Nahimah Ajikanle Nurudeen
The Central Bank of Nigeria last year began a campaign in a new policy on cash-based transactions which stipulates a 'cash handling charge' on daily cash withdrawals or cash deposits that exceed N150,000 for individuals and N1,000,000 for corporate bodies.
The new cash policy according to the central bank was introduced for a number of key reasons including; driving development and modernization of payment system in the country; and to reduce the cost of banking services and drive financial inclusion by providing more efficient transaction options.
In addition, the cash policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy.
The new cash policy tagged "Cash-less Lagos" started in Lagos on January 1. It stipulates that only Cash-in-Transit (CIT) licensed companies shall be allowed to provide cash pick-up services.
Under this policy, banks will no longer involve in transit lodgment services.
The service charges/fees will not apply until March 30, in order to give people time to migrate to electronic channels and experience the infrastructure that has been put in place. Any cheque issued with a value above N150,000 to a third party can only be deposited into an account as such cheques cannot be encashed.
To this end, individuals and corporate organizations that make cash transactions above the limits will be charged a processing fee of N100 or N200 as the case may be.
Consequently, banks have continued to encourage their customers to migrate to available electronic channels and where possible demonstrate the costs that will accrue to those that continue to transact high volumes of cash from March 30 in Lagos.
Meanwhile, switching to this alternative mode of payment is of advantage to stakeholders from an increased utilization of e-payment systems. For instance, it increases convenience for consumers with more service options; reduced risk of cash-related crimes; cheaper access to banking services and access to credit. Corporations will have faster access to capital; reduced revenue leakage; and reduced cash handling costs and increased tax collections for government. It will ensure greater financial inclusion and increased economic development.
Since the announcement of the policy, banks and financial institutions have continued to jostle for licence to operate electronic transactions systems alongside the central bank's efforts to encourage acceptability of the cashless policy and promoting financial products to suit electronic payment system.
The United Bank for Africa for example said it will provide merchants Points of Sale terminals for free where customers can make payments by direct electronic funds transfer into any account.
The policy is promoting branchless banking system where customers exploit electronic or alternative means of transactions. UBA said the cash withdrawals from ATMs shall form part of the daily cash withdrawal limits.
UBA's head of e-products, Luqman Balogun said the bank is increasing daily ATM withdrawal limits to N150,000 to allow customers attain the daily cash limits without visiting any UBA branches.
According to him, prepaid payment cards will drive financial inclusion as citizens without bank accounts can access financial services, stressing that cards will largely drive the attainment of the goals of cash-lite system given their popularity and wide spread acceptance.
Balogun said UBA card portfolio includes Debit; Credit and Prepaid card products. The bank currently issues Visa cards and plans to issue MasterCard and Verve cards to give its customers more options. All UBA cards are EMV cards with Chip and PIN security.
He noted that with the CBN's Cash-Lite drive, it is expected that the usage of payment cards will significantly grow. POS terminals will be readily available at more locations, thus affording citizens the opportunity to use their cards for payment in more locations than before.
Balogun said with the restriction on cashing of cheques to third above N150,000 across the counter of banks, UBA has developed line of products that can be used to effect direct funds transfer to beneficiaries accounts without the need to write a cheque.
On the Cash-Lite Lagos, Balogun explained that customers can rollout with UBA e-Products such as the Virtual Banking Products -U-Direct which is an internet banking platform that provides all account holders access to their accounts (Savings, Current, Loan, etc).
"It is a secure web based solution and gives users the freedom to access their account from anywhere they are 24 hours. With U-Direct, customers are able to conduct most transactions available within UBA branches but without having to visit the branch. They can make payments, transfer funds to other bank accounts (within and outside UBA), pay bills, remit money, etc. In the spirit of CBN cash-lite initiative, U-Direct provide customers with a flexible platform for electronic financial transactions," he said.
Balogun noted that U-Mobile is another platform for UBA customers to enjoy banking operating on the cash lite project bringing complete convenience to banking services while describing it as bank in customers' pocket.
He explained that transactions on U-Mobile is done using a mobile phone in which customers can manage their bank accounts and carry out a wide range of financial transactions including instant funds transfer, bills payment, airtime top-up, payment for goods and services, and balance enquiries amongst others.
"All financial transactions on U-Mobile are secured by pin and password giving customers peace of mind. We have many of the common billers on U-Mobile, making it very easy for our customers to renew their satellite TV subscription, pay utility bills. U-Mobile is an alternative payment solution SMS Alerts," he said.
Giving further insight into the UBA's line of products for the cash lite programme, he said PayManager is also a UBA web-based electronic payment solution that enables electronic payment to any third party (suppliers/vendors, customers, government, etc).
According to him, with PayManager, the bank customers can make payments from their account into other accounts with any bank in the world.
Balogun disclosed that PayManager supports foreign currency payments and international transfers.
He said BankCollect is a multi-channel web-based collection solution which enables collection or payment on behalf of government or corporate customers. Payments such as Airline ticket; insurance premiums; subscription payment; utility bills, etc can all be managed on UBA's BankCollect solution.
BankCollect is Cash-Lite compliant as customers can make payments using their debit cards on POS, ATM and online. Pay/U-Pay Connect: U-Pay is a web-based salary payment solution for small, medium and large organizations. It enables automated upload of salary information of employees for payment directly into employees' accounts in any bank.
Consolidated Internet Payment Gateway is another UBA's internet payment gateway developed to enable online payments on merchants' websites. It provides the simplest and quickest method of integrating e-commerce websites to a secure payment gateway for the purpose of receiving payment for goods and services. It presents a combination of local and international payment options to merchant customers on a unified web interface.
With the pilot project currently going on Lagos, banks are expected to deploy their IT across the country on or before June when the cashless economy is expected to be fully operational in Nigeria.
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