Policy, economy hobble E-Payment channels deployment

Inconsistent policies by financial regulator and harsh economic situation in the country have been attributed as responsible for the slow deployment of electronic payment channels such as Automated Teller Machines (ATM) and point of sale (PoS) terminals in the country.

Central Bank of Nigeria (CBN) had recently reported that in over one year, the number of deployed ATMs in the country have remained at 12,000 without additions while PoS terminals have not increased beyond 200,000 within the same period.

Regha Onajite, executive secretary/CEO, E-Payment Providers Association of Nigeria (E-PPAN), attributed the development to inconsistent policy by the authorities as well as harsh economic situation in the country.

“The Central Bank of Nigeria did not encourage the full implementation of the cashless policy in the states. The national assembly had its concerns over our preparedness and in all humility; I think we adopted the easiest option which is put a hold until everything is perfect. There will never be such a time when everything will be perfect. We need to take the bull by the horn and plunge.

This approach is discouraging for the banks and payment systems providers who have invested heavily on PoS and other infrastructure. Where will the recovery of these investments come from if people are unwilling (due to old habits) or forced by policy to use the systems? This made them hold back to deployment of additional ATMs and PoS terminal.”

“Another challenge is the economics of deploying PoS. By the policy, the banks are expected to deploy the PoS for free to the merchants. PoS are not cheap to purchase or manage, so it will only make sense to deploy them at locations where the cost of implementation can be recovered. The banks are therefore selective of merchants’ locations.

Tunde Ogungbade, managing director, Global Accelerex Limited while corroborating Onajite said that macro-economic factors in the country have incapacitated banks from increasing e-payment channels.

“In the last two years, the country has experienced strong macro-economic headwinds: the election expense, the low futures of crude, the devaluation of the naira etc. Banks are arteries connected to the heart of the economy. All these macro-factors will impact on non-performing loan portfolios and the ability to invest in the merchant acquiring business. PoS terminals have to be imported. The scarcity of dollar has driven up cost and reduced units procured.”

He said: “uncertainty about the future of new research, development and innovation, there has been several initiatives outside PoS that were hopeful options to leapfrog the use of cards. Technologies such as Near Field Communication and Barcode Scanning have been explored by banks to facilitate retail payment.

There is also the use of Mobile Money and m-POS. These technologies are available today but require a significant consumer and merchant behavioural change. The exploration of these alternatives requires significant investment which plausibly reduced PoS investment and deployment,” he noted.