an industry regulator such as the Bank of Ghana (via licensing) and investment promotion authority (via registration formalities).

While new, the fintech regulation on local equity ownership is in good company with a number of key industries in Ghana.

In November 2013, the government of Ghana passed the Petroleum Local Content and Local Participation Regulations 2013, (L.I 2204). This law states that there shall be at least a five percent equity participation of an indigenous Ghanaian company other than the Corporation to be qualified to enter into a petroleum agreement or obtain a petroleum licence.

Again, On 22^nd December, 2017, the Energy Commission (Local Content and Local Participation) (Electricity Supply Industry (ESI)) Regulations, 2017, (L.I. 2354) was passed by the Parliament of Ghana into law. This law requires that Local ownership should be at least 15% in wholesale power supply and development and utilization of renewable energy in addition to local participation in the supply of labour, goods and services.

There are, however, some significant differences in local participation requirements between the Bank of Ghana and other regulatory agencies. For one, the BOG requirement of 30% local ownership is the largest in any industry in Ghana.

Further, Bank of Ghana’s requirement transcends beyond just local ownership. According to stipulations of the law and the guidelines, it is obvious that indigenes should not just hold shares, but should have some form of control and partake in the decision making of the company.

Act 987 states in section 2 that the act is to be read with the company’s Act, 2019 (Act 992). Act 992 clarifies that equity shares are different from preference shares (which has limitations on dividends, voting rights, etc.). Thus, the local equity ownership requirement should have some form of voice in the affairs of the company and should not be limited when it comes to voting rights, etc.

Inclusion in any way, shape or form is often fraught with challenges and trade-offs. With the introduction of this requirement, existing and intending foreign-owned payment service providers are being compelled to rethink their business models in a very significant and stringent way.

The 30% Ghanaian equity required must be ordinary shares; giving the shareholders voting and dividend rights – a rule that is likely to transform the entire governance module of the business.  Bank of Ghana regulations further provide that shareholders with 10% or more share ownership and voting rights must include an attestation from a notary public confirming ultimate beneficial ownership.

It is normal that some resistance may arise on the part of the business owners and there exists a temptation to assume that the regulations are lax and would not apply or be strictly enforced. However, the intent of the law and the regulator is clear – Ghanaians must be the beneficial owners of 30% of all payment systems in Ghana, any other arrangement will result in a breach of Act 987, and consequently a revocation of licences already given or a refusal by the regulator to grant new licences.

Foreign firms, who may not want to give up a portion of control of their companies, would thus have to navigate a thin line between compliance with the BOG and retaining control.  However, stepping away from the knee-jerk initial rejection of local participation, one begins to see the potential of local participation as a win-win situation for the entire digital payment ecosystem.

This requirement is not meant to punish foreign companies or to discourage foreign direct investments, but to promote cooperation and collaboration between local and foreign investors, and to leverage returns to these cooperative investments for inclusive development of the Ghanaian economy.

Opportunities abound in this time to invest in one of the most promising industries in Ghana. Investors are always looking for opportunities to invest, and local investors in Ghana are no exception. Foreign companies have the opportunity to leverage local investors with the funds, expertise, local network and interest to drive exceptional success for their companies and profits for all.

There are a number of comfortable, legitimate modes of distributing equity and inviting partnership while maintaining the culture, organizational strategy, product strategy and operations management of the company. The core of the company can thrive with the right mindset and strategy.

It is crucial for any foreign company seeking to commence or continue operations in this space, to internally align and determine their key interests, local investor requirements, and the trade-offs they are willing to make. This will enable them approach the local investor conversation empowered for successful cooperation. If the company determines that they do not have sufficient know-how to navigate the course they have chartered, they may then bring in external advisors equipped to fill the gaps identified.

In order to create the right balance between regulatory compliance and preserving the core of foreign owned businesses, it is important for legal and regulatory advisors to understand the needs of the businesses, vis-à-vis the regulations.

#theeightgeeks #PSPlicense #PSP #compliance #techlaw #fintech

The primary goal of copyright is to protect the time, effort and creativity of the creator. Due to this, unlike other forms of intellectual property protection, a creator does not need to copyright his original work in order to be afforded copyright protection. Original works are afforded automatic copyright protection, and direct permission from the author/creator will be required for use whether or not they have copyrighted their works.

A person who infringes on any copyrighted work of another will be liable to a fine of between GHs6,000 to GHs 12,000 or to term of imprisonment of not more than three years or to both. The infringer can also be subject to a civil suit.

Remember what we said about automatic copyright protection? Now get to work on tracing the author to get that permission! It’s not optional.

Sound familiar? I’m sure it does. Many entrepreneurs, after establishing profitability of their business, set their sights on establishing market dominance and becoming household names.

While the popularization of your product/service may at first glance appear good for your business, it puts its legal protection at risk.

Trademarks protect the name, sign, design, logo, etc., associated with your company or products, and prevent others from capitalizing on goodwill accrued to your names or logos to sell their products.

When a product name becomes so popular that the name is associated with other products in the same category, it loses its trademark. For instance, “Flip Phone” was originally a trademark of Motorola, but has subsequently lost legal protection as a trademark by becoming the common name of that type of phone as used both by the consuming public and commercial competitors.

When this happens, third parties can now have unrestricted use of the trademark, and this is a big deal! In fact, Adobe and Google are currently working to mitigate the synonymizing of Photoshop with image editing and Google with web searches to prevent this very phenomenon.

So you see, there’s a household name (known and used by everyone) and there’s a household name (so known and used by everyone, it’s not clear whose it is).

Avoid becoming the latter. Protect your trademark!