Profit tops Banks’ Consideration for Card Schemes

The preference of certain card scheme over the other by Nigerian banks is driven by profit consideration rather than the value customers would get from such card, Nigeria CommunicationsWeek can now revealed.

Card schemes are electronic payment card brands which banks issue to their customers for use in cash withdrawals at automated teller machine (ATM) as well as for payment at point of sale terminals (PoS).

There are three major cards schemes banks in the country issue; they include Verve, MasterCard and Visa.

Nigeria CommunicationsWeek investigations revealed that some banks pitched tents with one particular card scheme against others in contravention of Central Bank of Nigeria’s  (CBN) directive that bank customers be allowed to choose the card of their choice since all the card schemes operating in the country have been upgraded to EMV standard.

It was however gathered that at the point of applying for a new ATM card or renewal, banks customers are not given opportunity to make choice of preferred card rather they are given a particular card scheme that the bank has pitched tent with.

For instance, if a customer is applying for card in a particular bank, he is presented with Verve even his needs is Mastercard or Visa because the bank has a tie up with the scheme.

Also banks have made it a practice to advertise their preferred card scheme more often to the detriment of other brands it issues.

In the electronic payment card system, card schemes produce cards for the issuing bank through the scheme switching companies.

Tunde Ogungbade, managing director, Global Accelerex an electronic payment value-added operator, said that apart from profitability, banks also consider cards schemes that have global outlook.

“I will go for a card that I can use outside the shores of the country in choosing a card scheme”, he added.

The greater percentage of cards issued by banks is for domestic use but Interswitch owners of Verve the local brand has entered into partnership with foreign brands for the card to be accepted in some countries.

Ogungbade noted that global brands such as Visa and Mastercard have the economic power to invest and grow their brands locally in the country.

He added that the focus on Nigeria by these foreign brands is based on the recent report by Goldmine that gross domestic product (GDP) of Nigeria will be the highest by 2016.

It was also gathered that the number of cards issued by banks between January and June this year, foreign brands accounts for 70 percent.