The central bank has announced it will launch national domestic cards in January 2023.
The Central Bank of Nigeria has said it would launch a national domestic card scheme on January 16, 2023.
The scheme will be launched through the Nigeria Inter-Bank Settlement Systems (NIBSS) in partnership with the Bankers Committee.
A statement by the CBN spokesperson, Osita Nwanisobi, said the scheme would accelerate financial inclusion and deliver lower cost payments services that are more accessible and affordable for Nigerians.
"Nigeria is Africa's largest and most vibrant economy and the pace of digitisation and innovation, alongside the expansion of mobile penetration and the proactive policy initiatives of the CBN have driven the accelerated adoption of digital financial services," he said.
"Considering the strength and breadth of its banking sector and the rapid growth and transformation of its payments system over the last decade, Nigeria is ideally positioned to successfully launch a national card scheme," he said.
The bank said apart from fostering innovation within the Nigerian domestic market, the scheme would allow banks to offer a variety of solutions including debit, credit, virtual, loyalty and tokenized cards amongst others.
By launching the scheme, the CBN said Nigeria would join countries like India, Turkey, China, and Brazil who have used this means to service the underbanked areas in their jurisdiction.
"The CBN recognizes the significant benefits from delivering Africa's first central bank-driven, domestic card scheme, which when delivered at scale has the potential to become the largest in Africa, and one of the largest in the world".
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The bank also said domesticating the card scheme would further enhance data sovereignty, enabling the development of locally relevant products and services and reducing demands on foreign exchange.
HOW WILL THIS WORK
The CBN has not provided full details of how the scheme will work. But a national domestic card is expected to rival Visa and Mastercard, the market's biggest players.
Visa and Mastercard have dominated the card payment market in Nigeria. While they remain convenient especially for international transactions, domestic cards are expected to better serve the unbanked market and increase competition within the payment landscape.
The cards should also have the capacity to reduce Nigeria's reliance on foreign-owned financial services companies.
But the direct participation in the market by the central bank may disrupt the market structure and innovation by other players. It may also crowd out competition.
