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Deployment, awareness frustrate CBN cash back on POS


Slow deployment and lack of awareness have conspired to hobble the cash back on Point of Sale terminals (PoS) initiative by the Central Bank of Nigeria (CBN) in collaboration with banks, aimed at revving up incentives for cardholders for PoS adoption.

The CBN had introduced a cash back on PoS terminals as a means to enable cardholders engaging in retail transactions with a merchant to as part of the purchase, obtain cash at the point of sale.

The other aspect of the incentive drive called “Cashback” was to give cardholders cash incentives for using their cards for PoS transactions.

The benefit of Cash back on PoS, apart from the CBN Electronic Payment Incentive Scheme (EPIS) that saw cash incentives, to the cardholder is to leapfrog the extra step, involved to obtain cash, namely a visit and queue at an ATM location, which can be annoying and time consuming.

On the other hand, the merchant benefits by avoiding the cost of cash management i.e. the administration, logistics, security and lodgement process for cash at their bank branch and while earning an income for each cash back transaction.

Banks also benefit when you consider the aspects of the cost structure of operating a bank that will eliminated due to a reduction in cash lodgement.

Nigeria CommunicationsWeek checks revealed that most cardholders are not aware of this service let alone using it, this is also compounded by inability of banks and Payments Terminal Service Providers to increase deployment of PoS especially at hinterland.

The number of deployed Pos terminals has witnessed stagnation in the last one year remaining within 120,000 which is frustrating desire of merchants to use cash back initiative as a way of encouraging cardholders to use PoS.

Tunde Ogungbade, managing director, Global Accelerex a PTSP, said, one year into Cash back on PoS has little results to show for the following reasons.

“The main issues of cash back via electronic means are being solved in peculiar ways, similar to plans for agency banking. What I mean is that POS has found different applications, especially in the hinterlands where regular purchases with a premium are being used to facilitate cash withdrawals.

“On the EPIS, cardholders will need to see that incentives being gleaned are covering some of their banking fees e.g. SMS Fees etc. At present, that’s not the case, with some cardholders voicing that the EPIS incentives though small are no longer being paid by banks,” he said.

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) a process they are not knee at following.

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