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Settlement delays, inoperative issuers hobble pos penetration


Stakeholders in the electronic payment ecosystem have identified delay in settlements by some banks as well as issuers not being operative among factors militating against increase in Point of Sale terminals (PoS) penetration in the country.

They also frown at Central Bank of Nigeria (CBN) model of deployment of the terminal where only banks are allowed to deploy PoS around the country, arguing that such model is counter- productive to the quest by CBN to achieve PoS deployment rate of 2,247 per 100,000 people by 2020.

According to Regha Onajite, executive secretary/CEO, E-Payment Providers Association of Nigeria (E-PPAN), “in our many campaigns for electronic payments across the country, I see issues of network challenges, poor support by PTSPs, settlements issues by some banks as some of the reasons for merchants’ unwillingness to use PoS as means of payment. We even found out that some merchants will put an additional charge for consumers to use PoS.”

“Some of the merchants in Nigeria, especially the small and micro ones do not understand that our payments system is highly evolved and that is why they can have a T + 1 settlement schedule. Most other countries do not offer such. We have developed a sophisticated payment system here. They want instant payment. My advice to such merchants is for them to adopt mobile payment. They do not have much capital to tie down and that is why they clamour for instant settlement. I believe we will still grow the system to when we can have instant settlement too.”

It would be recalled that Nigeria Inter-Bank Settlement System (NIBSS), the industry Payments Terminal Service Aggregator (PTSA) in its end of 2016 report on PoS attributed Issuer Inoperative as a major reason for failed PoS transactions in the country accounting for two million failed transactions last year.

Onijite said: “Issuer inoperative is a switching problem. It is surely one of the reasons for transaction failures but this is not peculiar to Nigeria alone as other countries also face similar issues.

It is a generic challenge that should not cause any scare or panic. In one of my meetings with the Minister of Communications, Adebayo Shittu, I can tell from a good point that the ministry is working hard on achieving a robust infrastructure network which will improve the services of the switches and banks across the country.

In his contributions, Tunde Ogungbade, managing director, Global Accelerex, said that Banks are the ones today responsible for investing in PoS terminals used by merchants at retail outlet.

“They are selective in the issuance of PoS terminals to ensure the investment results in transactions that can drive growth. Merchants have also enjoyed this approach of looking to the banks to provide the PoS terminal for free, knowing that if one bank does not, another will to earn their business. What needs to happen in the market is a model similar to what accelerated the adoption of mobile phones, letting the merchant pay for the device. This will remove the limit of banks budget and investment from market demands for PoS terminals and accelerate adoption.”

A report from NIBSS made available to Nigeria CommunicationsWeek shows that 51 percent of volume of transactions in 2016 occurred in Lagos with 32.7M, followed by Abuja with 6.8m and Port Harcourt 5.1M.

It further stated that between January and July 2017, only 15,093 terminals were added to the network.

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