By Festus Akanbi and Malachy Agbo
culled from: THISDAY LIVE Newspaper
The push by the Central Bank of Nigeria and the 24 banks to discourage the reliance on cash for transaction by Nigerians for most of their transactions, took off on Sunday, January 1, in Lagos, with the regulator and the banks expressing their preparedness for the take- off of the policy.
CBN deputy governor, Operations Directorate, Mr. Tunde Lemo, who expressed the determination of the CBN to go ahead with the pilot scheme in Lagos, had in an interview with THISDAY, assured that the financial system is well prepared for the cashless policy.
On the Lagos pilot scheme alone, the CBN and the banks will expend well over N2.5 billion, which the CBN deputy governor said will cover the cost of procuring 40,000 units of Point of Sale (POS) terminals at N50,000 per unit.
When an additional 25 percent in of the total cost set aside for logistics and public enlightenment, which is costing the CBN alone N500 million, is factored into the cost of the terminals, excluding the yet-to-be determined cost of mass mobilisation by each of the banks, it is estimated that the scheme could cost over N2.5 billion for the Lagos area alone.
Lemo, who disclosed that cost of cash management in 2012 is projected to go up to some N200 billion, however explained that the apex bank is poised to reduce the cost by 10 percent year-on-year.
He said in five years time, the cost of cash could be reduced by 40 percent through the e-payment channels being deployed by the banks.
"Year-on-year, we expect a 10 percent reduction, which could result in a 40 percent five years time. However, in aggregate terms, cash will still be a key means of payment because our intention is not to remove cash from the system, but simply encourage Nigerians to use safer alternative payment for their transactions," Lemo said.
Reacting to the concerns raised in certain quarters over the hitches that are usually associated with such technologically driven policies, Lemo said the apex bank and all the participating banks were ready to correct any lapses as time goes on.
He said; "We don't expect everything to be seamless from tomorrow because we are talking of a change of lifestyle. But Nigerians should not be discouraged by any minor hitches that may occur, as the CBN and banks stand ready to correct any anomalies."
However, one challenge is the prevailing duty charged by the Nigerian Customs Service on the POS terminals, which Lemo disclosed has caused some problems for the banks to get them cleared at the ports.
"We have a minor problem with the customs duty which was put at 20 percent," he said, adding that the banks have been asked to clear the terminals while the request for a duty waiver is being considered by the relevant authorities.
As a mark of preparedness by the CBN for the pilot scheme, Lemo disclosed that the Nigerian Interbank Settlement System (NIBSS) is already working as the aggregator of the network, meaning that it serves as a central point for the network.
He added that Service Level Agreements have been signed with Glo and MTN to provide the broadband and communication support services for the take off of the scheme.
In terms of reliability, Lemo explained that POS terminals being deployed are equipped with double SIMs to provide redundancy in the event of network failure by one of the operators.
"Part of the SLAs is meant to ensure that we have broadband. In terms of power, the POS terminals have rechargeable battery packs that can last 48 hours and can be charged with car battery outlets," he said.
The CBN deputy governor said 14 commercial banks had already hooked up to the NIBSS Instant Service which enables customers to credit a third party's account (counter-party transaction) with another bank and the recipient will get instant notification of the transfer.
On specific efforts by the Central Bank to ensure compliance, Lemo said banks were given a deadline to upgrade their ATMs to have biometric features for non-numerate customers.
Banks, he said, were also being encouraged to deploy smart ATMs in which customers can lodge cash and pay for bills.
Speaking on the initial pessimism by retailers and merchants, especially shop attendants to use the POS terminals, Lemo said: "We have asked banks to give retailers and merchants, who are their customers, an incentive scheme to encourage the use of POS.
"There hasbeen resistant because there has been a culture of tipping shop attendants when you pay with cash. So they tend to tell shoppers that the POS' are not working.
"But we have asked banks to incentivise retail outlets and other business as a way of encouraging the use of POS terminals, because they are safer and more efficient means of payment.
"POS also minimises the propensity for pilferage by shop attendants because there is less cash to play around with," he said.
THISDAY checks yesterday also showed that apart from the CBN, banks have keyed into the Cashless Lagos pilot scheme.
Investigations showed that apart from investment in the acquisition of more POS terminals and ATMs, other ambitious plans by some of the nation's financial institutions include the launch of new mobile payment services and staff training for the Lagos branches of some of the banks, among others.
Some chief executives and various heads of e-banking divisions of a number of banks who spoke with THISDAY also expressed their readiness for Cashless Lagos.
Managing Director, First Bank of Nigeria Plc, Mr. Bisi Omoyeni, in a response to THISDAY enquiries saw the development as another opportunity to position the bank for market competitiveness.
"At the beginning of the year, it was clear to us that we needed to deliver on some key areas of the business to restore customer confidence and position the bank for market competitiveness.
"Our primary focus was therefore, on improved channel availability, streamlining of our card product portfolio to meet the needs of our discerning customers and reduction in time to serve." he said.
To demonstrate the preparedness of the bank, Onasanya said the bank had created a portfolio of card products that will addresses the payment needs of all its customer segments - mass market, mass affluent and high networth individuals.
Onasanya was not specific on the bank's budget for the new policy but said First Bank "Would be deploying more ATMs and Point of Sale terminals this year while enhancing the existing internet and mobile banking platforms in order to handle low value cash and non-cash transactions,"
Head of e-business of Union Bank of Nigeria Plc, Mr. Ufuot William said the bank had been silently preparing to take position in the nation's electronic payment system.
The bank, according to him, has so far deployed over 500 POS terminals in the Lagos area, adding that it plans to deploy 10,000 POS nationwide.
He disclosed that Union Bank has started setting up ATM galleries in its rebranded branches and will be rolled out in all 400 branches.
William, who disclosed that many companies have already migrated to UBN e-payment and e-collection solutions, however, said that the pilot scheme of the cashless policy will affect largely big companies that generate large cash daily.
When asked to give the cost of the project, he said, "The cost is not readily available with me now. However, we intend to deploy 10,000 POS and each POS is about N65,000. That can give you an idea of cost in one aspect. We are investing in ATMs and other enhancing solutions."
Group Managing Director, Mainstreet Bank Limited, Mrs. Faith Tuedor-Matthews said the bank has adopted a multi-pronged approach that will guarantee a seamless transition experience for its customers.
"First we have reviewed and refocused all alternative channels for enhanced delivery of quality service to our customers as well as helping them make a swift migration to e-payment platforms.
"Then, we trained our staff in all our branches in Lagos to ensure effective compliance with the policy. We have also commenced aggressive recruitment of the POS mandate to merchant locations.
"We have enhanced our capacity in internet banking, mobile banking and SMS alerts. Most importantly, we have strengthened our ICT infrastructure to improve storage and processing and the optimisation of our live servers to increase our speed in processing transactions," she said.
Divisional Head, e-banking department, United Bank for Africa Plc, Mr. Balogun Luqman told THISDAY that the bank is fully prepared for its retail, corporate and public sector customers, adding that the bank's alternative channels and e-products are well tuned to meet and exceed customers requirements for the Cashlite era in Lagos and across the country.
He disclosed that UBA had so far deployed 1,500 ATMS and 5,500 POS in Lagos area alone. Other products the bank offers for the cashless programme include the internet payment gateway, internet banking (U Direct), mobile banking (Umobile), and mobile wallet (UMo), among others.
"In view of the anticipated huge penetration uptake and migration to the e-channels plus the attendant teething challenges, we have instituted a solid support platform such as the dedicated Cashlite Champions in all our business officers to educate and assist customers; our 24/7 Customer Interaction Center is Cashlite ready; all our channels have Cashlite information available; and we are working with highly reputable local and international strategic partners for seamless support especially uptime availability," Luqman said.
Group Head Branch Services Group, Access Bank Plc, Kalu Agwu, in his contribution stated that Access Bank had been in the forefront of the CBN's shared services initiatives with other banks which has among other objectives, the reduction of cost to income ratio and associated cash handling costs.
He explained that the bank had in readiness for the cashless policy deployed compliant/card neutral POS terminals to clients.
Access Bank, he said, has also entered into partnership with the CBN licensed Cash in Transit and Cash Processing vendors.
Head of Bankwide Operation and Technology, Diamond Bank Plc, Mr. Premier Oiwoh said the bank had already engaged some mobile payment vendors licensed by the CBN to reach the unbanked and effectively harness the cashless opportunities.
Although, he didn't give the exact figure of the various epayment channels deployed so far, he said numerous alternate delivery channel platforms had been deployed by the bank.
"Our mobile banking platform has the largest number of registered users (over 1 million) out of which 25 percent transact actively (beyond alert transaction service).
"The bank has already invested in the means to drive adoption - to all phone types with ease of use." He said the bank's support services staff have also been equipped with adequate training and effective participation in forums to ensure seamless support.
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