Agada Apochi, managing director, Unified Payments, has urged federal government to consider granting tax relieve to consumers to encourage the use of electronic card for payments at merchant locations.

He stated this against the backdrop of efforts by Central Bank of Nigeria (CBN) to encourage the use of Point of Sale terminals at merchant location for payments which have not yielded the designed result.

Presently, weekly volume of transactions on PoS increased to 200, 000 on some 150,000 deployed terminals, while weekly value of transactions is put at N3.4 billion.

According to Apochi “government can also do a lot by creating the right incentives for adoption of e-payments. If Government offers tax incentives for e-payments, it will be an effective tool to encourage a cashless culture.

That does not mean lower tax collection by government. Rather, Government tax collection will increase. For instance, if Government were to offer 50% incentive on Value Added Tax for payments made electronically, Government tax collection could increase by several multiples. 2.5% VAT on N100 million transactions is higher than 5% VAT on transactions of N10 million. Currently, many transactions are not tracked because of cash payments and that is to the disadvantage of Government.”

He however cited instance of CBN cash threshold which has helped in cashless initiative. “CBN was right when at introduction of the cashless policy, it said those who want to transact in cash should bear the cost rather than the practice where the cost is shared by all Nigerians through high cost of operations for banks and the resultant high cost of banking services. So, CBN had set a lower threshold for free cash service.”

“Unfortunately, the CBN was put under immense pressure by the Nigerian public and it had to raise the threshold, which has resulted in many businesses and individuals continuing with the cash culture at cost to the banking industry and ultimately the Nigerian public.

The public misunderstood the benefits of the cashless policy. People thought it was about banks making more money, which was a wrong perception.

First, it is about reducing the cost of banking services. If a bank charges a customer 25% interest rate and the cost of bank’s cost is 20%, the bank’s margin is 5%.

On the other hand, if the bank can reduce the cost of operations to 10% and charge the customer 15%, the banks will still make 5% margin. For the customer, it means a reduced cost. That will equally result in lower rates of default on the customer’s part.

I think the only duty on the part of the CBN is to continue to educate the public while the duty of the public is to support the CBN.”

Unified Payments® is a card-neutral and option-neutral Payments Service Provider owned by a consortium of leading Nigerian banks. Unified Payments® operates as a shared infrastructure for the banking community in Nigeria and Payments Service Provider within and outside Nigeria, with a mission to be the most preferred e-payment service provider in Africa.

Formerly known as ValuCard Nigeria Limited, the name of the Company was changed in 2012 to reflect its new business, following a successful transformation from a domestic card scheme to a provider of payment services supporting different payment options and schemes.

Unified Payments is a Principal & Plus Member of Visa and has contributed significantly to the growth of electronic payments in Nigeria. These contributions and exceptional value-innovations include but not limited to:

The company pioneered the issuance and acceptance of EMV Chip+PIN cards in Nigeria leading to reduction of ATM fraud in Nigeria by over 90%.

It enabled Nigerian banks to issue payment cards to Naira accountholders to be used for the first time-ever globally and also enabled Nigerian banks for first-ever acceptance of foreign cards at their ATMs.