By Udeme Clement
Cashless Lagos initiative of the CBN is on course notwithstanding the challenges.
Banks have commenced the enforcement of cashless policy of the Central Bank of Nigeria (CBN), which commenced on January 1, 2012, in Lagos State. While some new banks reject individual cheques above N150, 000 withdrawal limits, others refuse payment of cash above the same amount.
Despite awareness programme embarked upon by the apex bank, some depositors, who spoke with our correspondent still claimed ignorance of the policy. Before the commencement of the policy on January 1, the CBN carried out enlightenment campaign tagged, “Towards Cashless Lagos”. The sensitisation campaign was taken to strategic markets, in Lagos where market women and men expressed readiness to comply.
The policy, which took off, notwithstanding divergent views from analysts that cashless economy may not achieve certain objectives since over 45 per cent of Nigerians operate in the informal sector, is gradually making waves in Lagos . For instance, many customers are beginning to adjust to the new system following constant enlightenment by banks on the options available to them. Such options include the use of Automated Teller Machines (ATMs), internet banking, mobile money and point of sale (PoS) terminals.
On a visit to some banks in Lagos , Sunday Business gathered that banks are strictly discouraging withdrawal above the CBN’s cash limit but will begin charging fines for non-compliance by March this year. Some of the banks visited include Zenith bank branches at Ogba, Ojodu Berger and Victoria Island . Other banks include, First bank branches at Cele, along Oshodi Apapa Express way, Ogba, Olowu stress Ikeja and Isheri road Ojodu Berger. Diamond banks at Isheri road Ojodu Berger, GTB at Isheri road Ojodu Berger, Access bank and United Bank for Africa (UBA) Plc in Lagos .
A banker with Zenith told our correspondent that all PoS terminals will have minimum of two sims and 24 hour back up batteries in case of erratic power supply. Also, one of the managers with United Bank for Africa (UBA) Plc said, “time is long overdue for customers, particularly small depositors, to fully embrace self-service electronic banking services.
In July, our bank adopted critical measures to encourage its customers to embrace electronic channels. The bank further introduced a new minimum opening balance of N25, 000. The initiative was to enable customers with less account balance to migrate to either a mobile banking account that is self-serviced through U-Mobile, a suit of electronic and m-banking services offered by the bank or any of the other electronic channels of the bank.
Sunday Business also gathered that most banks in Lagos had in the last two weeks deployed thousands of PoS terminals along with ATMs and various mobile banking devices to help promote alternative modes of payment to reduce emphasis on large volumes of cash transactions. The PoS terminals can be deployed even in market places because some of them do not use electricity from the mains source and can run on battery. There are also PoS terminals that are so small and can be handheld.
Accordingly some analysts stressed that the cashless policy introduced to discourage the use of large volumes of cash for daily business transactions in the country is in line with global practice, but may face the challenge of the country’s infrastructure deficit. Most financial experts mentioned interconnectivity challenge being faced by mobile phone companies as the major factor that may work against the policy.
However, sources within CBN revealed that the apex bank has signed Service Level Agreements (SLAs) with two mobile phone companies to look into the interconnectivity issue with a view to ensuring the successful implementation of the policy, even as CBN in collaboration with the Bankers’ Committee must continue with regular enlightenment campaign to ensure that the policy achieves its set objectives.
Moreso, the monetary authority has also set up an industry-wide forum of payment stakeholders to map out strategies on how to check electronic fraud in the financial sector as CBN intensifies efforts in transforming the nation’s economy into a cashless one inline with global trend.
The deputy governor, operations, CBN, Mr. Tunde Lemo, who spoke recently in an electronic payment conference in Lagos , explained that the bank is mindful of the likely channels that may spring up as it creates different payment channels for the banking public to carry out their transactions electronically.
He stressed, “As we strive to develop the available channels for retail payments, the apex bank is also mindful of the infrastructure and the security challenges posed by this ambitious programme. We have progressed in forging effective partnership with telecommunication companies with the cooperation of the Nigerian Communications Commission while ensuring that structural impediments such as un-interoperability of payments networks of stakeholders are removed.”
He added, “We have recently set up an industry wide Nigeria E-Fraud Forum, to serve as an official body to represent the industry on fraud related issues, while enabling a forum for payment stakeholders to collaboratively share data on fraud attempts and proactively tackle these issues, with the objective of minimising fraud attempts and limiting losses in the system. The ATM Fraud Prevention Group had also convened and helped the industry in driving down ATM fraud incidences by 99 per cent, a development.”
Also, PayMaster Limited, a leading indigenous e-business infrastructure provider, has expressed its commitment to the CBN’s new policy for a cashless economy. The firm had already started driving implementation of the policy by increasing the deployment PoS terminals across some selected locations in Lagos . The management of firm said, “Operation Cashless Lagos’ is a six-month test-run of the CBN cashless policy aimed at moderating the volume of cash in the system and encouraging use of PoS terminals before its full expansion to other states of the federation.”
In the same vein, Interswitch, the pan-African integrated transaction and payment processing company has released instant Selectable PIN solution for banks, to enable customers select their own Personal Identification Number (PIN) at the point of collecting their ATM cards at bank branches. With the instant Selectable PIN, card issuance and activation have become instant process for banks. The technique is an upgrade from the traditional paper PIN mailer. A PIN is a 4 digit numeric secret password known only by the cardholder which the system uses to validate the cardholder.
The director, Transaction Processing, Interswitch, Mr. Akeem Lawal, said, “The instant Selectable PIN enable banks to provide their customers with the ability to choose their own PINs at the bank branches to quicken the speed of card activation. It is secured because the PIN is selected and memorised on the spot by the cardholder. The benefits of the solution include enhanced security and confidentiality of the PIN, reduction of operating cost for PIN issuance, increase in card activation and enhanced customer experience.
Also, it promotes complete confidentiality of the cardholder’s PIN at the point of delivery while eliminating risks that may be associated with paper PIN mailers dispatched to bank branches. With the instant Selectable PIN solution, banks do not need to send paper PIN to customers. Aside from that, the solution has the necessary security controls to service customers outside the bank branches. For instance, the banks can deploy the solution for prepaid customers and credit card customers at remote locations.
A financial analyst who spoke with Sunday business said—Cashless policy will reposition the economy for greater growth—Mr. Charles Akinsete, a financial analyst and the First Vice Chairman, Nigerian Association of Industrial Pharmacists (NAIP)—What the CBN is doing is in line with what obtains in developed countries.
E-payment is a good and government should provide needed infrastructure for the policy to succeed. Also, the cashless policy drive provides ample opportunity for banks to improve performance of their service delivery infrastructure. We made Nigeria a cash economy, which in a way encouraged fraud and robbery.
For instance, someone can travel from Lagos to Abuja with N10million for business transaction that can easily be done on-line and the transfer of money from one account to another within a short time. The CBN’s policy if fully implemented will help to curb corruption, money laundering and fraud. It will make the issue of cheques to be credible. People will not just issue cheques unless they have money in their accounts. It will take away so much cash from the system and bring credibility to our money transfer system.