By Babajide Komolafe
There is discontentment among electronic payment providers over the implementation of the National Central Switch (NCS) by querying the model being used by the Nigeria Interbank Settlement System (NIBSS) to implement theÂ NCS, especially the recent directives that all banks should connect to the switch.
NIBSS, they said, has been avoiding discussions with stakeholders neither is it consulting with stakeholders on the implementation of the NCS nor is addressing the many questions and reservations by operators concerning the operations of the central switch. This, they said, has occasioned frustration and confusion about the NCS.
NIBSS, however, dismissed these accusations, saying that they are tantamount to double speak.
The National Central Switch (NCS) was initiated to address one of the major problem often encountered by banksâ€™ customers in the use of payment card products like debit and credit cards.
Bank customers have, many times, experienced the frustration of not being able to use their card on ATM or POS irrespective of the bank that issued the card or the bank that owns the ATM or POS terminal.
Consequently, banksâ€™ customers have had to carry many cards belonging to different banks or card scheme (switches) e.g. Interswitch, E_Transact, Valucard, Visa, MasterCard, etc.
To address this problem (known in e_payment parlance as non_interoperability) the Bankers Committee, in 2005, initiated the establishment of the National Central Switch to be operated by NIBSS, and which would connect all the banks and card schemes (switches), hence, making it possible for banks customers to use their cards on any payment device irrespective of the owner.
â€œThe primary objective of the Nigeria Central Switch is interoperability. That is any payment device will accept any card from any switch or any bank. The other objective is to be the gateway for foreign electronic payment transactionsâ€, said Mr. Paul Lawal, NIBSSâ€™s Managing Director/Chief Executive.
â€œWe are saying less frustration for the Nigerian banking public because they donâ€™t have to care where they have to buy, they will just carry their card and it is accepted anywhere. That is the value propositionâ€, he said.
The operating guidelines require all existing switches to connect to the NCS but Lawal stated that though the central switch has been running since 2007, electronic payment providers (switches) did not connect to it until recently when they were mandated by the CBN to do so. He said even though they have now connected, they are yet to allow transactions within the system to pass through the central switch.
But e-payment providers are dissatisfied with NIBSS, who they claim is not addressing their concerns about the implementation of the NCS and hence their reluctance to participate fully in the switch.
The ill feeling between the e-payment providers and NIBSS over the central switch was manifested last week at the the 2nd Techno-Interactive Series of the E_Payment Providers Association of Nigeria (E-PPAN), which was to discuss the options for achieving interoperability and interconnection of payment scheme in the country.
NIBSS, a member of the association, shunned the meeting because it knew the issue of NCS would come into the discussions and it did not want to be part of such discussions. Participants at the meeting said that NIBSS, in fact, wrote to some operators to discourage them from attending the meeting.
â€œIt is a shame that operators of the NCS who typically should be here to be able to answer lots of the questions that we would want to ask so as to get a fuller understanding of the strategy, objectives and visions, are not here. An operator should be where its customers will be and in a forum like this, where all your customers will be sitting, I think it is a big indictment on that organisationâ€, said the Head of E-Business of one of the big banks who was also at the meeting.
The NIBSS boss told Vanguard â€œWe were supposed to be at the meeting but we did not attend because we believe it is not necessary. Now, everything is like it is going to run, we want to start the trial run this month, and just at this time, somebody wants to look for a round table on how to do it when we are just about to start the trial run.â€
Among other things, the e-payment providers though in support of the idea of a central switch, queried the model of implementation being used by NIBSS. They said that there is value in having a central switch in the model that recognises the existence of other switches but the issue of asking banks to also connect to the central switch negates this model and makes the NCS a competitor to existing switches.
Some participants, especially the banks, also sought clarifications on the value proposition, rules and regulations concerning the NCS and whether it is going to be a profit making ventures.
They said there is need for stakeholders, including NIBSS, the Bankers Committee and existing switches to meet and deliberate on the modalities for implementing the NCS.
â€œThe bankers have given to a baby and the baby is not answering its name. I think the bankers should go back and christen the baby what its right name should be. NIBSS, I think had a good motive when it came up with the idea of the NCS but, apparently, it is not operating it the right way.
â€œIf you tell the switches to talk to the NCS and the banks stayed away from that kind of discussions, I donâ€™t think that the NCS will listen to the switches. I think the Bankers Committee, which set up the NIBSS and then the NCS, should actually sit the NCS down and say this is what we want you to do. And if you can also coordinate all the stakeholders to be there and explain to everyone there what the NCS should do, it would be betterâ€, said Francis Ebuechi, General Manager, Chams Switch.
â€œThe concept of the central switch is not new, it is not been done in Nigeria for the first time. But, in my presentation, I tried to highlights some important points, that the implementation is different from country to country. There is value, and this is speaking as Interswitch, there is value in having an NCS in the model that recognises there are existing players in the market who already create significant value and, therefore, what they add should be additional value that either increases business either for existing players, for banks, for new entrants or that reduces cost.
â€œIn the discussions we had with the central switch over the last year, a lot of the comments and questions that was discussed and answered were focussed on creating that value. Now, the implementation thereafter may not follow directly under the original guidelines and principles and that is where I support the other speakers who said earlier that there might be a need for industry stakeholders to go back to the drawing board and say fine we recognised that there is value in this, however, that value can only be achieved if certain things are implemented in certain ways.
â€œAnd that need to be then articulated and communicated not only to the NCS operators but also to all industry players. Now, technology is important, again in this implementation, we focus so much on technology but what is missing and what is needs to be added is the rules. There is no clarity in terms of rules and regulation. And therein lies one of the key stumbling blocks that needs to be overcome before we can see the benefits that we expect to see from NCSâ€, said Akeem Lawal, Chief Technologist/Head of Operations, Interswitch, in response to comments by other participants.