E-Business
NCS Must not Compete with Commercial Payment Schemes-Experts
Global e-payment experts who converged at the second E-Payment Providers Association of Nigeria (E-PPAN) Techno-Interactive conference in Lagos recently agreed among other issues that the Nigeria Central Switch (NCS) should not be a profit oriented concern.
To address the challenges of non-interoperability of payment schemes in the country, the Bankers Committee, in 2005, initiated the establishment of the NCS to be operated by the Nigeria Interbank Settlement System (NIBSS) and to connect all payment switches; hence, making it possible for banks customers to use their cards on all payment devices irrespective of the owner.
Mrs. Bridget Morris, Africa’s leading transaction switching expert, whose paper ‘Switching, Interoperability and Interconnectivity’ was presented by Mrs. Onajite Regha, CEO of E-PPAN argued that NCS as a transfer systems, which exist between the banks are ‘infrastructure’ companies and should not be for profit companies because in this scenario the owners and customers are the same entities, namely, the banks.
“I would suggest that Interswitch, ValueCard and eTranzact and others should really be categorised as Payment Service Providers or Payment ‘Schemes.’ They need to be ‘for profit’ entities. They are providing payment services and gateways into the main clearing and settlement systems. They are not guaranteeing settlement and finality of payment themselves”, she said.
She explained that often Central Banks set-up or own these interbank switches and operates them with nominal fees and not for profit. According to her many countries consider that Central Bank’s business is about monetary policy, interest and exchange rates, and not about operating switches; so the switch company is usually separated off and run by the retail banks. They focus on clearing and settling of retail payments which is considered to be the business of retail banks not Central Banks.
She however, commended Mr. Sanusi Lamido, governor of Central Bank of Nigeria (CBN) for making difficult and positive gains in consolidating the banking industry and tackling bad loan books. According to her, this ‘tough’ action is provoking much international admiration. “We need to do likewise in the payments industry. We, in Africa, need to be seen to adhere closely to ‘best practice’ wherever possible in order to convince the rest of the world of our credibility. Central EFT switches and retail payments clearing houses and RTGS systems are the assurances that foreign partners look for”, she submitted.
Mr. Kyari Abba Bukar, managing director of ValuCard Nigeria who chaired the events that brought together banks, payment scheme operators and the media said interoperability and interconnectivity is not only desirable but achievable in the system. However, he argued that achieving the objective rests on three critical pillars. These are common and appropriate understanding by all industry stakeholders of the concept of interoperability; common and appropriate understanding of the roles and functions of payment card industry players; and strict adherence to professionalism and the distinct responsibilities of the different players built on the concept of separation of roles.
He noted that NCS should connect to other switches in order to ensure that when an issuer and acquirer are connected to different switches, the NCS will switch transactions between the different switches. However, where primary switches exist, NCS should not see transactions between issuers and acquirers that are connected to the same primary switch, as that will translate to competition with primary switches.
Primary switches should not establish connection with each other. If such happens, it would amount to elimination of the central switch. “As a monopoly, a central switch must not promote any card or payment scheme or engage in processing and other services of other industry players,” he said.
However, Mr. Akeem Lawal, chief technology & operations officer at Interswitch said it is imperative for industry stakeholders to determine the standards, rules, regulations and enforcement procedures for the management of the NCS before it commences operations. He maintained that interoperability and interconnectivity of payment scheme differs from country to country, depending on the history and development of the payment systems.
Lessons from other Countries
Nigeria CommunicationsWeek findings revealed that different country achieved interoperability and interconnectivity of their payment system in peculiar manners, depending on the history and growth of the system.
South Africa
The big four banks (Nedbank, absa, Standard Bank and First National Bank) have a central switch called BANKSERV through which they connect to VISA and MasterCard. The smaller banks either use BANKSERV or connect through local third party processors.
Canada
In Canada, there is a proliferation of different payment switches with direct interconnect amongst payment schemes
France
France operates a classic model of a central switch. All banks in the country connect to a central switch and card network known as Carte Bancaire. Most banks connect to VISA and MasterCard through this network while some banks connect directly.
United States
In the United States, there is a proliferation of payment schemes with bilateral interconnect agreements among them. No attempt has been made to implement a central switch.
In his own contribution, Mr. Adesola Adeyiga, head strategy and new business at eTranzact insist that the buy-in of all players is one of the critical factors for successful implementation of NCS. Other factors he listed include minimum standard for integration, regulation, dispute resolution management, across switch transactions settlement standard and transaction charges and fees.
Mr. Francis Ebuechi, CEO of Chams Switch, however, warned that NCS should not be seen as competing with existing switches. The roles for switches, issuers, financial institutions, Independent Service Operators (ISOs) and central switch should be clearly defined.
However, stakeholders at the conference were unhappy that NIBBS, the operators of the NCS were not present. “It is a shame that operators of the NCS who typically should be here to answer attendees’ questions in order to fuller understanding of the strategy, objectives and visions, were absent. An operator should be where its customers are and especially in a forum like this where your customers will be sitting. I think it is a big indictment on the part of that organisation”, head of E-Business of one of the big banks who was also at the meeting, said.
Against the backdrop of struggles by small and medium enterprises in Africa to scale their businesses because of lack of formal processes, Ovaloop Technologies has unveiled an inventory solution aimed at supporting retailers across Nigeria and Africa to formalise their businesses.
Combining inventory management, payment processing, accounting and business intelligence, the platform enables retailers to generate accurate financial records, improve operational efficiency, reduce internal fraud and strengthen their ability to access credit.
The company said the expansion of Nigeria’s digital payment ecosystem has created the need for solutions that go beyond processing transactions to helping small and medium-sized enterprises (SMEs) manage their day-to-day operations.
Speaking during the company’s launch event in Lagos on Monday, Princewill Mba, CEO and co-founder of Ovaloop Technologies described the platform as an indigenous technology designed to grow and formalize Africa’s retail economy
“Ovaloop is an inventory management system, but we like to always define it as a retail operating system, so think about it as your Microsoft Office. For us, the whole idea is to manage how businesses are being run. So Ovaloop manages your business operation end-to-end, from how you’re taking stock, to how you manage your stock, how you make sales, and how you collect payments,” Mba said.
Mba further noted that the company aims to change the conversation from building products that simply process payments to developing technology that helps retailers manage their entire business operations.
According to him, the formalisation of retail operations will also bring onboard unbanked SMEs, unlocking access to credit facilities which remain one of the major challenges facing SMEs in Nigeria and Africa.
“Most of these retailers are not bankable. They make a lot of money but when they come to collect loans from financial institutions, they struggle, because their cash flow statement is not very accurate, the data they provide to the banks or other financial institutions is not very accurate, and then they can’t work with that data.
“But with Ovaloop, we can generate useful data for them that they circulate to these institutions to help them access funding, and you can’t shy away from the fact that funding is very imperative for businesses to operate smoothly,” he said.
Acknowledging the gap in the inventory space, the CEO disclosed that the company took time to understand business operations across Africa and has built a solution that manages business operations end-to-end.
Mba said there is a huge gap in inventory management solutions across Africa, noting that many businesses still rely on manual record-keeping or disconnected software.
“What we’ve built and why we took this long was for us to understand how Africans operate business, because whether you would like it or not, most businesses are still taking inventory and stock using basic books while others use fragmented tools.
“So there’s a tool that collects your payment. There’s a tool that runs your business and another tool that runs your accounting. But when we talk about Ovaloop, it’s taking all these activities into cognisance. So, from end to end, we can manage your inventory.”
Daniel Kilanko, co-founder and CTO of Ovaloop Technologies commenting on the platform noted that it is easily accessible with strong security software that verifies payments and detects fraud.
“Our Ovaloop Pay Protect will tie every sales transaction to verified payments. So with that, you don’t have to deal with fragmented tools. The tools you are using for your inventory, payments and everything synchronise properly.
“So no transaction can be completed unless a verified payment is linked to that transaction. And with this, we also hope that we will be connecting with other local technology so that you just have one central system that does everything for you end-to-end.”
Kilanko said Ovaloop can be accessed through the web, Android and iOS mobile phones which gives users a complete business overview from anywhere in the world.
The platform will also be linked to various supply chains, enabling users to access products within and outside the country.
Also speaking, Titilope Ejimagwa, chairperson, Ovaloop Technologies, inventory losses and employee theft remain major operational challenges for many entrepreneurs
Ejimagwa recalled losing inventory to trusted employees despite maintaining close oversight of her business, citing nearly four decades of experience in marketing and entrepreneurship.
She noted that technology such as the Ovaloop platform, which can track inventory, verify payments and improve operational transparency, could significantly reduce such losses for SMEs.
“As entrepreneurs, one of our biggest challenges is fraud and inventory losses. Having one platform that helps monitor operations and reduce those risks is a major advantage for businesses,” she said.
Jumia Nigeria, the country’s e-commerce platform, has introduced a new instalment payment option on its marketplace through a partnership with Buy Now, Pay Later (BNPL) provider Klump, giving customers another way to pay for purchases without bearing the full cost upfront.
The new option allows eligible customers to spread payments for selected purchases over a period of up to 12 months after making an initial deposit of between 20 and 30 percent. The partnership is expected to widen access to products such as smartphones, electronics, home appliances, and other everyday essentials for consumers who may prefer structured repayment plans over one-time payments.
Customers selecting the option at checkout can compare financing offers from participating financial institutions, complete a digital credit assessment, and, once approved, begin repayment through fixed monthly instalments. The introduction of instalment payments comes as digital commerce continues to evolve in Nigeria, with retailers exploring payment options that respond to changing consumer spending patterns and the growing demand for financial flexibility.
Commenting on the partnership, Chief Executive Officer of Jumia Nigeria, Temidayo Ojo, said the initiative reflects the company’s commitment to making online shopping more accessible to a wider range of consumers.
“We are constantly looking at practical ways to remove barriers to online shopping. For many customers, affordability is not always about the price of a product but about having payment options that fit their financial reality. By introducing instalment payments with Klump, we are giving customers greater flexibility while making quality products more accessible.”
He added that expanding payment choices forms part of Jumia’s wider effort to improve the overall customer experience and support the company’s ambition of becoming Nigeria’s everyday retail destination.
“Whether we are strengthening our logistics network, expanding product selection, or introducing new payment solutions, the goal remains the same: to make shopping on Jumia simpler, more convenient, and more accessible for customers wherever they are,” Ojo said.
Founded to simplify access to goods across Africa, Jumia has continued to invest in technology, logistics, and payment solutions to make digital commerce easier for consumers in both major cities and emerging markets across Nigeria.
The addition of instalment payments complements the range of payment methods already available on the platform and comes at a time when consumer demand for flexible financing options is increasing across the retail sector.
Celestine Omin, Co-founder and Chief Executive Officer of Klump, said the partnership aligns with Klump’s objective of expanding access to responsible consumer credit.
“When we started Klump, our mission was simple: to give Nigerians access to affordable credit wherever they shop. Today, we’re pleased to partner with Jumia to bring flexible instalment payments to one of Africa’s largest e-commerce marketplaces, making it easier for more customers to access the products they need,” Omin said.
Under the arrangement, Klump will provide the financing infrastructure while customers complete the application process digitally during checkout. Financing offers are provided through participating financial institutions, subject to approval.
For Jumia, the partnership represents another step in expanding the range of services available on its marketplace while supporting broader efforts to deepen digital commerce and financial inclusion. As more Nigerians turn to online shopping, the availability of flexible payment options is expected to lower one of the barriers to e-commerce adoption, particularly for higher-value purchases.
Customers can access the instalment payment option by selecting Klump at checkout on eligible products available on the Jumia platform.
The Lagos State Government has launched a new financing initiative that will provide single-digit interest loans of up to N10 million to micro, small and medium enterprises (MSMEs), in a major push to improve access to affordable credit and stimulate business growth across the state.
The initiative, known as the Lagos State Access to Finance for SMEs through Cooperatives (LASMECO) programme, offers eligible businesses loans at a fixed 9 per cent annual interest rate, with repayment periods of up to 36 months for term loans and 24 months for working capital facilities. Beneficiaries will also enjoy moratoriums of six months and three months respectively.
The scheme was unveiled on Monday during the opening of a three-day LASMECO Accelerator Training Workshop organised by the Ministry of Commerce, Cooperatives, Trade and Investment, in Lagos.
In her keynote address, the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Bada Ambrose-Medebem, said the programme was designed to bridge the financing gap facing thousands of Lagos businesses that have been priced out of conventional lending because of high interest rates and stringent collateral requirements.
Ambrose-Medebem, represented by the Director of Cooperative Services, Adeyinka Adeyemi, noted that MSMEs account for about 80 per cent of employment and contribute roughly 75 per cent of Lagos State’s Gross Domestic Product (GDP), yet many struggle to access affordable credit as commercial lending rates range between 35 and 40 per cent.
According to the commissioner, LASMECO addresses the challenge by using registered cooperative societies as financial intermediaries and guarantors, allowing entrepreneurs to obtain loans without relying solely on conventional collateral.
Under the financing framework, she said borrowers will provide 10 per cent cash collateral, while their cooperative societies will guarantee 25 per cent of the loan, adding that Sterling Bank Plc would provide a 50 per cent guarantee, creating a layered risk-sharing structure that makes lending more accessible and sustainable.
The programme targets businesses in agriculture, manufacturing, healthcare, the digital economy, creative industries, tourism, environmental sustainability and education.
The commissioner disclosed that the Lagos State Government has released its counterpart funding, while the Bank of Industry (BOI) has matched the state’s contribution, paving the way for loan disbursement, saying that BOI would serve as co-funder and final loan approver, while Sterling Bank would process applications, conduct credit assessments, disburse funds and recover repayments.
The commissioner reaffirmed the Lagos State Government’s commitment to ensuring the success of the initiative, expressing confidence that the programme would unlock affordable financing for thousands of entrepreneurs while boosting employment, productivity and economic development across the state.
Earlier, the Permanent Secretary in the ministry, Mr Babatunde Onigbanjo, said the workshop marked the transition of LASMECO from policy to implementation, stressing that the programme was fully funded and ready for rollout.
He said all necessary groundwork had been completed, including the release of counterpart funding, execution of memoranda of understanding and onboarding of accelerator organisations, adding that participants were now being equipped to begin recruiting and preparing loan beneficiaries.
According to him, the three-day workshop is designed to prepare accelerator organisations to identify eligible MSMEs, assess their credit readiness, compile loan applications and support borrowers from application through disbursement and repayment.
Onigbanjo urged participants to focus on quality rather than quantity in recruiting loan applicants, warning that poorly prepared businesses could increase loan defaults and undermine the programme.
He stressed that accelerator organizations would only be paid when the businesses they support successfully secure funding, saying the arrangement was intended to align their interests with the success of the programme.
The permanent secretary also emphasised that every loan applicant must belong to a registered cooperative society, describing the cooperative model as central to the programme because cooperatives provide a 25 per cent guarantee for every facility while helping to formalise informal businesses.
He disclosed that Lagos has more than 13,000 registered cooperative societies, although only about 1,900 to 2,200 are currently active, adding that reviving dormant cooperatives would significantly expand access to the financing scheme.
Onigbanjo warned accelerator organizations against charging applicants processing, training or evaluation fees, stressing that the only approved deductions are a N200,000 accelerator support fee and a one per cent BOI appraisal fee, both payable only after successful loan disbursement.
He said the state would closely monitor loan recovery, business growth, job creation, cooperative compliance and portfolio performance, adding that only accelerator organisations that deliver strong results would remain in the programme.
The permanent secretary described LASMECO as more than a loan scheme, saying it is also a strategy to formalise businesses, strengthen cooperatives, promote industrialization and drive inclusive economic growth across Lagos.
He urged participants to make full use of the workshop to prepare for immediate enrolment of qualified businesses, insisting that the programme had moved beyond planning and was now ready for implementation.
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