E-Financial
FintechNGR, Africa Fintech Network Call for Enhanced Collaboration and Innovation on Cross-Border Payments and Remittances
In a continued effort to drive innovation and collaboration within the fintech sector, the Fintech Association of Nigeria (FintechNGR), in partnership with the Africa Fintech Network (AFN), hosted an impactful webinar on August 20, 2024.
The event, themed “Scaling Cross-Border Payments and Remittances,” brought together industry leaders to discuss the challenges and opportunities in advancing cross-border financial transactions.
The webinar, which had average of about 200 participants, featured key insights from seasoned practitioners and experts from across Africa, Hong Kong and Singapore.
The dialogue covered the opportunities and challenges to scaling cross-border payments to boost livelihood and intra-Africa trade as well as trade between Africa and the rest of the world; leveraging the development in fintech and wider digital finance space.
Opening the event, Jacqualine Jumah, Director of Advocacy and Capacity Development at AfricaNenda, highlighted key trends in payment volumes across Africa.
She noted that the continent has witnessed a significant surge in digital payment volumes, driven by increased mobile penetration and the adoption of fintech solutions.
However, she cautioned that while the growth is encouraging, the continent must address infrastructural and regulatory challenges to sustain this upward trajectory.
On the pressing issues of fraud, data privacy, and the need for strategic partnerships across Africa; Abiodun Animashaun, Country Director of Chipper Cash, emphasized the critical need for robust anti-fraud measures in cross-border transactions.
He highlighted that the success of these measures relies heavily on global collaboration between the private and public sectors, stressing that this cooperation is essential for enhancing the security and efficiency of cross-border payments.
Similarly, Paul Li, President Hong Kong Fintech Industry Association, addressed the challenges posed by varying privacy laws on the international transfer of data.
He noted that while technology such as AI can significantly aid in fraud prevention, the infrastructure required for such solutions is often hampered by these regulatory differences.
Li, called for a more unified approach at the governmental level to facilitate smoother data transfers, suggesting that mobile based solutions and blockchain technology could offer more streamlined and secure alternatives for managing digital identities.
The event also shed light on the importance of strategic partnerships for financial institutions looking to expand across the African continent.
Ho Chee Wai, Lead Consultant at JFourth Solutions based in Singapore, advocated for collaboration with established players in target markets, noting that such partnerships are crucial for easing the complexities associated with regional expansion.
He emphasized that such alliances are not only beneficial for entering new markets but are also vital for accelerating the setup and operation of financial services across Africa.
Furthermore, the discussion highlighted the potential of a unified digital identity system in Africa. The panelists explored the use of mobile phones and biometric information to create blockchain-based ID tokens, which could significantly streamline Know Your Customer (KYC) processes.
They suggested this approach would be more efficient and secure compared to traditional ID methods, which often face significant logistical challenges.
Reflecting on the relevance of traditional platforms such as SWIFT, questions were raised as to the true benefits for intra-Africa trade given challenges such as the need for settlement in non-African currencies and the associated volatility in African currencies; significant declined in correspondent banking relationship between Africa and advanced economies; and the relatively high transaction costs.
The view held was that fintech solutions, specifically tailored to the African context, might offer more effective and innovative alternatives.
On the issue of cyber fraud and insurance, Animashaun pointed out the difficulties fintech companies face in obtaining affordable coverage, attributing this to the limited anti-fraud infrastructure.
He noted that insurance companies often struggle to offer reasonable rates, necessitating case-by-case negotiations by fintech firms.
Overall, the webinar underscored the need for continued dialogue, collaboration, and innovation to overcome the challenges in cross-border payments and remittances. It also set the stage for further discussions on blockchain technology, which will be explored in more depth during the upcoming Nigeria Fintech Week in October 2024.
These initiatives reaffirm FintechNGR and Africa Fintech Network’s commitment to fostering an innovation-driven environment not only in Nigeria, but across the entire Africa fintech ecosystem. By leveraging technology and strategic collaborations, both organizations continue to play a pivotal role in enhancing efficiency, security, and accessibility in the financial services sector.
Dr. Emonotimi Agama, director-general, Securities Exchange Commission (SEC), has disclosed that 50 cryptocurrency exchanges have applied for operational licences in the country.
Agama who spoke during a fireside chat at the BusinessDay Blockchain Conference in Lagos recently, said the commission received “50 applications and has accepted seven firms into its programmes”.
“Our work at the SEC is to protect investors and foster market development,” he said.
“The commission is open to innovation. Businesses must meet regulatory and compliance requirements to ensure the growth of a stable and sustainable digital economy.”
According to him, the government is receptive to crypto and blockchain because it has seen the country’s youths adopt the technology.
Agama added that the pace of acceptance of digital assets may vary across different sectors but will eventually happen.
“For innovators, we encourage you to seize the opportunity to develop blockchain solutions tailored to Africa’s unique needs,” he said.
“Focus on solving real-world problems, such as financial exclusion, inefficient supply chains, and lack of transparency in governance.”
Recall that SEC had on August 29, granted Busha Digital Limited and Quidax Technologies Limited “approval-in-principle” to commence operation under the accelerated regulatory incubation programme (ARIP).
The ARIP was introduced by the SEC to onboard firms that had already begun operations before the release of the rules on virtual asset service providers in May 2022
The commission equally introduced the regulatory incubation programme (RIP) designed to evaluate the business models of digital asset firms and allow them to test their products, services, and technology in a real-world market environment under the regulator’s close supervision.
The commission also said additional licence applications were being assessed and that approvals-in-principle would be granted on a case-by-case basis once the requirements were met.
However, on September 4, SEC clarified that it has not yet fully licenced any cryptocurrency exchange.
On his part, Buchi Okoro, chief executive officer (CEO) of Quidax, said regulation helps check operators’ activity in the space and protect investors.
The House of Representatives Public Accounts Committee, has asked Guaranty Trust Bank (GTB) to calculate and remit the Value Added Tax (VAT) on the commission from Remita between 2015 and 2022 to the federal government recovery accounts.
Remita is a financial solution gateway technology used by the federal government for collection of revenue for Ministries, Departments and Agencies to the Treasury Single Account (TSA).
The committee chaired by Hon. Bamidele Salam gave the directive on Thursday at the ongoing investigation into alleged revenue leakages through REMITA platform and non-compliance substantively with standard operating procedure and other allied service agreements.
The panel raised two issues on evidence of remittance of VAT components of Remita collections and collection of fees in the first regime of the Remita transaction.
But, Ahmed Liman, executive director of GTBank, said the bank did not remit the VAT for the period of eight years.
He said: “We believe that Remita is saddled with the responsibility of sharing the commission fees between the payment receiving parties.
“In our mind, we think Remita has done the needful before sharing the fees between the parties.”
Liman also said the collection of fees in the first regime of the Remita transaction, the bank charged 0.75 per cent on all the payers who used the platform.
The executive director added that the bank received N254.4 million from the Accountant General through Remita in 2018.
The committee resolved that the bank should calculate and remit the VAT on the commission fees received from the platform from 2015 to 2022 to the federal government recovery accounts domiciled with the Central Bank of Nigeria (CBN).
Other Banks that appeared before the committee on the same issues were Keystone, Sterling Bank, Polaris Bank, FCMB, Ecobank, Wema among others.
The committee referred the aforementioned banks to the reconciliation sub-committee in order to address the discrepancies that were noted and get a new date to re-appear before the panel.
Central Bank of Nigeria (CBN) has announced new regulations for processing Point of Sale (PoS) transactions across the country, directing that all POS transaction are to be routed wither through the Nigeria Interbank Settlement System (NIBSS) or Unified Payment Services Limited (UPSL) hence, breaking the monopoly of the former on transaction processing.
In a circular dated September 11, 2024 to all payment service providers on connectivity to Payment Terminal Service Aggregators (PTSA), the CBN directed that payment service providers are to commence regularisation with the PTSAs and notify the CBN in writing to confirm compliance, within 30 days from the date of the circular.
In order to achieve the objective of tracking electronic transactions in Nigeria, the CBN had in August 2011, granted a PTSA licence to Nigeria Interbank Settlement System Plc (NIBSS).
Following concerns over channelling all Point of Sale (PoS) transactions through a single aggregator, it had on April 19, 2024, granted a second PTSA licence to Unified Payment Services Limited (UPSL).
Nearly five months after it granted the licence to UPSL, the CBN has directed that acquirers are “to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator (PTSA).”
The circular further read, “PTSAs are required to send PoS transactions to only Processors certified by the relevant Payment Scheme, nominated by the Acquirer and licensed by CBN. All licensed Processors must be integrated with both PTSAs, thereby allowing Acquirers the flexibility to choose which Processor(s) and PTSA to utilise.
“All Payment Terminal Service Providers (PTSPs) must ensure that their PoS devices and applications are configured to route transactions through any PTSA, as directed by the Acquirer.
All PTSPs shall submit monthly returns to the CBN, detailing the number of merchants and agents they manage, along with the PTSA services used to route the corresponding transactions.
“Each PTSA is required to submit monthly returns to the CBN, detailing all transactions processed through their platforms. The returns mentioned above are expected to be submitted to the Director, Payments System Management Department, no later than seven days after the end of each month.”
SEC Says 50 Crypto Exchanges have Applied for Licenses
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