12 December 2012

Nigeria: Towards Efficient E-Payment in Nigeria

Experts have a common agreement, that Nigeria needs a strategic agenda to fast track the country's move towards an efficient electronic payment system.

Such agenda must incorporate a programme of incentives for electronic payment usage, balancing of cooperation with competition and massive education and enlightenment.

They also want expansion of service offerings on electronic payment channels especially Point of Sale (PoS) terminals; a business approach to electronic payment; and full adoption of electronic payment by the government.

At the recently concluded second annual conference of the Committee of e-Banking Industry Heads (CeBIH) in Calabar, Cross River State, experts such as Division President, Sub-Saharan Africa, Mastercard Worldwide, Daniel Monehin; Deputy Director, Banking and Payment System, Central Bank of Nigeria, Mr. Emmanuel Obaigbona; and Managing Director, Nigeria Interbank Settlement System, Mr. Ade Shonubi, agreed that Nigeria needs an efficient e-payment system.

Speaking on the theme of the conference, "Developing a market structure that works: Challenges and Prospects for the Nigerian Payment System", Obaigbona and Shonubi said while there are still a lot of challenges in the quest to move the country from cash to electronic payment, there have been significant achievements especially in the deployment of electronic payment channels like ATMs, Internet, PoS and electronic money transfer.

They observed that the improvement made was the product of collaboration among stakeholders, and that there is need to consolidate on this.

Shonubi stated: "Developing a Nigeria payments system that works requires unbiased regulation and oversight over the financial system practitioners by the regulatory authorities and collaboration between major stakeholders in the e-payment value chain."

Obaigbona on his part said: "The cashless policy was primarily aimed at enthroning electronic payment and we are making progress but we need ideas from this group. We are supposed to come together because CBN encourages collaboration.

"We need to hear from you. You are the experts on electronic payment. It is from your own perspectives that a lot of things happen. You tell us your own views, we look at them and we invite you to discuss and we would be able to come up with something for the industry."

Chairman of CeBIH, Chuma Ezirim, said while collaboration is needed to set standards and build infrastructure to reduce cost for the industry, there is however need to balance cooperation with competition.

"Centrally-agreed common features can sometimes hamper product and/or service differentiation and innovation at the individual service provider level. A key question is what factors the authorities and key stakeholders should consider in balancing cooperation and competition in retail payment systems," he said.

He noted that while it is the responsibility of central banks to provide oversight and regulatory functions to deal with conflicts of interest and balance cooperation and competition in order to achieve optimal availability and affordability of payment instruments, "the CBN however should not unduly interfere in the provision of electronic payment access services in the country, which is an area that gives banks the opportunity to compete for product/service differentiation and innovation."

Daniel Monehin of Mastercard suggested the need to facilitate acceptance of electronic payment channels, especially PoS.

He called for a programme of incentives that will compel cardholders and merchants to accept PoS.

He said: "In my experience in markets like South Korea, what was used there was a dual approach. What I see mostly in Nigeria is a single approach.

"In Nigeria, we see the stick, we see the penalties, we see the charges, but we don't see the carrot; like telling people, if you embrace electronic payment, here is the pat you will get on your back.

"The picture of merchants that keep PoS under the table will be very uncommon if you have programmes in place that motivate that merchant to record a sizable portion of his revenue on that terminal. Such that it would be like the developed markets, whereby as you are opening your business you will get your PoS connected because that is your gateway to your revenue."

He, however, noted that government's active participation is critical to the enthronement of electronic payment irrespective of the model adopted by operators and regulators.

He said: "I am yet to see any government across the world that made bold moves in payment like the Nigerian government. The only difference is they are directing everybody to do it but they are not doing it."

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