Incentives for customers


To get more people interested in using the e-payment platforms, the NIBSS is currently encouraging the use of cards to pay for goods and services via PoS terminal. The agency, collaborating with banks is working out modalities that will ensure that bank customers that use their e-payment cards to pay for goods and services on PoS terminals and web platforms will now be rewarded with cash back of 50 kobo for every N100 spent.

Chairman, Committee of E-Banking Industry Heads (CEBIH), Mr. Chuks Iku said the committee and all member banks have partnered with NIBSS for an incentive scheme for members of the public. The scheme, he said, will allow cash back rewards to card holders for using their cards to make payments on alternate channels. “The objective is to encourage usage of cards on PoS and the Web,” he said.

As electronic payments gain ground, the number of connected card readers has increased to about 158,000 from 5,000 before 2012, according to the CBN statistics. The value of transactions rose 26 per cent to N1.4 trillion ($8.5 billion) in the first half of last year from the position, a year ago.

CBN Deputy Governor, Operations, Kingsley Moghalu told Bloomberg that the bank is targeting an increase to 375,000 readers by the end of 2015. For him, improved e-payment would make monetary policy more efficient because of ease in which cash movement is monitored.

The rise of online-shopping websites, such as Jumia and, has also spurred Nigerians to consider electronic payments. The value of online retail transactions, estimated at N62 billion in 2011, may rise to N150 billion this year, according to Euromonitor International, a London-based researcher.

Some customers have expressed displeasure over services at PoS and web payments. Monday Adeoye, a civil servant, based in Lagos, who was at the Power Holding Company of Nigeria (PHCN), Ikeja Distribution Company, Ogba unit to pay his bill, said it took him more than two days to make the payment because the PoS was not working.

He said the poor network challenge, which is becoming a daily occurrence, made users to abandon the device and reverted to cash payment. This, he said, led to long queues. “We have a long queue because there is only one person that is attending to us, besides the PoS is not working. There is need to get more people involved in bill collection, and also get the PoS working too. I have been here several times today and was told that the server is down,” he told The Nation.

ATMs withdrawals accounted for 93 per cent of electronic payments by volume in the first half of 2013, according to CBN data. Mobile money also hasn’t taken off in Nigeria, with phone payments accounting for just 3.7 per cent of all electronic transactions. The mobile money which allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of PoS terminals to pay for goods and services among others is under threat.

The telecommunication companies (Telcos) and banks which are expected to jointly drive the process are not doing so. Both sectors want to drive the mobile money business and have found it extremely difficult to work together.

General Manager, IBM Africa, Taiwo Otiti, said strategy being adopted by the key stakeholders is stifling the success of mobile money operation in the country.

He said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users, the people who are unbanked, may have mobile phones, but how would you get them into the financial system. You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. But many of the stakeholders are not doing that”.

Otiti said the getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift, that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin to deliver the needed results,” he said.

So far, the CBN has licenced 21 mobile money operators, but the challenge remains how to link mobile money to the PoS, among other issues.

“That is a challenge that we are also working on. If mobile phones can serve as a touch point, our transactions would go up rapidly. So, these are some of the things we are looking at, hoping that by next year, as we roll out more PoS machines, we have to see how we integrate the mobile phones into the network because in the hinterlands, the challenges would be more. We hope to roll-out to all the state capitals by the second quarter of this year,” the CBN said.

It explained that the second anniversary is an opportunity for operators and regulators to come together and talk about how to continue to transform the payment system in the country.

“Of course we have ratcheted up transactions around electronic payment. We haven’t done badly at all, but there are still a lot to be covered and we have made significant progress in the area of infrastructure provision, particularly led by the cashless programme of the CBN. We believe that if we continue to drive this, then we will make the payment system a lot more efficient,” it said.

Also, the CBN said an efficient payment system is good for the transmission of monetary policy and that is why it is important to us at the CBN. It is also good for financial stability because a stable financial system is seen through how efficient the payment system is.

While mobile payments increased more than threefold in recent years, only N6 million was transacted using mobile money, compared with N57.2 billion ($352.5m) on ATMs, and PoS.

The CBN bank wants commercial lenders to drive growth rather than phone operators because they regulate the banks and not the telecommunication companies, Moghalu said.

Even among Nigerians with ATM cards, cash still dominates daily business as connection and network difficulties and delays in transaction times get worse. There have been cases where consumers are debited twice for the same purchase.

About 40 per cent to 50 per cent of card-reader transactions also crash because of patchy radio and phone networks, Moghalu said. The CBN is trying to reduce failure to below 10 per cent over time, he said.

Fixing botched transactions causes “quite a bit of frustration” because they can take months to resolve, Bisi Lamikanra, a partner and head of management consulting at KPMG Advisory Services, said adding that with these hitches, consumers typically rather withdraw cash from the ATM, even if they’re withdrawing it outside the shop. The start of chip-and-pin-card technology in 2010 helped lower incidents of ATM fraud by more than 90 per cent.

Analysts said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. They insist that the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.