By Babajide Komolafe
The Central Bank of Nigeria    (CBN) has released the  operational guidelines for proposed National Central Switch (NCS) for all card and electronic funds transfer transactions in the country, giving all switching companies  in the country till July 30th  to connect to it.

L-R: Mr. Isa Zailani (Executive Director, Strategic & Risk Management - Afribank), Mr Sean Lee (Account Manager, Grg Banking Equipment Company)and Mr Benjamin Peters (Md/Ceo, Teleserves) at the Afribank Stand During the 9th Card Expo Africa Exhibition in Lagos yesterday.

The apex bank also issued the operational guideline for Transactions Switching in the country in which it restricted issuance of multipurpose payment cards to banks.

A Switch or switching company is electronic funds transfer and transaction switching and processing service providers. The switching companies facilitate the exchange of value between financial service providers, merchants, their customers and other stakeholders.

Presently there are a variety of switching companies in the country including Interswitch. However, the NCS which would be operated by Nigeria Interbank Settlement system would provide interconnectivity and interoperability amongst approved electronic funds transfer  switch initiatives in Nigeria.

According to the “Operational Rules and Regulations for the Nigeria Central Switch (NCS)” released by the CBN, “The Nigeria Central Switch is designed to:  Provide interconnectivity and interoperability amongst approved EFT switch initiatives in Nigeria;

Specify the Nigeria EFT interface standards  Provide vital retail payment statistics for tactical & strategic planning purposes; Provide a mechanism for proactive detection of card frauds;  Provide a central switch which integrates modules for accessing external content, transaction service networks, internal billing applications and related packages;  Provide seamless integration of the Nigeria retail payment system with the West African Monetary Zone retail payment plan and beyond. Deploy a central switch network which complies with all relevant international standards”

The operating rules for the NCS also banned anti-competition activities among participants. It stated, “No parties to Switching Services in Nigeria shall enter into any agreement in respect of any switching service that shall cause or is likely to cause adverse effect on competition. Any agreement entered into in contravention of this provision shall be null and void and of no effect. Any agreement entered into between parties to Switching Services or decision taken
by any association of switching companies or association of persons, including cartels engaged in identical or similar provision of switching services, which:

Limits or controls markets, technical development, investment or provision of Switching Services; Shares the market or provision of services by way of allocation of geographical area of market, or number of customers in the market or any other similar way;shall be considered an anti-competition agreement.

Any agreement amongst parties to Switching Services, in respect of switching services, including: . Tie-In Agreement; Exclusive Service Agreement and  refusal to deal; shall be considered an agreement in contravention of anti-competition agreement if such agreement causes or is likely to cause adverse effect on competition in Nigeria.

Meanwhile, under the guidelines for transactions switching, “Only licensed deposit taking institutions shall with the approval of CBN serve as the issuers of multi purpose payment card. The guideline also stated, “The issuer (banks) shall be held liable (where proven) for frauds with the card arising from card skimming or other compromises of the issuer’s security system.

No member institution shall issue or support the issuance of a card or access device that is restricted to only certain terminals/payment devices that have distinctive hardware and/or software features unless such terminals/payment devices are for use only in closed systems that are not normally made available to members of the general public.

The cardholder shall be entitled to receive, within a reasonable period or at an agreed intervals, a statement of all transactions is performed with his/her card. The cardholder shall be given reasonable notice before changes are made to fees levied on his/her card and be given the option to discontinue usage of card to avoid such changes in fees without penalty

A cardholder shall be given reasonable notice before changes are made to the terms and conditions of his card contract and shall be given the option to opt-out of the card contract without penalty”