E-Financial
CBN Halts SMS Charges on Bulk Transfers
Money deposit banks can no longer take Short Message Service (SMS) charges on bulk bank transfers done through the Real Time Gross Settlement (RTGS).
The RTGS is an interbank funds transfer system on “real time” basis and “gross”. Settlement in the “real time” means that the transaction takes place almost immediately.
The banks were previously charging N4 per transaction or text message fee on all bulk transfers, but were directed by the Central Bank of Nigeria (CBN) to halt such fees in the interest of customers.
The CBN’s directive has further cut banks’ multiple revenue streams that form a major part of the huge profits they declared in recent years.
The Nigerian Communications Commission (NCC) had directed that any person subscribing to any of the Nigerian GSM networks must not be charged more than N4 for SMS, sent to other networks. The NCC set a price cap of N4 per message for all domestic Off-Net Messaging Service in line with Sections 4 and Chapter V11 of the Nigerian Communications Act (NCA), 2003.
Speaking on e-payment at a meeting with financial journalists in Lagos, Dipo Fatokun, CBN Director, Banking & Payments System Department, ‘, described e-payment as any form of payment that allows the use of electronics system to initiate, authorise and confirm the transfer of money between two parties.
The transaction reason, he said, could be for the payment for goods and services, settlement of obligations, gifts among others.
He explained that e-payments are driven by a network of interconnected systems, which make it possible for exchanges of value between payer and payee, sender and receivers or donor and donee.
“Banks, Payment Service Providers (PSPs), Financial Authorities and Central Banks play various roles in developing the payments system infrastructure to drive electronic payments, that is nationally utilized. The e— payments industry refers to all stakeholders, operators, regulators, infrastructures, merchants, retailers and the final consumers of the payments products and services. Payment technologies and platforms bind the industry together in a tight ecosystem,” he said.
Fatokun disclosed that global non-cash (electronic payment) transaction volumes grew at 8.9 per cent to reach $387.3 billion in 2014, an increase, driven by accelerated growth in developing markets.
“Cards have been the fastest growing payments instrument since 2010, as cheque use has declined consistently and significantly. Debit cards accounted for the highest share (45.7 per cent) of global e-payment transactions and were also the fastest growing (12.8 per cent) payments instrument in 2014,” he said.
According to him, global non-cash volumes are estimated to have grown by 10.1 per cent to reach $426.3 billion in 2015, aided by high growth in emerging economies across the world, including Africa even as the Nigerian e-payments industry has been evolving in line with the evolution in global payments in both Wholesale and Retail systems.
“Banks, PSPs, and the CBN have played various roles in developing the payments system and creating products and channels for electronic payments. The Retail Payments Transformation Programme of the CBN has led to the introduction of various electronic payments products and services by operators in the industry. The electronic products are gradually reducing the usage of cheques and cash, as noticed consistently in the annual performance report since the inception of the Cash-less Policy in 2012,” he said.
He said the volume and value of transactions based on cheques and National Electronic Funds Transfer (NEFT) have been consistently reducing yearly since 2013, while same data for the Nigeria Interbank Settlement System- NIBSS Instant Payment (NIP), Automated Teller Machine (ATM), and mobile money channels have been on the increase. This is an indication of users’ preference for instant value channels over non-instant payment channels.
“The ATM Channel accounts for the highest volume of transactions, while the NIP accounts for the highest value of transactions annually. This is because the ATM is usually the e-payment channel that new and lower value account holders always interface with, while corporates and upwardly mobile middle class customers make transfers using NIP,” he said.
The CBN director disclosed that banks and other e-payment service providers operate in a highly regulated environment. “Regulation is necessary to ensure that operators focus on delivering products and services that enable compliance, efficiency, financial stability and a positive customer experience. The attempt to regulate electronic payments in Nigeria started with the CBN Electronic Banking Guidelines, issued in August 2003,” he said.
Also, in furtherance of its effort to promote and facilitate the development of efficient and effective systems for the settlement of transactions, including the development of electronic payments system, the CBN has since 2008, issued and reviewed several e-payment related framework, guidelines and circulars.
Central Bank of Nigeria (CBN) has awarded the country’s second Payment Terminal Service Aggregator (PTSA) license to Unified Payments, Nigeria’s premier financial technology company, following a rigorous and transparent process,
The move is targeted at enforcing existing requirement that all transactions from point-of-sale channels in Nigeria must go through a licensed Payment Terminal Service Aggregator (PTSA).
The CBN is enforcing the laws to clamp down on financial crimes and other market misconducts and it aligns with the CBN’s objectives to fully track all electronic transactions in Nigeria, given the propensity of using such transactions to fund insecurity, violent crimes, banditry, kidnapping as well as other vices.
According to one analyst, “By awarding a second PTSA license, the apex bank has proactively responded to industry operators who had expressed serious concerns about channelling all transactions through a single aggregator, the Nigeria Interbank Settlement System PLC (NIBBS), as has been the case for some years.
“With the new policy direction, payments service providers would henceforth route all transactions through either of the two licensed Companies.”
Other financial analysts and industry players have commended the Central Bank, affirming that “the move can be a massive step in the right direction. They also commended the open, transparent, and inclusive manner via which the selection process was managed, and the license awarded.
“The selection process, which lasted for months, began with an invitation for qualified organisations within the payment industry to submit an Expression of Interest document, alongside other requisite documentation and additional capital requirement of N1 billion.”
The new management of CBN decided not to give the license out without going through an open process – and for the first time in licensing a payment service provider – the apex bank went through a public bid process outlined in its publication of Friday, January 5, 2024, in different national newspapers. At the end of the process, Unified Payments emerged as the most preferred service provider.
Unified Payment Services Limited, also called Unified Payments or UP, is a shared service provider within Nigeria’s financial technology sector owned by a consortium of Nigerian banks. For over 26 years, the firm has provided payment technology to banks and other industry operators. The first and only non-bank entity that is a principal member and licensed acquirer of all of American Express, Mastercard, Visa, UnionPay and Payattitude. Unified Payments facilitates both local and international transactions.
Formerly known as ValuCard Nigeria Plc, Unified Payments led the way to introduce POS payments in Nigeria under its card scheme known as ValuCard which is the first payment card to be issued in Nigeria. The company later transformed into a scheme-neutral and option-neutral service provider enabling transactions under different schemes.
The company has continued to provide leading payment technologies and services, enabling different operators to leverage its capabilities and licenses, enabling prompt and seamless transactions.
Among the shareholders of Unified Payments are First Bank, Access Bank, United Bank for Africa (UBA), Guaranty Trust Bank Plc, Zenith Bank and Fidelity Bank. Other shareholders are Citibank Nigeria Limited, Ecobank of Nigeria Plc, First City Monument Bank Plc, Keystone Bank Ltd, Polaris Bank Ltd, Stanbic IBTC Bank Plc, Sterling Bank Plc and Wema Bank Plc.
Chartered Institute of Bankers of Nigeria, CIBN, has expressed support for the ongoing banking recapitalization exercise saying it will empower banks to lend more to the economy.
CIBN President, Dr. Ken Opara stated this yesterday while speaking at the annual lecture of the institute in Lagos, with the theme “Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity.”
Okpara noted that the volume of credit to the real sector activities namely agriculture, manufacturing and services is low compared to their critical role in driving economic growth.
Consequently, he called for more credit to the real sector, saying, “I propose that we consider offering more credit to these key sectors and particularly the agriculture sector. It is for this reason that the Recapitalization exercise is a welcome development.
“The recently announced upward review of the Minimum Capital Requirements of Nigeria by the Central Bank of Nigeria would further empower banks to extend more credit to the economy’s productive sectors.”
To address these factors impeding credit to the real sector, Okpara suggested that, “The government needs to improve further the ease of doing business and infrastructural development, such as power, roads, rail networks, etc.
“Setting up industrial centres where these companies can co-habit and share common infrastructure. Harmonize and reduce the various taxes and levies, including locating them in a single hub.
“Banks need to be deliberate in de-risking these companies via Capacity building programmes, and Advisory services.
Specialised Financial Institutions can be created in addition to the Bank of Industry (BOI), especially credit guarantee agencies and risk-sharing institutions, to further facilitate the deepening of credit as practiced in countries such as China which significantly transformed its economy.
A new report claims that 20 per cent of Nigerians are using Bitcoin to carry out financial transactions every day.
According to the open-source blockchain website, Elastos, the research was compiled from online interviews conducted with 1,407 self-defined ‘tech savvy’ respondents in Brazil, Germany, Nigeria, South Korea, UAE, the UK, and the US.
The interviews were completed by a third party, a registered market research company and completed between 30 March and 04 April ’24.
The report further revealed that 67 per cent of Nigerians would have more trust in Bitcoin to put their life savings than banks and local governments.
The report reads; “The inaugural BIT Index (Bitcoin; Innovation & Trust) – compiled from over 1,400 self-defined ‘tech savvy’ respondents from 7 countries across the globe – sheds light on the actual perception and use of Bitcoin in people’s daily lives, irrespective of its current valuation. Elastos’ BIT Index is part of ongoing research to better track the ‘real world’ use of Bitcoin together with users’ motivations, expectations and barriers around the same.
“In particular, the data reveals the role being played by emerging markets in terms of understanding, usage and confidence around Bitcoin. Nigerian respondents’ levels of usage and trust compare starkly with those expressed from so-called ‘established’ markets such as Germany and the UK and Germany where daily usage levels are just 8% (for German respondents) and (9% for their UK counterparts).
“In terms of the trust – in addition to Nigeria – significant proportions of respondents from Brazil (35 per cent) and the UAE (32 per cent) would have more confidence in Bitcoin-based services to protect their life savings compared to those from markets such as the UK (20 per cent) and Germany (22 per cent).
“When it comes to ensuring the integrity of online transactions, emerging market respondents also revealed their relative confidence in Bitcoin, compared to alternatives. According to the data, 66 per cent of Nigerian respondents and 35 per cent from Brazil have more confidence in Bitcoin-based systems than alternatives such as banks, or national Governments, compared to figures of just 16 per cent (Germany) and 21 per cent (UK) who feel the same.
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