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Industry Mulls Cashback on PoS to Drives Cashless Scheme

By Chike Onwuegbuchi
02 October 2015   |   1:34 am
CENTRAL Bank of Nigeria (CBN) Banks and Payments Terminal Service Providers (PTSPs) are working on the introduction of cashback from point of sale (PoS) terminal, in an effort to further drive the penetration and adoption of cashless policy. Cash Back from POS Terminals enables a card user to withdraw cash from merchants’ cash boxes or…
Central Bank Of Nigeria building

Central Bank Of Nigeria building

CENTRAL Bank of Nigeria (CBN) Banks and Payments Terminal Service Providers (PTSPs) are working on the introduction of cashback from point of sale (PoS) terminal, in an effort to further drive the penetration and adoption of cashless policy.

Cash Back from POS Terminals enables a card user to withdraw cash from merchants’ cash boxes or shops’ cash boxes any time they pay by cards for the goods or services.
It can also come as cashback on purchases paid for through PoS.

Nigeria CommunicationsWeek investigations reveal that the cashback on PoS initiative is in line with CBN launched Electronic Payment Incentive Scheme (EPIS) which was launched September 2014 to offer incentive to merchants and further drive adoption of electronic payments at merchant premises.

As part of this initiative, a framework was introduced earlier this year for the EPIS which included offering purchase with Cashback services on POS terminals to enable cardholders receive cash, if they so choose, along with goods they have purchased.

Adebayo Olarewaju, head, Physical Channels, First Bank of Nigeria, who is driving the implementation on the banks’ side said that purchase with cash back is a service offered to cardholders by which an amount to be withdrawn as cash, is added to the purchase payment amount transactions paid through the POS. The cardholder receives the added cash along with the goods purchased.

He said that the initiative gives cardholders one stop opportunity for card and cash transactions on POS especially in remote locations with very limited number of banks.
“Cashback on POS has the potential of driving sales traffic to merchant locations in spite of the primary business offered. It mops up cash and creates a safer business environment for merchants. A merchant is incentivized with 50% of the total transaction fee charged per cash back transaction,” he explained.

He added that Cash Back on PoS is not a replacement for ATM cash transactions. Therefore the impact on ATM investment is negligible.

Tunde Ogungbade, managing director, Global Accelerex a PTSP, said that purchase with Cashback will enable merchants with high cash inventory to further serve Nigerians who patronize them as an alternative to ATM for cash-out, and serve as an additional location for obtaining cash across the country.

“CBN has also provided guidelines for merchant selection so that cardholders feel comfortable in the environment where they are been offered cashback, hence not all merchants can offer this service,” he said.

According to him, “Just like it operates in other countries; there is a limit to the amount that a customer can cash-out via POS terminals during a purchase with Cashback transactions in Nigeria. The limit is set to manage risk. The maximum amount that can be received per transaction is N20,000 and a cumulative maximum daily limit of N50,000 per card. There is a cost of N100 per Cashback transaction to the cardholder for using the value added service which is the price to pay for the convenience”.

It was gathered that Payments Terminal Service Providers (PTSPs) interested in the implementation of this initiative on their terminals will have to first get their terminals certified by Nigeria Inter-Bank Settlement System (NIBSS), the industry’s Payment Terminal Service Aggregator (PTSA).

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