e-Payment will Minimize Fraud – Obaro

John Obaro is managing director of SystemSpecs Limited, a thriving financial and human capital management software solutions company. He has had a distinguished IT management career and is regarded as one of the most respected personalities in the Nigerian IT industry. Obaro worked in the banking industry for 10 years before setting out to start up SystemsSpecs 18 years ago. He spoke to chike onwuegbuchi and funmi ilesanmi on issues in the e-payment space. 

FG’ Directive on e-Payment            
It was a very good move on the part of the government to embrace e-payment and that has given a good platform for the industry to grow, because government at the end of the day is the largest player. In the last one year, there have been experiences that move from extreme excitement to extreme frustration, so you have two clear groups in the industry today, those who are very excited about e-payment, and those who are very frustrated by e-payment.
The first challenge is that e-payment itself has not been properly defined, so you have people come up with anything different from a cheque leaf and call it e-payment. You have people put data on CDs and flash drives and send to their banks and call it e-payment. You have people send schedules to their banks and call it e-payment. You have people send attachments to e-mails, and send it to their banks and call it e-payment. Now, these clearly are not in anyway e-payment.
e-Payment is e-payment. e-Payment must be end to end electronic payment for transactions. The moment you have manually intervened, it is no longer e-payment. It is at the very best manual e-payment. Most of the people who have experienced frustration with “e-payment” are those who have been practicing moving schedules physically to the banks, they do not know what is happening to the payment, they send in diskettes of data manually to the banks, they do not know what is happening to the payment, they just wait. These people are bound to experience lots of frustration.
However, for true e-payment, organizations key in their transactions from the comfort of their offices themselves, it is transmitted to the banks, necessary accounts are debited and the counterparts credited. The organizations that sent these instructions are able to see on the screen of the computers on their desk the status of all instructions they have given. Therefore, any organization that cannot see their current and even historical transactions on the screen in front of them showing the status are not practicing e-payment.
In the last one year, we have some arms of government that are practicing e-payment and are enjoining the benefits and we have those who are struggling with manual processes.
Extent of MDAs Compliance with e-Payment
Let me put it this way, a number of the Ministries, Departments and Agencies (MDAs) are doing true e-payment but a large number of them are still struggling with sending schedules to their banks. Part of the challenge is that a number of the MDAs probably did not get a proper understanding of what they were to do at the early stages; they just knew they were no longer allowed to write cheques. The next thing they did was to hand over their payment instructions to their banks in whatever form. So they just transferred the problem in an attempt not to flout government regulation and not knowing what next to do they just present cheques to banks or key in some things into a spreadsheet and send it by e-mail to their banks.
As the year started wearing on with the confusion and pressure on their operations, many of them started exploring better and more effective ways of  addressing these issues and I can only see things getting better. Yes, there has been a move from fairly cumbersome ways of addressing issues into more efficient ways, especially as they see possibilities. Part of the initial challenge was that many people did not believe that these things were possible. They did not believe that it is possible to sit in your office, issue a debit instruction, your account is debited and your identified beneficiary will be credited. Many people did not believe it, did not understand it and it was therefore easier for them to just throw the schedules to the banks.
Directive on Cheque over N10 Million to go e-Payment
I think that is a very encouraging move from the Central Bank of Nigeria. I know it is inline with vision: 2020 of the federal government, which entails the economy to go electronic in terms of payments. Of course we have been advocating that, you no longer need a cheque leaf at all to carry out transactions. We have organizations today that carry out a good number of their transactions on Remita without touching cheque leaves. For now I would say in SystemSpecs for instance less than one to two percent of our transactions are issued on cheques. Why? We need to issue cash directly for some pressing transactions, other than that we are looking at a future where we do not need cheque leaf for anything, because if you want to pay a third party, you can press some buttons and the beneficiary gets credited.
The N10 million limit by the CBN, I feel is something that would encourage organizations to begin to look in the electronic direction.
My advice to organizations is that, they should avoid the temptation of having some transactions in the electronic form and another set of transactions in the traditional way of cheque writing because at the end of the day it may further compound their reconciliation challenges. You might as well seize the opportunity to move all your transactions to an e-payment platform so that you can have a full view of all your transactions.
I do not see the directive as a negative for any organization rather I see it as an opportunity for them to immediately go electronic. Really, what do you need? A laptop and an internet access is all that is needed to adopt electronic payment. I want to encourage organizations to see the CBN mandate as an opportunity to go fully electronic.              The challenge is that most of the banks are thinking only of their individual banks, therefore they have solutions that their customers can use to carry out e-payments with them.
In real life, most organizations have multiple bank accounts, so you find the challenge of an organization that wants to perform true e-payment log into the website of bank A and perform its transactions, then log out to log into the website of bank B, learn to navigate through the website of bank B, the way bank B wants it. Then they log out and need to remember their password for bank C to log into their website. All of these create confusion in the mind of the corporates. That is where a solution like Remita comes in. Remita presents one front to the organization, one password assess and transmits the instruction of the organization to the respective banks. That makes life easier for the corporates. On ones screen for instance, you can see your balances across all banks; if you have accounts in seven banks, with Remita you can see your balances on each of the seven banks on a screen, including your gross total. From the same screen, you can issue payment instructions; you can pay people within the same bank or in any other bank without having accounts in any of these other banks.
You can pay beneficiaries in other banks even in microfinance banks and mortgage institutions. At the same time you are able to see the status of all your transactions, the instructions you gave, you are able to know the ones that have been successfully paid, the one that has one challenge or another and you can immediately address those challenges. Perhaps if the account number was wrong or you do not have sufficient funds, you are able to track all of that yourself.
Bankers understand this, a number of bank customers are also beginning to understand this and that is why I foresee a bright future for the industry.
Depriving Banks of Certain Revenues 
It is only a bank that wants to be short sighted that will not embrace e-payment. e-Payment is actually what you may call a major efficiency platform for bankers. Take for instance under the manual system, you issue a cheque to someone, that person goes to his bank, he fills a teller form, he queues up before he can pay in the cheque. The cashier collects the cheque, pass it through some internal processes before it is keyed into their computer system. It then goes through clearing which will be monitored while going through the two to three days clearing. All of these takes resources from the bank, not just a cheque but you can imagine all the banking halls filled up with people who are trying to pay in their cheque leaves.
Whereas with an electronic payment platform, once banks have their IT infrastructure well in place, they just sit back and watch these transactions happen without manual interventions. You can see that this is a major efficiency platform for the banks. Apart from that, the risks of fraud get minimized because it is when you have a lot of manual human interventions that opportunities for fraud exist. With the electronic platform the bank gets more efficient and the chances of fraud are minimized. I believe the banks are the winners at the end of the day.
I do not see any forward looking bank opposing e-payment because they see it as a loss of revenue. They still continue to charge COT and other agreed charges with the banks.
Software Company of the Year Award
I must say it is a very special award to us at SystemSpecs.  Special in the sense that in our 18 years of operation we have won different awards both nationally and internationally but this is the first time we have an award by our colleagues in the same industry, that is Nigeria Computer Society (NCS). When your colleagues in the same industry conduct a survey and come up with an award recognizing you, that gives a very exciting feeling. We feel humbled by the award and we feel challenged at the same time. Challenged in the sense that you have an award by people who know, by people who understand and you now have to remain on top of the game; you have to improve your standards and remember at all times that your products are a showcase for the industry. You therefore have to do everything to keep the integrity of the award at all times.
Areas of Operation
When we started at about 18 years ago, we partnered with a then UK firm now called Info and has actually been bought over by a US company. We partnered with the company for the deployment of Sun Systems, one of the most popular accounting software worldwide. We started representing them in Nigeria, we moved into oil and gas, manufacturing and other sectors of the economy. After a while, we then moved on to develop our solution for payroll and human resources. It has been a very interesting experience. A few years ago, we ventured into the e-payment space, we started out from saying when people finished running their payroll, they should be able to effect payments directly from their offices; and that was how we started Remita.  On our stable today, we have Sun Systems from Info, we have Human Manager which is a payroll and human resource management solution and then we have Remita which is an electronic payment platform.
Mobile Money    
People have defined it variously, it is the extent that you use a mobile phone to effect payment, people want to see that as mobile payment which is still part of the what we are saying. On Remita for instance, you can effect your approvals via your mobile phones so you can effect payments to vendors from the mobile phone. I also foresee a future for that even though for now we are focusing more on corporates but as time goes we will also be looking at individuals who would want to carry their mobile phones and it is as good as carrying cash in hand.
Future of e-Payment in Nigeria
I see a bright future for e-payment in Nigeria. What many people may not realize is that Nigeria is currently ahead in the area of corporate e-payment. Nigeria is currently ahead of quite a number of countries including a number of western nations. If we get it right the way we are doing it, it will become a very exportable product even to other countries. It increases the velocity of money that of course would immediately have an impact on our economic activities because with money moving around everybody gets a piece of the action.