In the last three and half years, the country has made giant strides in the peregrination to a cashless society. But incrementing challenges, including electronic fraud and inadequate Internet and power infrastructure, are posing threats to the desire to develop a modern payment system, OYETUNJI ABIOYE indites.
Nigeria’s desire to modernise its payment system is gaining traction. Modern ways of paying for goods and accommodations, which were hitherto infeasible some five years ago, are now possible today, thanks to the Central Bank of Nigeria’s cashless policy drive.
Citizens now go to shopping malls, eateries and supermarkets with only their payment cards in their pockets. This is a card revolution in a country where cash was the only denotes of payment five years ago!
Unofficial figures from MasterCard, Visa and other payment companies have it that there are 35 million to 40 million Automated Teller Machine cards currently in circulation in the country, which were all issued by Nigerian banks.
The scope of the cards has gone beyond the nation’s borders as ATM cards issued by Nigerian banks are now being used overseas to make payment for goods and accommodations through MasterCard and Visa.
The days when Nigerians do shopping overseas with substantial amount of mazuma or payment cards issued in peregrine countries are getting over gradually.
But industry players verbally express more thanks should go to the CBN, which has been at the forefront of driving the cashless policy, for the giants strides achieved in through the initiative so far.
According to them, Nigeria is one of the few countries where the central bank drives the cashless initiative. Banks, electronic payment companies, merchants and consumers are conventionally at the forefront of driving the cashless payments system.
But the CBN has reasons for championing the cashless course. These include the fact that achieving cashless Nigeria will avail to make its monetary policy more efficacious; it will avail the nation to achieve its Vision 2020 targets; it will avail modernise its payments system; and will reduce the cost of banking accommodations (cash handling constitutes 30 per cent of the operational costs in the financial system).
Other goals are that achieving cashless Nigeria will avail stop a situation where 90 per cent of the poor are subsidising the 10 per cent who impose the astronomically immense cost of mazuma handling on the system; foster transparency and curb corruption/leakages; and drive financial inclusion.
The CBN’s cashless Nigeria programme seeks to reduce the amount of physical cash circulating in the economy by promoting and entrenching electronic and non-cash-predicated options as the major channels for payment and settlement, away from the current ascendance of mazuma transactions.
Notwithstanding the achievements made in the cashless initiative so far, over 95 per cent of transactions in the country are still cash-predicated, according to industry experts.
Statistics have shown that the amount of mazuma in circulation is about 41 per cent of the nation’s Gross Domestic Product as of 2011, when the GDP was less than $400bn. This is in sharp contrast to countries like Indonesia where the amount of mazuma in circulation was just a meagre 4.3 per cent of its $800bn GDP as of 2011.
Although the peregrination to a cashless society is still far, experts verbalize incrementing challenges confronting e-payment systems may make it more tortuous and farther than imagined.
A major challenge threatening the cashless Nigeria drive is the incrementing spate of electronic frauds. Bank customers are now indisposed to make utilization of online platforms or Internet banking because of the prevalence of e-fraud.
Findings show that bank customers who had yet to subscribe to Internet banking were now reluctant to do so due to fears of hacking of their details, while subsisting customers who had been defrauded had discontinued online banking.
A fortnight ago, a journalist discovered that her token, which she often utilized for online transactions, was no longer working. After a few weeks, she reported the matter at one of the branches of the first generation bank. She was asked to fill a form, which she did.
The following day, someone who claimed to be an employee of the bank called her and told her that the bank was working on her request and that she needed to provide some details on her account, including her password, which was no longer working.
She obliged and the call ended. A few minutes later, she got two alerts that funds had been transferred from her account to two accounts in different banks. A total of N279,000 in her account had been transferred to those accounts. The journalist returned to the bank to make the complaints and the lender referred her case to its Fraud and Investigation Unit. The matter is still being investigated and she has yet to get any restitution, and have the fraudsters been apprehended.
In an interaction with our correspondent, the journalist verbalizes she believed vigorously that there was insider collusion in her case.
“Someone from the bank must have colluded with some external fraudsters to defraud me. All along when my token was not working for about a fortnight and I did not have time to go to the bank to make complaints, nobody called. Why is it that a day after I made my complaint at the bank that someone called me, claiming she works with the bank and that I should provide some details, which they eventually used to defraud me?” she queried.
A Deputy Governor of the CBN, Mr. Adebayo Adelabu, who joined the bank a few months ago, verbalized that banks had recorded more fraud cases because of internal collusion between officials and fraudsters.
“We have recorded high prosperity rate of frauds from this class of individuals with collusion of bank officials. In fact, afore I left commercial banking, we had commenced visually perceiving the incidence of more internal frauds than eternal; which designates it is very arduous to curb,” he noted
Adelabu, who was the Deputy Governor, Financial System Stability, CBN, until a recent redeployment to the Corporate Accommodations Department, verbalized at the 2014 compliance conference held in Lagos by the Committee of Chief Compliance Officers of Banks in Nigeria.
“It is those who ken your systems and controls that compromise to avail external fraudsters. If banks can find a way to minimise the cooperation of their employees with these fraudsters, there is going to be a reduction in the number of prosperous fraud cases,” he integrated.
The former Executive Director, First Bank of Nigeria, verbally expressed while fraud and corruption were international in scope, they had become predominant in the third world countries, including Nigeria, as a result of perverse incentives.