Cash Versus Digital Payments: A Comparative Cost Perspective in Cocoa Value Chains

This study is set against the background that the cocoa value chain in Ghana predominantly uses cash as the primary medium of payments. Digital payments have been touted as an antidote against limitations and dangers associated with the use of cash for cocoa trade in Ghana. However, both cash and digital payments have costs associated with their deployment. The present enquiry sought to estimate the costs associated with the two payment methods. The study employed simple random sampling, questionnaires and focus groups to reach 311 Ghanaian cocoa value chain actors. Three DFS firms and ten licensed buying companies were selected through snowball sampling and semi-structured interviews. A mixed method of qualitative and computational analyses was employed with focus groups. The sector-wide costs associated with cash payments and digital payments were estimated at $97.26 million and $107.49 million respectively. Digital payments are less pronounced in cocoa trade, accounting for 7% of respondents’ transactional experience in cocoa trade. Costs associated with digital payments are largely bloated by cybercrime and fraud, transaction fees and electronic levy (tax). Policy considerations include subsidising transaction fees and taxes, and combatting cybercrime or fraud. Future research could extend the analysis to include the quantification of qualitative variables such as costing the death of value chain actors in the analysis.