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Banks Outsource Payment Gateway Services to Fintech

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Some money deposit banks have started the outsourcing of their payment gateway services to payment platform providers, in a bid to ensure efficient service delivery and focus on traditional banking services.

 

Banks in the country as part of their services provide payment gateway for merchants who sign up with them to be able to receive payment through point of sale terminal, internet among other electronic payment channels.

 

But Zenith bank and Flutterwave, a financial technology services provider, recently inked an agreement to allow the bank to sign up merchants for the service while Flutterwave provide the payment gateway to ensure that the sign up merchants get payments through the various e-payment channels.

 

Reacting to this developments, Tunde Ogungbade, managing director, Global Accelerex , said that it is an expected and a welcomed development.

 

“Banks and other financial institutions need FinTech companies and Fintech companies cannot exist without Banks.  It is a symbiotic relationship.  The Banks and OFIs have the regulatory experience, operational expertise, business risk management and customer trust that have been built over decades and for some, even over a century.

 

“FinTechs bring the information technology agility and new business models, among other offering to enable Banks identify, grow and reach new market segment or serve exist ones at a low cost structure by using modern business computing platform to complement existing core banking platforms.

 

“FinTechs also serve as that research and development side of a bank to experiment with new products, services or solutions tailored to various segments without the need to modify stable and functioning core banking which are costly and risk prone.

 

“As more banks and FinTech see this relationship as a complementary rather that a competitive one, there will be more outsourcing agreements beyond payment that will be a win-win for both sides.  This is assuming there is no desire for customer ownership and control, or holding store value (money) on the part of the FinTech, which are critical to the identity and functions of Banks,” he said.

 

Corroborating Ogungbade, James Agada, managing director, CWG, said that such arrangement will save banks from making further investment in technology as well as maintenance of the infrastructure.

 

“I see more of such arrangement coming in the industry. I don’t think any bank would want to stop the trend,” he said.

 

A payment gateway is a merchant service offering that is provided by a Payment Service Provider either directly to merchant or in partnership with a bank.

 

It was traditional required for e-commerce to enable a third party know as a Payment Service Provider to serve merchants who need to accept payments online so that such payments can authorize and processed for the merchant and the funds settled.

 

Since all funds have to end up in a bank at settlement, these payment gateways need to connect to a bank eventually, either directly or indirectly.

 

Relationships with Card Schemes, such as Visa or MasterCard can only be through a bank or at the introduction of a bank, at least for the initial first card scheme relationship to be established. This is because these schemes only have banks or OFIs as members.

 

Banks do incur fixed cost for establish card scheme membership so utility is key. There can be several business models and roles played by a FinTech acting as a Payment Gateway which depends on its agreement with its partner bank and its status with the Card Schemes.

 

 

 

 

 


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E-Financial

Nigerian Manufacturing Sector Contracts for 5th Consecutive Month – CBN

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The Manufacturing Purchasing Managers’ Index (PMI) in September stood at 46.9 index points, indicating a contraction in the Nigerian manufacturing sector for the fifth month.

This was disclosed by the Central Bank of Nigeria (CBN) in its September PMI report released last week.

According to the report, four out of the 14 sub-sectors surveyed reported expansion (above the 50 per cent threshold) in September.

It listed the expansion order as electrical equipment; transportation equipment; cement and nonmetallic mineral products.

It said the remaining sub-sectors reported contractions in the following order: petroleum & coal products; primary metal; furniture & related products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; fabricated metal products and plastics & rubber products; while the paper product sub-sector was stable.

Production

At 47.3 points, the production level index for the manufacturing sector indicated contraction in September for the fifth consecutive month.

Of the 14 sub-sectors surveyed, five recorded increased production level, one reported same level of production, while eight recorded declines in production.

New Orders

At 46.4 points, the new orders index also contracted in September for the fifth consecutive month. Six sub-sectors reported expansion in new orders, while the remaining eight recorded contraction in the month.

Supplier Delivery Time

The manufacturing supplier delivery time index stood at 53.5 points in the month, indicating a faster supplier delivery time for the fifth time.

Six of the 14 sub-sectors recorded improved suppliers’ delivery time, five reported same level, while three recorded slower delivery time

Employment Level

The employment level index stood at 44.1 points, indicating contraction in employment level for the sixth consecutive month.

Of the 14 sub-sectors, two recorded growth in employment, three recorded same level of employment, while the remaining nine recorded lower employment level in the review month.

Raw material Inventories

The manufacturing sector inventories index also contracted for the sixth consecutive time in September to 43.0 points. Four of the 14 sub-sectors recorded growth in inventories, while the remaining 10 recorded lower raw material inventories.


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FG Sacked IST Members over Fraud- Ahmed

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Mrs Zainab Ahmed, minister of Finance Budget and National Planning, has said the Federal Government sacked some past members of the Investments and Securities Tribunal (IST) as they indulged in corruption.

FG Sacked IST Members over Fraud- Ahmed

Inaugurating the new members, the minister charged the new members to eschew corruption and be forthright.

Bar. Azi Amos Isaac was appointed as Chairman for a five year term and Bar. Nosa Smart Osemwengie, was re-appointed as member for a second term of four years.

“The problem with the tribunal has been infighting amongst members, lack of industrial harmony and series of complaints bordering on maladministration.

“This has been the bane of the tribunal and a source of embarrassment not only for the Ministry of Finance but for the government in general,” Ahmed said.

The new chairman, Azi, assured the finance minister that, “the teething issue of restiveness has been addressed since he assumed duty,” adding that, “The place is calm and the staff have become very supportive.”

Azi said since 2003, the tribunal has “given judgment in the value of assets worth over N844 billion and that from 2017 to date, they have given decisions in monetary value totalling over N28bn.

“It has not failed in its adjudicatory responsibility.

“It has carried out its assignment with candour and integrity and intends to improve on what has been on ground.”

 


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CBN Bans Customer-to-Customer Forex Transfer

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Central Bank of Nigeria (CBN) has banned transfer of foreign exchange (forex) from one customer to another.

CBN Bans Customer-to-Customer Forex Transfer

According to the apex bank, forex cash lodgements into domiciliary accounts can only be done by the account owners henceforth.

An internal memo available in the media space explains that the new guidelines are necessary to review the utilisation of inflows into customers domiciliary accounts.

The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.

“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.

“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”

It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A.

Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.

Offshore forex inflows from other Nigerian banks and internal account to forex transfers sourced from offshore inflows are to be used for trade transactions subject to eligibility for E-Form M.

“Upon confirmation of the legitimacy of the inflows, customers can have unfettered access, subject to a maximum of $50,000,” the document read.

“Utilisation for trade transactions subject to processing of eligible trade transactions using E-Form M. Payment for services must be backed with demand note from offshore beneficiary and other regulatory documents.

“Related party transfers are allowed to the maximum of the inflow received. The transfer request should be backed by a signed instruction from the account holder.” Payment of government fees and levies are also allowed to the maritime, oil and gas, aviation. government parastatals and export processing zones.

 


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