Cashless Transactions

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Cashless Transactions

• Platforms, Challenges and Opportunities

The Story
A paper presented at the annual Conference of The
Computer Professionals Registration Council of
Nigeria
Segun Akano CEO, Upperlink Limited
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How We Got Here

• CBN introduced a cashless policy which is to
  enhance the Nigerian Payment system, reduce the
  use of cash in payments for goods/services and
  improve the use of Electronic Payment Systems.
• The specific advantages are to reduce the heavy
  burden of Cost of Cash Management, Security of
  money and people, Money Laundering, Transaction
  Losses due to Fraud and Counterfeit among others
• The policy attempts to place a tab on a daily
  cumulative cash lodgments withdrawal from banks
  of N150,000 N1m for individuals corporate
  customers respectively .
• CBN recently reviewed upward the limit for free
  cash transactions for individuals to N500,000
  from N150,000 and for corporate bodies to N3
  million from N1 million
• The policy took off in Lagos on April, 1, 2012
  and is expected to begin nationwide in Jan 2013.
• Since its implementation, many issues have arisen
  and there have been efforts made to respond to
  them

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The Journey So far

• Presently there are between 18 to 20 million
  different types of cards in the hands of
  Nigerians.
• There are over 60,000 POS in use across Nigeria
  presently. CBN plans to deploy 350,000 by 2015 of
  which 90,000 will be done in 2012 alone.
• POS Transaction grew from N100m in May 2011, it
  has now reached N2.34bn in May 2012 with over
  7000 transactions done daily (about N78m per day)
• POS transactions are expected to grow by 200 in
  the next year Interswitch
• Of the over 11,000 ATMS deployed nationwide,
  transactions have hit 110m monthly up from 100m
  recorded as at last year July.
• CBN has however encouraged the banks to deploy
  additional 75,000 ATMs to beef up capacity.

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Cashless (Cashlite) Regime What is involved?
Specific economic activities covered within the
context of the cashless initiative
include -Paying for services -Buying items
-Subscribing for services -Collecting from one
or more payer -Aggregating deductible funds.
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Cashless (Cashlite) Regime Platforms
There are about 6 Principal Platforms
viz -Point of Sale Terminal POS -Automated
Teller Machines ATM -Web Gateways
Paydirect/Webpay -Mobile M-Money -NIPS NIBSS
Instant Payment System -Account-to-Account
Transfer NEFT, RTGS
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Cashless (Cashlite) Regime Stakeholders
Cashless Transactions Stakeholders include but
not limited to 1. Merchant Acquirers Banks 2.
Card Issuers Banks 3. Merchants Stores,
Schools, Hospitals, Churches 4. Cardholders
Individuals 5. Card Schemes and Card
Associations Loyalty Schemes, 6. Switches
Interswitch, Chams, Etranzact 7. POS Terminal
Owners 8. Payments Terminal Service Aggregator
(PTSA) ITEX 9. Payments Terminal Service
Providers (PTSP) Paymaster, Etop, Citiserve,
Valucard, EasyFuel and ITEX 10. Processors
NIBSS 11. Independent System Operators (ISO)
Systemspec, Parkway, Upperlink
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Cashless (Cashlite) Regime Enablers

• Enablers are firms who on the face-value
  capabilities of the Cashless PLATFORMS build
  several solutions for organizations to manage
  outflow and inflow of Money through these
  gateways. Specific examples are
• -Payment Suites eg. PayChoice, Remita
• -Collection Suites BranchCollect, Remita,
  PayChoice, BankCollect
• -Payroll Application
• -E-Commerce Solutions
• -E-Wallet Products
• -

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Cashless (Cashlite) Regime Challenges

• Some are rather best described as Teething
  Problems, Others are systemic and require
  conscientious consideration
• Poor communications network
• Limited POS deployed
• Interoperability of Cards on the platforms
• Poor response time to customer complaints
• User apathy
• Vulnerability to fraud
• Insufficient sensitization

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Cashless (Cashlite) Regime The Gaps

1. In the face of all these Nigeria still lags
   behind many nations in the use of ATMs and PoS
   terminals.
2. ATM per individual is very low in Nigeria and
   calls for immediate actions as shown

Country ATM/100 people
United States 169
South African 55
Nigeria 12

1. 80 of the cash in Nigerias economy is still
   locked up in the hands of the economic
   participants in the informal sector.

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Cashless (Cashlite) Regime Opportunities

1. It is estimated that cashless transactions in
   Nigeria is expected to grow at an annual rate of
   85 in the next 5 years.
2. Forecast has it that overall transaction
   processing for banks and other financial services
   would surpass 15bn (N2.4trn) by the end of 2012.
3. Many more levels are expected to be created in
   the E- Business Value Chain that will open up our
   economy.
4. It is hoped that, if the immediate challenges are
   adressed, the objectives of CBN would have been
   met on the one hand and Nigeria will be on her
   way to be among the top 20 economies in the world
   by 2020 as envisioned by the present political
   administration.

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Thank you