Impediments to Effective e-payment System

sanusi-lamido 2According to Mrs. Dorothy Gordon, director-general, Kofi Annar Centre of Information Communication Technology (ICT) Ghana, the success of M-Pesa in Kenya has provided the template for other countries within and outside Africa to emulate.

This has brought to fore the cashless initiative of the Central Bank of Nigeria (CBN) and the impediments that has almost thwarted the success of the policy towards an effective e-payment system. However, there are indications that various e-payment machinery put in place are not functional, and this could be linked to the 115,000 units of point of sales terminals (PoS) out of 150,000 already deployed in Lagos.

This is seen as an indication that the initiative by the CBN, which has been instituted in other states of the country, may be a failed attempt.

Commenting on this, stakeholders rendering support solutions to the banks, stated that the cashless policy has failed because other infrastructure deployed by banks are also not working as expected, a situation that has led to congestion in the banking halls. The PoS in business concentrated areas, have been found to be out of order due to lack of power and broadband infrastructure to drive them. It was also gathered that most of the decision by the apex bank are not well directed towards the success of the policy.

According to Mr. Soji Arowolo, group managing director, Robert Johnson Nigeria Limited, the policy by the CBN that banks should route their PoS transactions through Nigeria Inter-Bank Settlement System (NIBSS) Plc, is not favourable for the deployment of these instruments of payment system.

He said this means that banks cannot deploy PoS on their own as that it is a bad policy as it does not allow massive utilisation of the machines in enhancing transactions.

Also, Dr. Gbolahan Dada, chief executive officer and managing director, Joe-Han Network Marketing Ltd, a banking solutions provider, however, advocates that the cheque system of payment should be adopted, as it can take a lot of money out of the payment system, since the enablers in fostering a robust cashless initiative are not there. “These difficulties can be avoided in a cheque system which involves easy transaction,” he said.

He further decried the CBN’s over-regulatory policies, which sometimes kill investments; as the governor of the apex bank need to have a human face sometimes, considering the huge sack of bank staff in recent times.


Commenting on this, Mr. Tony Okafor, assistant director, CBN said the mobile money market is one of the channels that drive the cashless policy of the apex bank. “The cashless policy lays emphasis on less use of physical cash and the use of alternative means of effecting it, like the point of Sales terminals, debit and credit cards. We have just started, and last year we commenced the cashless policy thing in Lagos and by 1st of July this year, we migrated to five additional states in the south-west,” he said.

He explained that the pace of acceptance is not slow as the development has to be assessed before steps are taken towards its enhancement. “If the impact of what the CBN did in Lagos is slow, there is no point migrating, the banks have to address that first because we look at Lagos as a mini Nigeria and that’s why we started with it.  We have migrated to the second phase and then to the third till the entire country is covered,” he stated.

According to him, the infrastructure to drive the mobile money scheme is not adequate and that with time, there would be progress, like what is obtainable in Kenya.

ATM Maintenance:

However, the huge cost of maintenance spent on Automated Teller Machines (ATM) used by the commercial banks in the country is alarming. This amounts to about N29.7bn annually on the almost 10,000 machines deployed for electronic payment and cash transactions.  But the rate of maintenance of these ATMs has reduced due to the withdrawal of the N100 charges on transactions made by customers, as the banks no longer found the service profitable and the machines very expensive to maintain. This is however, coupled with the cost of sustaining the increasing numbers of staff in the banking halls, due to the malfunctioning process of these machines which often leads to congestion.

A closed source to the CBN, the apex bank, stated that at the commencement of the ATM service in the country, CBN knew that the commercial banks would not be able to handle the machine payment system effectively, but have to allow the process to continue to boost the payment system to meet with development in the global financial sector. “What would the banks maintain if they are not making profit from the transactions from them? They have now decided to minimise cost by not carrying out regular maintenance processes, a situation that has made the banking halls to be congested.

Security Measures:

In a paper presentation, Mr. Abayomi Atoloye, former director, Banking and Payment Systems Department, CBN, said the framework for mobile payment recognises the need to comply with best international standards and relevant global regulations. For instance, the Know Your Customer (KYC) as well as Anti-Money Laundering requirements and mandatory fidelity insurance for the activities of the agents, are applicable in contracting agents. The Framework stipulates rights and responsibilities of all the parties including users to avoid undue delay in resolving customer complaints, stipulates a maximum of three (3) working days for the resolution of all issues that may arise, and the right of appeal of consumers to an ombudsman for dispute resolution.

He said CBN is collaborating with the Nigerian Communications Commission (NCC) to address issues that might hinder the efficiency of mobile payments in Nigeria especially from the telecoms companies.

Atoloye added that the risk of mobile payment fraud can be reduced by increasing customer awareness, but even more effectively by improving security, that the current efforts of the CBN and banks in public awareness campaign should be intensified, that the Payment System Oversight Office will intensify efforts in monitoring compliance to guidelines and regulations on payments system, and the current efforts of the CBN Management on shared services or common payment infrastructure, will reduce cost of provision of payments services.

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