ATMs

By ‘Lola Adewoyin

Ahead the Central Bank of Nigeria (CBN)’s final implementation of its cashless policy, stakeholders have started discussing market structures, competitions, market imbalances and the pains these processes could inflict on card users.
At a workshop organised by Initiative for Public Policy Analysis (IPPA), the stakeholders spoke their minds on the response of card users in Nigeria and how it affects the nation’s economy, especially in the wake of the cashless policy.
At inception, Nigerians embraced the invention believing it was going to be a preferred solution to diverse challenges that confront account owners in accessing their funds.

However, with the advent of payment cards, the pressure of accessing funds in bank accounts eased a bit, with its positive effect in eliminating the barrier of time limitation in accessing funds, the relief was however momentary as challenges associated with the card usage soon followed.
Except for the cases of card theft, illegal transfer of people’s funds without authorisation, internet fraud and other mistrust, the population of card users would have continued to be on the increase instead of this unusual downturn the development its witnessing.

Just as the nation’s card market started experiencing development, certain distortions and imbalances set in, ranging from card theft and mistrust to internet fraud, it was evident that Nigeria is just learning the rope in payment cards usage.
Unfortunately, cases of card theft, illegal funds transfer, dispensing error by the Automobile Teller Machines (ATMs) amongst others, made the very few percentage that are using the cards  to drop drastically.

Regardless of the banks’ campaign on cards usage, coupled with the apex bank’s directives on cashless policy; the response graph is still nose-diving. These and other issues were the salient points discussed at the workshop themed ‘Engaging Stakeholders in the Economic Regulation of Payment Cards in Nigeria’.

Speaking on the trend of development, Dr. Damilola Olajide of University of Aberdeen, UK, argued that the initial high adoption of payment cards in Nigeria has not been sustained over time and that the usage and adoption rates have been significantly low due to insufficient information and the huge number of the unbanked segment of the population.

Pondering on what sort of public intervention in form of economic regulation that could improve adoption of cards usage by consumers and its adoption by merchants, Olajide, represented by Prof. Chris Ekeji, said cardholders (consumers) and merchants (POS) represent the different demand structures to be satisfied at the same time, saying one side of the market consists of cardholders and card issuers, while the other side consists of merchant acquirer.
According to him, the relationship between the two markets is interdependent and so the demand from one side is dependent on the demand of the other side.

He opined that card networks (card schemes/switches) play an important intermediate role of balancing the two sides of the market, through which each side have access to each other’s market.
To him, this balancing act will create economic value by providing incentive to facilitate and encourage participation of both sides of the market.

Another presenter, Olusegun Sotola, in his own paper titled ‘Evolution of Payment Card in Nigeria; Analysis of Transaction at Channels’, said ATM has remained the dominant channel of card transaction in Nigeria. This, according to him, has resulted in the little headway the nation has with credit card channel. “Whereas credit card has the highest benefit compared to other channels,” he said.
Beaming light on what sort of public intervention in form of regulation that could improve adoption of card usage by consumers and card adoption by merchants, Sotola surmised that awareness campaign by both the apex bank and other banks would foster progress.

Stakeholders present at the workshop included representatives from the CBN, banks, merchants, regulators, card holders, Green Economics Nigeria, VISA Card, the media and others.
They admitted that the literacy level in the country was really a debacle to card usage in Nigeria. They unanimously reached a consensus that there should be more aggressive awareness on card usage before the new deadline of CBN on cashless policy comes.

A representative of the CBN, Musa Jimoh, of the Department of Banking and Payment System, revealed that his bank has made it mandatory for banks to resolve issues relating to card payment brought by any card user within a maximum of five days, adding that there should even be compensation for the loss of resources caused by the technology or the bank itself.
Disclosing that CBN has further created another Unit called Consumers Protecting Unit to handle all grievances in respect of card usage; Musa noted that the apex bank was aware of the nation’s low literacy level on card usage, which was part of the reason for the shift in the deadline of cashless policy compliance.

Speaking from his experience out of the country‘s shore, he said Nigerian cards rarely work abroad. He specifically narrated his ordeals in New Jersey, USA, saying he had to cut down his stay because of his inability to access his fund over there.
Reacting to this, the Country Manager VISA Card, Mr. Ade Ashaye, explained that the problem could be from the person’s bank. He urged all card users to always ensure that they inform their banks before embarking on any journey with their card.

Reason: he said some cards are usually secured to prevent foreigners from accessing the funds except if authorised by card owner. Ashaye said his company has only shut down its system for 15 seconds in the last 50 years of operation.
Participants at the workshop also maintained a position that lawmakers should be made stakeholders in this policy making so that it could fast-track good policy making to foster development in the usage of payment cards in Nigeria.