By EMEKA AGINAM

As the cashless economy initiative of the Central Bank of Nigeria (CBN) goes full throttle from today, the Independent Automated Teller Machine (ATM) Deployers (IADs) licensed by the apex bank have criticised the policy reversal of the Bank’s directive on the deployment of offsite ATMs, saying that CBN was insensitive especially in the light of huge investments already made.

It would be recalled the CBN in 2009 banned banks from deploying offsite ATMs, and licensed two additional IADs to facilitate deployment of ATMs. But two months ago the apex bank bowed to pressure from banks, and issued a circular which removed the ban and allowed banks to deploy offsite ATMs alongside the three IADs.

According to the CBN banks or IADs would be free to brand the off-site ATMs they acquire, and process their transactions accordingly. Each party shall ensure provision of cash for their off-site ATMs.

However, the three IADs namely ATMC, Chams PLC and Copoteri Services criticized the action of the CBN saying, “Given the capital intensive nature of the Offsite ATM Channel, policy consistency is paramount to enable IADs attract the requisite investment for sustainable development of the channel.

“It should be noted that the IADs have lost a number of funding opportunities over the past 24 months due mainly to uncertainties and rumours regarding CBN’s ability to sustain the April 2009 Offsite ATM Policy Directive. Going forward, the IADs kindly request for support policy measures that will be sustained and engender investor confidence.”

In a letter to CBN jointly signed by Managing Director of Chams Access, Funke AlomoOluwa,  Managing Director of ATMC, Olumide Bajomo and Managing Director of  CSS, Mr. Darlington Kutenha, the IADs requested for support policy measures that would be sustained and engender investor confidence.

“Comprehensive policy support for burgeoning IADs: In order for IADs to become significant contributors in the Offsite ATM value chain, it is necessary for CBN to put in place a comprehensive policy support package that would enable the IADs to operate Offsite ATMs on a level playing field with the banks.

Lamido Sanusi, CBN governor

“We have noted from our experiences that half-hearted or poorly coordinated policy measures may either be inadequate, or rather counter-productive, to attainment of CBN’s policy objectives. Please find below the five (5) minimum policy support measures required by the IADs:

“Fee Redistribution: CBN to increase revenue share due to ATM Owners (Bank or IAD) to N90 to correspond with the cost profile and value addition by respective stakeholders in the value chain. The increase in revenue share due to ATM Owners is a trade-off to partly mitigate the impact of the reduction in Transaction Fee from N150 to N100 as stated in CBN’s November 4 Circular.

To assist CBN with managing stakeholders’ acceptance of this change, we recommend engagement of a neutral subject-matter expert such as ATM Industry Association (ATMIA) to facilitate the implementation process including a review of Offsite ATM economics in Nigeria.

ATMIA is an independent worldwide association representing all ATM industry stakeholders (Banks, IADs, CIT, ATM Vendors, Switches, Processors, Regulators, Equipment / Parts / Support Providers, etc) and have experience with similar assignments across emerging and developed countries. It might interest you to know that a number of payment industry stakeholders in Nigeria are already members of the ATMIA.

“Developmental/ intervention funding: CBN to grant IADs access to developmental funding recognising that Offsite ATMs are a critical capital-intensive infrastructure / component of the national payment system and that rapid sustainable expansion of this channel across the country is urgently required for the success of CBN’s Cashless Policy initiatives. The IADsare considering a variety of developmental funding options details of which we are willing to discuss with CBN.

“Cash provisioning: CBN to provide IADs with access to adequate volume of ATM-fit Currency Notes (Cash) in a manner that provides IADs a level playing field to profitably operate Offsite ATMs without held hostage by Banks. The IADs would be glad to discuss and address any outstanding issues related to the feasibility and jointly workout operational modalities with the CBN on our cash provisioning request.

“PTSP Licensing Bundling: CBN to offer IADs an opportunity to leverage obvious synergies between offsite ATM and PoS Deployment by bundling the PTSP and IAD Licences as a form of palliative to partly cushion the adverse financial implications of the latest Offsite ATM policy reversal communicated via the November 4, 2011 Circular issued by CBN.

“Zero tolerance for non-compliance: CBN needs to do more on compliance as the regulator. Consequently, application of sanctions for non-compliance should be intensified in order to restore a compliance regime for all Offsite ATM Operators (Banks & IADs).”