News Column

Nigeria Has World's Cheapest POS Charges - NIBSS

May 16, 2014

Kingsley Ighomwenghian and Sola Alabadan

Top officials of the Nigerian Inter-Bank Settlement System (NIBSS) met chief executives and their representatives in the nation's banks last week to discuss unfolding realities in the nation's electronic payment space and the need to put structures in place for the envisioned growth in the coming months and years.

The event was a NIBSS breakfast forum in Lagos, where the organisers introduced the Business Activity Monitoring Tool (BAM), to further check the incidences of card frauds perpetrated through Automated Teller Machines (ATM) and the Point of Sale (PoS) terminals, with innocent Nigerians losing their deposits to card frauds.

Speaking at the forum, top officials of NIBSS said the new tool is necessary to monitor all bank transactions on various electronic channels.

Meanwhile, NIBSS also used the occasion to announce that the Bank Verification Number (BVN) system would take off by May end with 2000 devices to capture bank customer data.

In a nation that is working at gradually moving the populace away from cash to electronic portals, the need for confidence boosting, keen observers agree, had become very necessary, to ensure the success of the ongoing cashless policy which goes nationwide in July.

One other touchy point at the parley was clarifications around the perceived high charges paid by merchants for transactions on PoS terminals. Executive Director, Technical and Operations at NIBSS, Niyi Alao, told Daily Independent on the sidelines of the forum that a global review of the PoS charges would reveal rather that Nigerian merchants pay the least cost comparatively.

According to him, "I hear comments like merchants saying they don't want to pay for PoS transactions. We are saying pay 1.25 per cent, which is the least in the whole world. Every other countries I have studied, the minimum the merchants will pay is three per cent, but with the Central Bank of Nigeria's intervention and the banks working together, it was agreed that let us not charge the merchants more than 1.25 per cent, even subject to a maximum of N2000. All that has been done so that all these players can recoup their investments so that the businesses can continue and you can have more terminals in town and the terminals are properly supported."

Chief Executive Officer, Electronic Payment Providers Association of Nigeria (E-PPAN), Mrs. Onajite Regha, stated early last year that the value of electronic fund transfers was N80 billion per day, quoting the Central Bank of Nigeria (CBN). Of this amount, NIBSS reportedly handles transactions worth about N20 billion daily, while the Nigeria Electronic Funds Transfer conducts about N60 billion transactions daily.

Regha recalled that by the time we started the Cash-less Lagos scheme, the projection of the regulator was that by December, 2012, we would have recorded 40,000 PoS terminal deployment. But available data showed that we now have about 150, 000 PoS machines in Lagos.

The figure, Ajao said has greatly increased today, resulting in almost two million PoS transactions "on a monthly basis currently and as soon as the cashless extend to other parts of the country, we expect the figure to double in the next six months. With the trends in other countries that have done cashless, one can easily project how many PoS you are expecting in the next six months.

"We have done proper scaling: the servers, what specification and size, the network. In fact, every party in the system has really enhanced capacity believing the volume would come up and we don't want it to catch up with us by surprise," he added.

Cashless policy

Still on the cashless policy, Alao said last week that the campaign started in January 2012 and that "right from the beginning, we did our scaling, and we did our calculations. Looking at the size of the Nigerian economy, it is easy for you to easily project. You look at the economy, the population, the volume of commerce that is going on, and look at trends in other countries that have done cashless. With all that, you can easily project how many PoS transactions, what value of transactions are you expecting to see in six months, one year and even in next five years. So, right from that time, we have done proper scaling, we know the servers we need to use in terms of size and specifications and the network links we need to have in place.

"Maybe we are doing just 64 kilobyte before, in fact today all the banks have not less than two megabytes bandwidth of link to the central switch. That is investment.

Every stakeholder group in the value-chain in the systems, he continued, "had to really enhance capacity because we know the volume will come and we don't want the volume to come and catch us by surprise. So, there is investment made already by the banks, NIBSS, PTSPs like Citiserve, Unified payment system. A lot of investments have been put into it. That is why we always appeal to merchants."

With the cashless policy becoming nationwide in July, the NIBSS boss expects the number of PoS to double within the next six months, as it has been since 2011 when the pilot phase of the policy started in Lagos.

"Between now and December, that figure will definitely double. People have now realised that cashless is good, it is convenient and that it makes life easy. Everybody is staying on it. The habit is catching on. However, six years' time is so far given the trend of things now. So, don't let me give you figure off my head. I can say from my own calculation that within the next six months, we expect the figure we have to double; we can begin to extrapolate from that," Ajao added.

Global tracking

Also commenting, Mrs. Christabel Onyejekwe, Executive Director, Business Development at NIBSS, noted that ahead of the transition to the cashless programme, NIBSS put measures in place to ensure that all cards issued in Nigeria can be tracked globally. The application, she explained, is a robust solution that enables the user to have a wider visibility of transactions simultaneously in more than one bank.

The CBN, she stressed, "has given NIBSS the power to host the anti-fraud platform for the entire industry. So what we are trying to do is that for all cards that are issued in Nigeria, wherever in the world you are using it, we can track it. So, the anti-fraud solution attempts to arrest possible fraudulent transactions on your cards, so long it is a Nigerian card anywhere in the world. The difference is that you are able to checkmate your security. Some of those things we tell you 'manage your pin well', 'know what you are doing,' we try to do that better clearly. So, we are trying to be more conscious and advising both the banks and the community at large as to what to on the security issues."

The newly introduced BAM tools, would enhance operational efficiency of Nigerian banks, as it has the capacity to monitor multiple services.

She added that the solution was designed to capture high performance and process large scale data loads to produce intelligence at the appropriate time.

Onyejekwe identified other features of the application to include: access real-time information anytime anywhere through an internet connection (i.e. NIBSS-Bank VPN connection), access for multidisciplinary bank teams, access to dashboards of banks activity per service and receiving alerts from fall out of the thresholds directed to operational and management teams.

She pointed out that there was a need for proper monitoring of transaction card, as it enables the bank to react promptly to events, predict the trends, as well as alert teams instantaneously to solve problems.

"We want to sell a tool which the banks would for their day to day activity monitoring for their transactions on electronic channel to be able to foretell what is going on and arrest all the issues arising from that. NIBSS is a shared service infrastructure and that means we can see all systems everywhere so long as they are connected to NIBSS, unlike the banks that will see segregated transactions on their own platform, they may not have a wider visibility.

"Ours is more robust and more on line real time. Here every five minutes, the solution tells you what is going on and you will be able to track your transactions more even in other banks. The ant-fraud solution we are putting in place attempts to arrest possible fraudulent transactions with cards so long as it is a Nigeria card," she noted.

On the difference between the BAM tools and existing ones, Onyejekwe emphasised that "NIBSS is a shared service infrastructure. That means we can see all systems everywhere so long as they are connected to NIBSS unlike the banks that are able to see only segregated on their own platform. They may not have the wider visibility. So the difference here is that ours is more robust, it is more online real-time, every five minutes it refreshes and tells you what is going on, so you are able to track your transactions more.

"Again, it simply means you can see more of your transactions across all the other banks, all the other networks, everything you are doing," she added.

The BAM tool, she continued "is a bit different from what we have done. Yes, because you can view all the products of NIBSS but as at today you are not able to monitor all at one go online real-time. That is how different it is. It is just a monitoring tool that was not in existence before."


Meanwhile, fielding questions during the breakfast meeting, Onyejekwe stressed that the BAM tool is a mandatory for banks willing to be ahead of competition, just as it better to be part of it from the onset.

On operators' request for time to evaluate the tool, she assured that there will still be training sessions apart from the demo shown during the forum, and that the system is to complement what the banks have been doing.

Still on the suite of products, she told the participants that tool also allows for bulk payment, which is ready, besides auto top-up for telecommunications and utilities companies. The 'Corporate Lounge' is undergoing pilot with the state government; Biometric Identification is ready; just as Person to Person payment; while Pay Africa is in the works. Still on the Corporate Lounge, she said it empowers corporate clients with accounts in many bank to see the balances in their accounts with every bank immediately, even as transfer can also take place, among other things.

She also implored the banks to talk to NIBSS more so that the organisation could know what their needs are.

Onyejekwe further assured participants that the tool is customisable.

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Source: AllAfrica