By Amaechi Ogbonna
With a population of over 200 million people, a large percentage of which having access to financial services, Nigeria’s rating as Africa’s largest economy endows it with significant opportunities for businesses to grow and expand their operational capacities across the country.
In an era of rising financial services and competitiveness, no customer wants to left in the lurch, hence the craving for better, faster and prompt service delivery remains a major determinant in the list of choices available to customers.
Moreover, given that electronic and digital marketing services are consistently disrupting traditional physical offerings, most bank customers now prefer to be served on the go, without losing focus of value and timeliness of service providers.
Working under a cloud of favourable regulatory policies from the Central Bank of Nigeria (CBN), there are ample evidences to prove that Nigeria has indeed made great progress in creating a robust payment infrastructure with various reforms targeted at growing the entire ecosystem.
However, in providing such sound payment system infrastructure where stakeholders and customers can conduct business transactions with confidence, trust and timeliness, the Central Bank of Nigeria (CBN) in collaboration with the Bankers Committee, Nigeria Inter-Bank Settlement System (NIBSS) and other payment industry players have consistently focused on transforming Nigeria’s Payment Systems architecture in a manner that continuously provides solutions to increase resilience of infrastructure by encouraging the usage of electronic payment methods across the nation.
So far, these efforts have over the years added value to nation’s economy by making Nigeria a global leader in the payment systems infrastructure.With recent developments in the country’s payment system, there are evidently some clear indications it has began to leapfrog a number of advanced economies in matters of payment innovation, especially in the Instant payment space.
The journey has been quite eventful over the years, considering that in 2011, for instance and at the time most small & medium enterprises and other service providers in the country desired a payment platform that delivers instant value; Nigeria demonstrated its capacity as a forward-looking country within a vibrant financial & payment service industry.
Through the mandate of its apex bank to ensure the safety and stability of the Nigerian financial system, a faster, simpler and a more efficient means of payment was birthed.
The introduction of the NIBSS Instant Payment (NIP) platform had indeed transformed the way Nigerians pay for goods and services locally and internationally.
Leveraging this platform, the NIP has provided more opportunities for financial institutions and other players within the ecosystem to innovate and provide more payment options.
Shortly after that innovation, another national initiative launched by the Central Bank of Nigeria, Bankers Committee and implemented by NIBSS in 2014; the Bank Verification Number (BVN) was developed to harmonise the financial sector and improve banking operations, enhance credit advancement to bank customers and also encourage financial inclusion.
With strong collaboration across the ecosystem, NIBSS has thus far facilitated the growth and proliferation of BVN with the management and issuance of unique identification number to customers across the country.
But on the back of these reforms came more improvements in 2015 and 2019 respectively, the Industry Fraud and Trapped Card portals, were developed by NIBSS as portal services provided to the financial industry for stakeholders to monitor and report fraud for proper management of debit/credit cards trapped at various ATMs across stakeholders’ service point.
Addressing the need for speed and transparency in platform integration & certification as well as industry efficiency for Know Your Customers (KYC,)in 2020 and 2021 respectively, NIBSS created an Industry Sandbox and a Centralised Address Verification service that gives access to all NIBSS services in a single suite thereby allowing financial institutions proactively carry out KYC to verify their customers respectively.
Payment experts who commended the introduction of these innovative solutions concluded that the Nigerian payment system has evolved significantly over the years leveraging wide spread technology advancement to simplify payments and deepen financial inclusion.
Sequel to the COVID-19 Pandemic, globally, research had shown a major shift to contactless payment options with a number of countries like China, India, Thailand, Ghana, Singapore, Malaysia pioneering solutions with Quick Response Code.
In the global pursuit to bridge the gap within a fast-evolving payment landscape, it is evident clear that Nigeria has not been left out of the race.
Only recently, the National Quick Response Code (NQR); another initiative driven by the Central Bank of Nigeria (CBN) and implemented by Nigeria Interbank Settlement System Plc (NIBSS) made its debut to further strengthen the ecosystem.
With NIBSS providing efficient integration process for financial institutions to leverage APIs, NQR delivers instant value for P2B, P2P and B2B transactions with a more improved customer experience. This payment option has empowered Bank customers who own smartphones to easily access information provided by merchants for the purpose of making payments.
Today, it is being recognised that the competition is indeed cash and it’s believed that cash is overripe for disruption. Thus, as a nation, economic experts have argued that Nigeria must embrace a cashless economy, by encouraging the provision of platforms to enable seamless transactions to boost business expansion where cash is efficiently disrupted.
Over the past few years of its introduction, the Nigeria payment industry has continued to adopt initiatives geared towards creating convenient ways of making payments and extending electronic payment benefits to Nigerians even at the bottom of the pyramid where use of cash has remained predominant.
The critical questions at this around is to uncover
1. How many participants do we have in the payment’s value chain
• There are multi-variant and inter-dependent participants in the payments value chain ranging from
Deposit Money Banks (24); Merchant Banks (6); Non-Interest Banks (3); Mobile Money Operators (16); Switching & Processing Companies (13); Card Payment Schemes (7); Payment Solution Services (39); Payment Terminal Services Providers (19); Super agents (19); International Money Transfer Operators (47); Payment Service Banks (5); Micro Finance Banks (887); Finance Houses (106); Primary Mortgage Banks (34); Development Finance Institutions (6); Holding Companies (7)
2. What is NIBSS’ role and every other participant’s role in the payment’s value chain?
• NIBSS is a critical shared service provider and National Central Payments Solution for Nigeria.
• NIBSS is the processor and manager of the Bank Verification Number which is the bedrock for customer identity, Know Your Customer (KYC) and due diligence in financial institutions.
• Within the Payment processing space, NIBSS is a routing agent for outward payment push from transaction originating institutions to beneficiaries receiving institutions and vice versa for collections.
• We facilitate the settlement of all payment schemes in conjunction with the CBN to avert industry exposures.
3. Under what circumstances can NIBSS or any of the participants be held responsible for delayed or failed transfers/transactions?
• Delays are relative, as it is the responsibility of every player in the financial system to ensure due diligence in mitigating risks.
• Transfers sometimes fail when the receiving institution is not available to apply funds
• Transaction failures not occasioned by system glitches are fool proof of the resilience and reliability of the payments processing system and it is positive to the industry.
• Also, there is an Industry process regulated by CBN for addressing delay or failed transactions.
Other include • Unfunded customer’s account • When a transfer limit is exceeded or an account is blocked from receiving reasons include: inflows.
4. When there is transfer reversal failure, what are the possible causes? And which member of the value chain is responsible to activate reversal?
• Transfer reversal failure will occur when the owner of the account to be debited fails to authorise debit into his/her account. Where this happens, the resolution of reversals goes into Dispute Resolution via the Industry Dispute Resolution System (IDRS) domiciled in NIBSS as an industry wide service
• The processing Bank is expected to reverse failed transactions instantly or within 24hours in line with Industry SLA (maximum period is 72hours in line with CBN regulations)
• The person/customer that initiated the original transaction is responsible for activating reversal through his/her financial services providing institution.
• For electronic transactions the expectation is instant reversal or within 24 hours and if this didn’t happen the account holder should visit his/her bank to log it as a dispute, this should be treated within 72 hours.
5. We have noticed some stability within payment processing, in recent times, what has NIBSS and the Central Bank done to elevate the speed of transactions.
• Standards and operational procedures are set in collaboration with critical stakeholders who are constantly engaged through several stakeholders’ fora at which everyone gives their inputs.
• Infrastructure Capacity Enhancement: All players have also committed to improve on their network and infrastructural facilities.
• Monitoring Tools: NIBSS has provided to stakeholders a real-time solution for proactive monitoring of transactions and uptime.
• Collaboration and partnership with Banks & Industry Stakeholders
• Dedicated teams to resolve challenges proactively and as they occur.