By Emeka Aginam
WHile Nigeria is preparing to transit to cashless economy initiated by the apex bank, the central bank of Nigeria, stakeholders in the Nigerian Information Communications Technology at the end of the just concluded cashless 2012 national conference by the Nigerian Computer Society, (NCS) were worried saying that except many challenges including legislation, lack of POS at priority locations, poor telecommunications infrastructure, lack of user awareness, interoperability of various platforms, diversified security threats from various sources, identity theft among others were resolved, the cashless policy may be derailed.
Already, the CBN had commenced the pilot scheme of the cash-less programme on January 1, 2012 in Lagos and slated January 2013 for the commencement of the policy in other states. Although the cashless society initiative of the CBN appears to be gaining the attention of the IT industry, experts at the event also noted that it is important to allow more time for the policy implementation given lack of available infrastructure and the literacy level of the public.
With more state including Anambra, Kano, Ogun, Rivers and Abuja among others to go cashless by 2013, according to CBN Governor, Sanusi Lamido, he nevertheless urged fast action on the e-payments bill. Sanusi who was represented by the Head , Shared Services of CBN, Chidi Umeano told the gathering that the apex bank was committed to putting in place necessary infrastructure to make the policy work.
“We are aware that fraudsters in cash-based societies may also be preparing to transit to cashless too. What is more important is to put in place right policy to deal with them. But I can tell you that the migration from max strip technology to chip and PIN technology has reduced fraud by 90 percent.
“Nigeria achieved changeover from magnetic stripe based payment tokens and channels to Chip and PIN compliant channel and tokens in 2010 in a bid to stem fraud in electronic payments thereby recording over 90% drop in card related fraud incidences.
“The CBN instituted an industry ATM anti-fraud committee which has been recently up scaled to e-payment fraud forum. This group ensures that our anti-fraud mechanism is kept abreast of new challenges for proactive response credit/ settlement risk has been reduced by shorter clearing cycle.
“The CBN now has a payments system policy and oversight office which is saddled with the effective monitoring and regulation of the payments system We are also in the process of acquiring a payments system oversight and anti-fraud,” he said.
Deployment of POS terminals
Although deployment of point of sales terminals (POS) may pose as a challenge, he said that the cumulative number of POS deployed /connected stood at 88,622 as at July 1, 2012. This, he said represents an increase of over 100% above the 5,992 recorded as at end of January 2012.
“The target of purchasing at least 10,000 POS terminals per vendor has been met for three vendors. Registered merchants reached an all time high at 151,717 as at July 2012.The gap between registered versus deployed, is mostly due to lack of capacity on the part of the PTSPs to meet the demand” he added.
Right policies needed
Also speaking, the Deputy Governor of Akwa Ibom State, Obong Nsima Ekere representing Governor Godswill Akpabio without mincing words noted that not much may be achieved unless the present administration passes the legislation on e-payment which is still awaiting presidential approval for more two years now.
“ We are ready for e-government. We have the right infrastructure. We will continue to build more. We want to be the best digital state. But I have to tell you this: payment channels introduced by the cashless initiative have witnessed increase in systems attacks worldwide and breaches will continue to grow” he noted.
Meanwhile, the NCS President, Sir Demola Aladekomo earlier in welcome address commended the initiative of the CBN in introducing cashless policy but cautioned that right policies must be put in put to achieve the objectives.
“It appears as if globalization has brought in its trail, enormous challenges of unprecedented electronic fraud, robbery, gangstarism, 419, terrorism and insecurity. We appeal to the federal government for the quick passage of law on e-payment. That will go a long way in fighting cybercrime in the country.
“These challenges, together with some other considerations, show the wisdom of a cashless society, anywhere and everywhere in the world. We commend the courage of the present Federal Administration and the Central Bank of Nigeria (CBN), in embarking on this bold act of “Cashless Nigeria” he added.
Crime’ll get sophiscated with cashless society
Earlier in his address, Tope Aladenusi Head, Information & Technology Risk and Enterprise Risk Services of Akintola Williams Deloitte, who was guest speaker at the capacity building event also told the gathering that physical crime might decrease with a cashless society, adding that that doesn’t mean crime will decrease.
It will just get more sophisticated in nature. He noted that with the embrace of a cashless society, there was a transfer of risk to the various electronic channels, and adequate measures need to be put in place to manage these risks.
Payment channels introduced by the cashless initiative, he added have witnessed increase in systems attacks worldwide and breaches will continue to grow.
“The attacks are becoming more sophisticated. More breaches are targeted by system components. Criminals target the easiest opportunities. Nigeria must be well prepared. Let us not be in a hurry to go cashless. We have to put the house well otherwise the fraudsters will take over the payment channels.
Most ATM machines, he said were based on a Windows operating system and have a standard PC architecture which may have vulnerabilities that increases their risk exposure.
Customer data security essential
Speaking on data security of customers, Chris ‘E Onyemenam, the Director General/CEO National Identity Management Commission, (NIMS) said that there was need for a reliable identity management sector to drive the cashless policy.
“The security of data of banking customers is essential because of fraudsters who were prepared to also migrate to cashless. “NIMS is central to the success of a cashless economy project – a secure UIDI is a precondition for financial inclusion. Deployment strategy focused on update-able database and secure identity authentication are all essential to drive the policy.
“The NIMS is an essential transformation tool for fostering socioeconomic development, maintenance of law and order and security of lives and properties, he explained.