CBN, manufacturers’ deliberation on future success of cashless operations
The Central Bank of Nigeria (CBN) and the Manufacturers Association of Nigeria (MAN) weekend in Lagos reviewed the cashless operation which has been in operation in the last one year and the way forward.
Kola Jamodu, president said at the forum that the e-payment system is expected to embrace the estimated 70 percent of Nigerians who are at present unbanked or under-banked, within the formal banking system. “With the effective coverage of the country, money outside the banking public is expected to reduce drastically, bringing the costs of fund and borrowing downward; and with more bite in the effectiveness of Monetary Policy. Since it is over a year that the Cashless Policy has been in operation, it is therefore not out of place to have a review of the scheme with a view to making it serve the purpose of its introduction to the satisfaction of all stakeholders,” he stated.
He appreciated the few changes made by the CBN along the line of policy implementation in deference to outcry of some stakeholders, particularly the manufacturers and their merchants.
He said, “Such changes include shifting of the date of application of penalty on lodgments and withdrawals over the then authorised daily limits of N150, 000.00 and N1.m for individuals and corporates respectively from 1st January to 31st March, 2012 due.”
He added, “The upward review of allowable daily cash lodgments and withdrawals from N150, 000.00 and N1, 000,000.00 to N500, 000.00 and N3, 000,000.00 for individuals and corporate organisations respectively. Exemptions of Micro Finance Banks and Mortgage Finance Institutions from the daily limit of cash lodgments/withdrawals in order to enable them meet the daily cash demand of their customers.”
He however said that manufacturers and their distributors particularly those operating in high cash generating activities have been contending with some pertinent issues of concern which the authority needs to consider for quick resolution. He enumerated the issues which includes:
The non-exemption of cash lodgments from the allowable limits, given the cash dominated economy that we operate, with high informal sector that is largely operated by the micro, small and medium enterprises;
Inadequacy of PoS to support the scheme as Banks are unable to meet the demand of the users (merchants) for such vital infrastructure;
Where PoS are available, most of them are card selective. There are instances where some PoS will accept Master cards and reject Visa cards and vice versa;
The need to further reduce the 1.25 percent transaction fee for the usage of PoS to a barest level for high volume transactions;
Payment of COT by Merchants on their accounts and at the same time paying for transaction fee for using the PoS;
Development of adequate security measures to forestall internet scamming of the bank accounts of those who have signed on internet banking; and
The need to allow the policy to evolve as Nigerians need more time to appreciate its goodness instead of hammering on sanctions on violation of allowable limits. The penal fee of N100/thousand and N200/thousand for individuals and corporate organisations respectively is considered too high and punitive.
Jamodu said with the fast development in internet telecommunications, the manufacturing sector, and indeed other sectors of the economy cannot afford to be left behind in the automation of internal processes, including payment system. He further said this was what informed the collaborative arrangement between MAN and Interswitch Limited, an acknowledged electronic payment platform in organising the forum for the enlightenment of its members.
Tunde Lemo, deputy governor, operations , CBN, the keynote speaker at the forum said since the policy took effect, the POS deployment has been on the increase. In his presentation, he stated that the the cumulative number of POS deployed /connected to NIBSS CTMS stood at 177,846 as at August., 2013 This represents an increase of over 2800 percent above the 5,992 recorded as at end of January 2012.
“We set a target of purchasing at least 10,000 POS terminals per vendor. This has been met. Registered merchants reached an all time high at 147,123 as at August, 2013 and is growing.”
On payment card safety, he stated, “ As a prelude to the policy, Nigeria had achieved changeover from magnetic stripe based payment tokens and channels to CHIP +PIN compliant channel and tokens, thereby recording over 90 percent drop in card related fraud incidences. “
Based on evaluations, he stated that that consumers are gradually acquiring the appetite for card and not cash for settling of retail purchases. He mentioned new measures being taken on the success of the cashless policy to include.