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Ahead of April 1, 2017 when the cashless system which had been in only six states will go nationwide, operators in the nation’s epayment ecosystem have pledged their readiness to cope with challenges of handling more volume of cashless traffic.
The Central Bank of Nigeria (CBN) in a circular to all Deposit Money Banks directed that with effect from April 1, 2017, banks in the states where the cashless policy was already operating, Lagos, Ogun, Anambra, Abia, Kano, Rivers and the Federal Capital Territory, would begin to impose charges on deposits and withdrawals above N500,000.
Reacting on the readiness of her colleagues, Mrs. Regha Onajite, chief executive officer, Electronic Payment Providers Association of Nigeria (EPPAN) said “The reintroduction of the cash processing fees is a means to help the Central Bank achieve its goal on transforming the nation to a country where we depend less on cash than on other modes of payments.
According to her, studies have shown that processing cash comes with a very high premium; these monies can be used for other things. Cash has its disadvantages such as security etcetera and those who have swung over to the digital side can tell you how convenient digital payments are.
She noted further that “Ever before the introduction of the cashless policy the CBN has carried out its research and found that less than 10% of our population will be affected by this policy. For individuals, how many people do really pay or receive more than Five Hundred Thousand Naira on a daily basis? Cash processing fees are not punitive; it’s just a means of allowing people pay the price of their obsession to cash. We can spend money without necessarily touching cash.
“We understood the need for a break with the policy at the initial kick off. As an insider I can attest to the fact that we were all set and geared to go. But as a listening industry we had to step back when there was a cry for a little more time to get people to get used to the system. You can say now that there has been a lot of improvement in the system and the infrastructure is better than 2012 when we started. A lot of improvement has gone into the system in terms of policies, innovations and standardizations.
Part of the epayment operators readiness include making arrangements to sensitize and mobilize the Nigerians to understand the benefits of a cashless Nigeria and to adopt alternative payments modes instead of cash.
On the need to increase availability of ATMs and PoS machines beyond banking premises, James Agada, Chief Executive Officer of CWG Plc, said in several places such as US, Europe and even in India, ATMs and PoS devices are not even deployed by banks alone. It is the mixture of deployers that led to increased ATM penetration.
According to him, “Independent deployers and ATM networks treat ATM deployment and operation as a business proposition — they provide a value, people appreciate the value and pay for it. And in every business, there is growth when the business is inherently profitable, what users pay exceeds the cost to provide the service. An analysis of the share of market of independent ATM deployers across the globe shows clearly that where there is a strong, independent deployer presence, the ATM penetration is also high. And independent deployers only get in the game where it is profitable.”
Also speaking, managing director, Global Accelerex, Tunde Ogungbade was of the view that the cost of cash management according to CBN was about N192B in 2012. I have no doubt that now that number is much higher. The various cashless options available in Nigeria today, especially via channels such as PoS and NIP, can help save this large cost related to cash management. This will also help bring the estimated 65% of cash in circulation, considered to be outside of the formal economy into the banking system. Finally, the risk of theft and loss will drastically reduce further, especially in the hinterland. Today, most merchants fail to recognize the cost of cash management on their business.”
However, one of the waiting challenge that may frustrate the nationwide scheme may be the issue ATM card seizures by machines coupled with the annoying delays and logistics in either retrieving it or getting new ones as many users are accusing banks of perpetrating the seizures so that customers will get new ones at a fee of about N1,000.