By AYOOLA OLAOLUWA
The Central Bank of Nigeria (CBN) cashless policy has continue to spur the growth of digital and electronic payments in the country, Business Hallmark can report.
The CBN, it would be recalled, had in December 2001, introduced the cashless policy in a move to reduce the amount of cash in circulation, thereby encouraging the use of electronic platforms for payment for goods and services.
While the pilot programme started in Lagos in January 2012, the policy was extended to Ogun, Rivers, Anambra, Abia, Kano and the Federal Capital Territory on July 1st, 2013. On July 1st, 2014, the policy kicked off in the remaining 30 states of the federation.
Eleven years into the programme, the policy has recorded some successes, with the use of electronic platforms for settlement growing exponentially.
According to a report by the Nigeria Inter-bank Settlement System (NIBSS), transactions worth N204.5 trillion were performed electronically in the country between January and July 2022 through the settlement’s instant payment platform (NIP).
This represents about 40% appreciation, when compared to the N145.8 trillion figure recorded in the same period of 2021.
The NIBSS, which provides the infrastructure for automated processing, settlement of payments and fund transfer instructions between banks, discount houses and card companies, attributed the rise in the value of e-payment recorded to the increase in the volume of deals within the period.
The N204.5 trillion value, said the NIBSS report, was gotten from 2.7 billion transactions, an increase of 42% over the total 1.9 billion transactions recorded in the same period last year.
A breakdown of the 7 months data by NIBSS showed that the NIP platform recorded N26.6 trillion worth of transactions in January, 27.2 trillion in February, N31.8 trillion in March, N29.2 trillion in April, N29.6 trillion in May, N31.7 trillion in June and N29.3 trillion in July 2022.
Developed in 2011 as an account-number-based, online-real-time Inter-Bank payment solution system, the NIBSS NIP funds transfer platform, BH gathered, is preferred by financial institutions and their customers because it guarantees beneficiaries getting instant value of transferred funds.
The NIP grants customers access to banks and fintechs’ several payment channels, such as internet banking, Unstructured Supplementary Service Data (USSD), mobile apps, POS, ATM, kiosks, among several other payment channels.
Further breakdown of the data showed that the NIP, ATM and POS channels were the most employed in the period under review.
For instance, NIP and Point of Sales terminals were used 3.41 billion times in the period under review, compared to 2.40 billion times in the corresponding period of 2021.
Channel by channel breakdown of the terminals indicates that while POS in the country increased N1.05trillion in 7 months to N4.61 trillion from N3.56 trillion recorded in 2021, Nigerians transferred a total of N9.2 trillion from mobile devices between January within the same period.
In January 2022, the sum of N1.05 trillion was transferred from mobile apps, N1.09 trillion in February, N1.37 trillion in March, N1.37 trillion in April and May, N1.47 trillion in June, while the value of mobile transactions as of July 31 stood at N1.55 trillion.
However, in spite these seeming successes, available record shows that more than 90% of transactions in the country were conducted using cash and less than 60 million unique bank accounts as at November 2022.
On Tuesday, December 6, 2022, the CBN moved to further drive the cashless policy by directing all banks to suspend weekly cash withdrawals above N100,000 for individuals and N500,000 for businesses, starting from Monday, January 9, 2022.
The bank, however, allows individuals and businesses to collect above the stipulated amounts, but with the condition of paying a processing fee of 5% for individuals and 10% for businesses.
However, on Wednesday, December 21, the CBN revised its weekly cash withdrawal limits to N500,000 for individuals and N5,000,000 for businesses, after Nigerians protested against it.
Also, processing fees for withdrawals above the stated limits was reduced to 3% for individuals and 5% for businesses.
Meanwhile, new data by the NIBSS shows that spending on electronic bills such as power, PayTV and other utilities from January 2022 to November 2022, rose by N576.41billion, a 28.14% increase from the N2.05trillion that was spent in the corresponding period of 2021, to N2.63trillion.
According to the NIBSS, while the value of e-bills pay rose significantly in 2022, volume fell by 31.99 per cent from 841,796 in the 11 months of last year to 1,111,087.
The settlement platform revealed that the touch points for these payments include bank branches, Internet banking, mobile banking, USSD, and agent networks.
Also, a survey by Mastercard revealed that 91 per cent of Nigerians used digital platforms to make financial transactions in the first 11 months of 2022.
According to the Mastercard MEA Inclusion Survey 2021 report titled ‘Financial Inclusion – Connecting People to Finance, Health, and Education’, 46 per cent of total respondents chose utility bill payments and receiving salary as the most used digital financial transactions, followed by buying goods and services.
“There is now a greater awareness of mobile money, combined with a broader diversification in its uses. Consumers are now more open to using mobile money for more than just transactions.
“They are using credit, savings, and insurance products; in many cases, mobile money is being used to receive payments for services or products. Consumers are also paying bills and buying products using mobile money.
“Money transfers to and from family and friends come in as the fifth most used digital transaction, followed by saving and investment payments”.
Meanwhile, the adoption of e-payment platforms in paying bills is expected to continue its upward trend, especially with the CBN disclosing that cash payments in business transactions will reduce by 2025 as new naira notes circulate in the economy.
Making this known in its Payments Vision 2025 document, the CBN said by 2025, the country will aspire to have a cashless and efficient electronic payment system infrastructure that would facilitate financial services in all the sectors of the economy.
“The Nigerian payment landscape has many options that have displaced cash in recent times, including electronic bill payment, mobile phone top-up, and mobile and instant payments.
“The use of cash will naturally slow with the ‘mobile first generation’, which will be economically active by 2025, hence one of the focuses of the PSV 2025 is enhancing the cashless policy of the CBN.
“The PSV 2025 will focus the attention of critical stakeholders on contemporary developments that will drive digital innovations and payment in the future, such as contactless payments, big data and open banking”.
The CBN also insisted that the January 31st deadline for the exchange of old notes would not be extended.
BH investigation revealed that businesses, especially banks, payment channels and utility companies have introduced easy and self help apps in order to win more customers and reduce personnel cost.
According to findings, most companies have set up their own platforms where customers can make payments or resolved complaints without having to speak with customer control agents.
For instance, Ikeja Electric (IE) and Multichoice Nigeria subscribers can now purchase energy or pay for subscription through the companies mobile apps, ie-payments.com, eazy.gotvafrica.com and selfservice.dstvafrica.com respectively with no added fees.
While Multichoice subscribers can fix errors on their decoders or upgrade their bouquets through self help platforms at no cost while using the company’s apps, using the USSD option will only attract the normal SMS fees charged by telecoms companies.
Checks, however, revealed that customers who cannot operate or have internet enabled devices and prefer to patronise payment channels such as Paga, VtPass, Quickteller, Opay and others will need to pay the sum of N100 as commission (charges) on every transaction they make.
An Ikeja Electric customer in the Olaniyi, New Oko-Oba area, Samson Folarin, said he prefer patronising payment agents to buy energy instead of visiting banks or the energy firm’s offices.
“Though I normally pay a service charge of N100 anytime I visit POS agents for energy, still I prefer it to going to Ikeja Electric offices or banks for several reasons.
“One, I will need at least N300 to either visit the Jankara or Abule-Egba office of IE. That is outside the stress of going there to waste priceless time queueing up just to make payment where it will take me at least one hour to do that.
“But with just N100, a visit or call to the POS agent on my street will achieve that for me.
“I remember a time when my energy finished in the middle of the night on a weekend and I was broke and helpless. I just called the guy to sell me N500 energy. With his commission of N100, I ended up paying N600. I even learnt you can buy as little as N200 or N300 online.
“I don’t think that is possible in banks and IE offices where you can’t buy less than N1000 energy. If you add your transport fare and the stress of going there to it, you can see that it is a better choice patronising a neighbourhood POS agent”, Folarin stated.
Apart from utility companies, banks are also introducing mouth-watering products, a move that is fuelling the adoption of cashless policy.
A bank customer can now transact virtually every business online, including paying for utilities bill, school fees and even the purchase of data and airtime.
One of the Deposit Money Banks (MDBs), Polaris Bank, recently assured customers and non-customers of seamless transactions via mobile and alternate channels ’24/7′ without visiting its branches.
The bank’s Group Head of Strategic Brand Management, Nduneche Ezurike, stated that Polaris Bank’s channels such as Polaris Mobile, Polaris Xperience, ATMs, and PoS terminals are available to enable customers and non-customers to carry out their various transactions.
“VULTe digital banking platform makes it easy to bank on the go, enabling customers and non-customers to instantly meet their payment needs and obtain loans anywhere and at any time directly from their mobile device”.
According to Nduneche, VULTe allows customers to manage their accounts, send money, obtain loans, pay bills, buy airtime, pay merchants, and do other transactions without any stress.
“It is secure, reliable, convenient and available to everyone. We offer our customers more options for sending or receiving money to and from loved ones. They can transfer money to other bank accounts too”, he added.
Nduneche added that the bank’s extensive distribution network of SurePadiAgency Bank operators, spread across the country, are available to Nigerians in far-flung communities, where access to banking services is limited due to the lack of physical presence of bank branches.
Meanwhile, some experts who spoke on the continued growth of e-bills payments in the country attribute it to convenience, speed and cost effectiveness of transacting e-business.
“Unlike the physical means of payment, consumers using electronic channels don’t have to wait for long before their payments reflects. People can pay on the go and get the service immediately.
“So, convenience and speed are the two key drivers for it. Now that we are talking about financial inclusion with PSBs and other mobile money in areas without access to banks, people can use phones to carry out financial transactions.
“Another reason is that e-payments are more economical. Before now, Nigerians must pay physical visits to banking halls, Discos and DSTV offices to pay bills.
“But now, they can do that in the convenience of their homes and offices. They save transport cost they would normally spend transporting themselves to and from the banks or their providers offices.
“Apart from the cost of data, or USSD fees which are very minimal, Nigerians using e-channels most often don’t pay other charges.
“So, like I said earlier, mobile apps enable on-the-go payment. It is not location-based. Mobile is the way to go; mobile is what is driving adoption”, one of the experts informed our correspondent.