Cashless Transactions
Platforms, Challenges and Opportunities
The Story
A paper presented at the annual Conference of The
Computer Professionals Registration Council of Nigeria
Segun Akano
CEO, Upperlink Limited
How We Got Here…
o CBN introduced a cashless policy which is to enhance the Nigerian Payment
system, reduce the use of cash in payments for goods/services and improve the
use of Electronic Payment Systems.
o The specific advantages are to reduce the heavy burden of Cost of Cash
Management, Security of money and people, Money Laundering, Transaction
Losses due to Fraud and Counterfeit among others
o The policy attempts to place a tab on a daily cumulative cash lodgments &
withdrawal from banks of N150,000 & N1m for individuals &corporate
customers respectively .
o CBN recently reviewed upward the limit for free cash transactions for
individuals to N500,000 from N150,000 and for corporate bodies to N3
million from N1 million
The policy took off in Lagos on April, 1, 2012 and is expected to begin
nationwide in Jan 2013.
o Since its implementation, many issues have arisen and there have been efforts
made to respond to them
o
The Journey So far…
• Presently there are between 18 to 20 million different types of cards in the
hands of Nigerians.
• There are over 60,000 POS in use across Nigeria presently. CBN plans to
deploy 350,000 by 2015 of which 90,000 will be done in 2012 alone.
• POS Transaction grew from N100m in May 2011, it has now reached
N2.34bn in May 2012 with over 7000 transactions done daily (about N78m
per day)
• POS transactions are expected to grow by 200% in the next year
[Interswitch}
• Of the over 11,000 ATMS deployed nationwide, transactions have hit 110m
monthly up from 100m recorded as at last year July.
• CBN has however encouraged the banks to deploy additional 75,000 ATMs
to beef up capacity.
Cashless (Cashlite) Regime: What is
involved?
Specific economic activities covered within the context of the cashless
initiative include:
-Paying for services
-Buying items
-Subscribing for services
-Collecting from one or more payer
-Aggregating deductible funds.
Cashless (Cashlite) Regime: Platforms
There are about 6 Principal Platforms viz:
-Point of Sale Terminal [POS]
-Automated Teller Machines [ATM]
-Web Gateways [Paydirect/Webpay]
-Mobile [M-Money]
-NIPS [NIBSS Instant Payment System]
-Account-to-Account Transfer [NEFT, RTGS]
Cashless (Cashlite) Regime: Stakeholders
Cashless Transactions Stakeholders include but not limited
to:
1. Merchant Acquirers [Banks]
2. Card Issuers [Banks]
3. Merchants [Stores, Schools, Hospitals, Churches]
4. Cardholders [Individuals]
5. Card Schemes and Card Associations [Loyalty Schemes,]
6. Switches [Interswitch, Chams, Etranzact]
7. POS Terminal Owners
8. Payments Terminal Service Aggregator (PTSA) [ITEX]
9. Payments Terminal Service Providers (PTSP) [Paymaster, Etop, Citiserve,
Valucard, EasyFuel and ITEX]
10. Processors [NIBSS]
11. Independent System Operators (ISO) [Systemspec, Parkway,
Upperlink]
Cashless (Cashlite) Regime: Enablers
Enablers are firms who on the face-value capabilities of the Cashless
PLATFORMS build several solutions for organizations to manage outflow and
inflow of Money through these gateways. Specific examples are:
1.
2.
3.
4.
5.
-
-Payment Suites [eg. PayChoice, Remita]
-Collection Suites [BranchCollect, Remita, PayChoice, BankCollect]
-Payroll Application
-E-Commerce Solutions
-E-Wallet Products
Cashless (Cashlite) Regime: Challenges
Some are rather best described as ‘Teething
Problems,’ Others are systemic and require
conscientious consideration:
1.
2.
3.
4.
5.
6.
7.
Poor communications network
Limited POS deployed
Interoperability of Cards on the platforms
Poor response time to customer complaints
User apathy
Vulnerability to fraud
Insufficient sensitization
Cashless (Cashlite) Regime: The Gaps
1. In the face of all these Nigeria still lags behind many nations in the use of
ATMs and PoS terminals.
2. ATM per individual is very low in Nigeria and calls for immediate actions
as shown:
Country
ATM/100 people
United States
169
South African
55
Nigeria
12
3. 80 % of the cash in Nigeria’s economy is still locked up in the hands of the
economic participants in the informal sector.
Cashless (Cashlite) Regime: Opportunities
1. It is estimated that cashless transactions in Nigeria is expected to grow at
an annual rate of 85% in the next 5 years.
2. Forecast has it that overall transaction processing for banks and other
financial services would surpass $15bn (N2.4trn) by the end of 2012.
3. Many more levels are expected to be created in the E- Business Value
Chain that will open up our economy.
4. It is hoped that, if the immediate challenges are adressed, the objectives of
CBN would have been met on the one hand and Nigeria will be on her
way to be among the top 20 economies in the world by 2020 as
envisioned by the present political administration.
Thank you