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Interoperability Hobbles Mobile Money Growth 4 Years After CBN Directive

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By Chike Onwuegbuchi

Over four years after Central Bank of Nigeria (CBN) issued a directive to mobile money operators and Nigeria Inter-Bank Settlement System (NIBSS) to achieve interoperability among schemes which involves the transfer of money electronically from one person to another using a mobile phone still operates in fits and starts.

 

CBN had directed Mobile Money Operators (MMOs) in the country to fully connect to the National Central Switch (NCS) before February 28, 2013.

 

The CBN gave the directive in a circular entitled “Timeline for Interoperability and Interconnectivity”. The circular was signed by Mr. Dipo Fatokun, director of banking and payment system.

 

The circular stated that full connection to NCS would enhance MMOs’ “interoperability and interconnectivity “.

 

However, Nigeria CommunicationsWeek gathered that after mobile money operators have connected to NIBSS a fully interoperability is yet to be achieved in the ecosystem.

 

Victor Olojo, national president, Association of Mobile Money Agents of Nigeria (AMMAN), at the association’s 2nd annual conference held in Lagos told Nigeria CommunicationsWeek that interoperability has continued to hobble the growth of mobile money in the country.

 

“Interoperability has continued to remain a major challenge for us in this industry, especially agents. Because, we deal with consumers who cut-across different mobile money operators and banks, for instance, if I’m an agent with bank A and I’m unable to do transactions with Bank B with the device of Bank A that is not really the idea of financial inclusion.

 

“Financial inclusion should enable people irrespective of whatever financial institution they are operating. It means, if I have a Paga wallet I should be able to send money from my Paga wallet to Quickteller or PocketMoney wallet. Presently, this is not happening. What we have in the market place today is using different point of sale terminals for different banks, in that regard, I ‘m using 10 PoS for 10 banks. The ideal situation should be one PoS from Bank A should be able to attend to customers from nine other banks.

 

“That will solve the problem and the money I spent in buying the other nine PoS for other banks could be invested in the business. Imagine investing N900,000 in other areas of my mobile money business that will assist in driving financial inclusion. If interoperability issue is resolved, it means a problem of financial inclusion would have be adequately addressed.

 

Olojo also decried inability of banks to grant their members facility to grow their business especially Bank of Industry.

 

According to him, ‘Bank of Industry says mobile money is a high risk business and therefore not ready to give us loan facility’.

 

Emmanuel Okoegwale, principal associate, MobileMoneyAfrica, said there are different levels to achieve interoperability. It could be platform, agency or even via other channels like merchants.

 

“Essentially interoperability enables the acceptance of e-money seamlessly across providers, agency network and event merchants. Interoperability for agent revolves around agents’ ability to meet the needs of subscribers across multiple providers for cash out and cash in service, same way ATMs don’t discriminate between cards of firms that had entered into interoperability agreements at National or even at international level. It significantly reduces the cost for ecosystem players across agency network,” he said.

 

 

Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world.

So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

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E-Financial

NIBSS, PFS Launch National Automated Cheque Clearing System

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Dr. Yele Okeremi, Managing Director of PFS,

Nigeria Inter-Bank Settlement System (NIBSS) and Precise Financial Systems (PFS) have collaborated to unveil a new National Automated Clearing System (NACS), which allows all the Deposit Money Banks in the country to clear cheques within hours.

 

The banks have been test-running the infrastructure for 11 weeks ago and a total of N5 trillion  worth of cheques from 10 million transactions has been processed through the new platform.

 

At the post go-live session in Lagos with representatives of the banks, Mr. Ade Shonubi, managing director of NIBSS, explained that the institution had been on the project for over 18 months. He added that the infrastructure would allow all the banks to achieve several payment and non-payment transactions.

 

NIBSS’ boss said that as at today there are four clearing sessions. According to him, the advantage of having multiple clearing sessions was that the net amount against each bank is smaller so that risks are managed.

 

“With the new system, a cheque can be cleared within six hours, four hour or at whatever duration we agree”, he said.

 

Dr. Yele Okeremi, Managing Director of PFS, the software firm behind NACS, at the session said the process of clearing cheques in all Nigerian banks has been simplified with the launch of NACS and that the successful completion of the project has the door for more Nigerian firms to take on more national challenges.

 

Okeremi commended the collaborative effort that exists between NIBSS and PFS, saying that the partnership has given birth to the new system that “allows bank customers to experience the benefits of shorter cheque clearing cycles, as it reduces operational cost of the banks because the clearing departments of the bank can work smarter and close earlier”.

 

Mr. Kolawole Aminu, Head, Domestic Payments and Collections, Union Bank,  described the new platform as user-friendly.

 

He added that “over N5 trillion that has been processed on the new platform just within 11 weeks. We are talking of over 10 million in terms of the volume of cheques. That tells you how much we do with this mode of payment.”

 

 

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ATM Cash Withdrawal Volume Reach 107 Billion in 2016

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In 2016, the number of cash withdrawals at ATMs worldwide was 107 billion, a 6 percent increase over 2015.

And though the total number of withdrawals is declining in some developed markets, the value of the cash withdrawn is increasing as consumers choose fewer, higher-value transactions, according to Global ATM Market and Forecasts to 2022, a report from the research and consultancy firm RBR.

According to the report, not only are ATM withdrawal volumes and values on the rise in most markets, but also real-time cash deposits.

By the end of 2016, the number of ATMs that could be used to automatically deposit banknotes reached 1.1 million, or 34 percent of the global ATM total, RBR said in a press release.

By connecting additional facilities to the deposit module, deployers often enable customers to settle bills, transfer money, or pay for other goods and services with the deposited cash.

And just as the rise in ATM popularity meant that banks could rationalise their branch networks and redeploy staff to higher-value positions, automated deposit ATMs mean that they can continue to move staff members to other roles, such as sales.

For the customer, these ATMs mean that they can deposit their banknotes at more times of the day and in more locations, for greater convenience.

Recycling ATMs — automated deposit ATMs that also dispense the deposited banknotes — are growing in number. At the end of 2016, more than 670,000 ATMs at the end of 2016 were recyclers, up from 360,000 in 2012, RBR said.

In addition to staff redeployment or rationalisation, these machines also allow banks and independent ATM deployers to reduce their cash-in-transit costs, since fewer CIT visits may be required.

“Banks are improving the functionality of their ATMs so that more transactions can be migrated from the branch counter to self-service, freeing up staff to undertake sales and advisory tasks. Furthermore, they are increasingly rationalizing their branch networks and using ATMs to offer a wide range of services in areas that do not justify the presence of a traditional outlet,” said Rowan Berridge, research leader for the report.

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CBN Licenses Inlaks as Super-agent for Financial Inclusion

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The Central Bank of Nigeria, CBN, has granted an approval-in-principle to Inlaks, a financial technology company, to drive its financial inclusion and the cashless initiative agenda. Inlaks will operate as a super-agent in the nation’s financial services system.

Inlaks, a system integrator in Nigeria and Sub-saharan Africa will work very closely with the CBN and all partners to reach the underserved population as well as the financially excluded.

The aim is to ensure that informal workers in Nigeria have access to affordable financial services through its agent network which will address social challenges in key areas such as health insurance, credit accessibility, savings, wage payments, among others.

To launch the service, Inlaks will leverage the Nigerian Inter-Bank Settlement System, NIBSS, switching infrastructure to enable inter-scheme Cash-In-Cash-Out, CICO, at all its agent locations as approved under the CBN regulatory framework.

The Inlaks’ super-agency platform therefore shall be enabled to communicate with all its agents and shall also have visibility of its agents’ transactions through integration with NIBSS, according the CBN framework.

As stated in the framework, “Super-agents’ in Nigeria shall be responsible for the management and monitoring of the activities of their agents only, and shall not hold electronic money value and would also have information on the volume and value of transactions carried out for each type of service by each agent.”

The framework also states that the volume and value of transactions should be made available to the principal to monitor effective compliance with set limits and establish other prudential measures in each case. Measures such as onsite visits will be carried out to ensure that agents operate strictly within the requirements of the law, guidelines and the contract.

Femi Adeoti, managing director, Inlaks, while commending the CBN for granting it the license also highlighted the fact that the licence would deliver numerous gains to the Nigerian economy by enhancing financial access, financial inclusion, sustainability and growth of the small and medium scale enterprises.

Also as part of its efforts to reach the underserved, Adeoti said Inlaks would partner CBN to deploy a unified information technology platform for about 1000 Microfinance Banks in Nigeria. “The landmark project which is ongoing will be implemented under the auspices of the National Association of Microfinance Banks, NAMB,” he said.

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