BANKING

Quidax currently Building the Next West Africa Billion-Dollar Crypto Startup
On Friday the 13th of September, Nairametrics sat down with the Chief Executive Officer of Quidax, Buchi Okoro, to discuss Quidax’s rising reputation in the cryptocurrency space and what to expect from Africa’s largest cryptocurrency exchange and possibly the continent’s next billion-dollar crypto startup.

Why is Quidax in crypto?
The journey into crypto started a while back with me actually getting ripped off while trying to buy cryptocurrency with Naira, as well as my co-founder Uzo Awili receiving Bitcoin for his work as a developer with no way to convert it to naira. Now multiply that by the thousands of people having these same issues and it becomes clear that the big why for us was to fill a real market need and the opportunity to be a part of the greatest revolution to finance and money in the past 200 years. That is golden.
At what point did Quidax seem viable?
We started initially with the crude (so it seemed at the time) idea of organizing a Whatsapp group where people bought and sold crypto between themselves. This was in 2016, at some point it was like oh, this is something and we sat down to do the math. People where moving serious numbers through that group, it was at that point we knew there was a demand for a reliable and seamless way to buy and sell cryptocurrency. We can say that was when we knew Quidax was viable but it wasn’t Quidax then.
What is Quidax doing that is unique?
Firstly, we settle to local bank accounts instantly, the earliest we have seen is 4 hours settlement time-spanning up to 72 hours, this literally means that you can’t save a life if you wanted to use a crypto transaction.

Secondly, we are building the infrastructure that powers crypto-fiat transactions across Africa which means you can now build a crypto application into your product or service powered by our infrastructure. If you want your users to buy, sell or store crypto on your product, or simply operate a cryptocurrency wallet, you can easily do that by integrating with our plug-and-play APIs.

What do you love about your team, and why are you the ones to solve this problem?
The thing I love most about the team is that they are crazy enough to think they can do anything. We always joke that if we knew what it would take we might never have gone into it but beyond that, there is a huge sense of trust, discipline and fellowship within the team and that is important because the journey is long and the demands are heavy.
We are solving the problem because there is equal parts experience, excitement and discipline within the team.

In your opinion, do you think cryptocurrency can transform Africa?
Yes, I do, and that is because Africa has a track record of leapfrogging. It happened with telecommunication, with mobile money and now with financial transactions. The promise of crypto is the ability to transfer value from point A to B efficiently, seamlessly and cheaply. We see cryptocurrency as the technology that could make doing business across and with Africa easier, cheaper, faster and more efficient. Crypto would open Africa to the world economically in the way the internet did.

What is Quidax’s unfair competitive advantage and why will it be sustained?
12 hours to 2 minutes. That’s the amount of time we have reduced settlement to the local bank account and we have been able to do that because of our integrations into the major banks, it took us 10 months to get this right.

We support businesses that transact with cryptocurrency and want to offer crypto services to their customers in the way no other player does.

Here’s a question I have been meaning to ask, what can people do with cryptocurrency?
In some countries, you can use cryptocurrencies to pay for everyday goods and services. The likes of Starbucks and retailer Walmart are among those that accept cryptocurrency as payment.

In Nigeria, very soon, customers would be able to pay for everyday stuff using cryptocurrency. One of the businesses we support, Fliqpay, has been on this journey for a while and it is finally coming to light. So you would be able to buy airtime, movie tickets, pay for pizza and even cars using cryptocurrency.

What has Quidax achieved so far?
The first of August this year made it 1 year since we launched our public beta. In that time we have processed over 110 Million US Dollars in transaction volume and we serve users in 70 countries and 6 continents but we are still yet to scratch the surface. We want to support more businesses looking to offer cryptocurrency services and help drive its education and adoption in Africa.

What does the next 5 years look like for Quidax?
In the next 5 years, we expect to be covering at least 40 countries in Africa and powering remittance in and out of Africa. We also expect that at that time we would have achieved our goal of being the go-to African partner for anything cryptocurrency related.

What’s a typical day at Quidax like?
A typical day at Quidax could go from calling users to understand the issues they are facing and then turning that feedback into actionable steps that could end up as new product features or an upgrade to an existing feature. However, the best part of my day is taking a look at our metrics to understand how users are daily engaging with Quidax and what we can do to optimize that experience for them.

What’s in Quidax’s pipeline? What features can users expect from Quidax in the next 1 year?
A couple of our plans for the next year are hush-hush. Although I can tell you what to expect over the next month. In about 3 weeks we will be launching our mobile app but sometime before then, we will be kicking off a partnership with a liquidity provider. With the partnership, people can trade higher amounts of cryptocurrency on Quidax. The most exciting part of next month is that we will be entering into some partnerships that would change the face of crypto-remittance in Africa.

Who are your competitors, and how are you different?
While there are a number of cryptocurrency exchanges in Africa none of them is on our trajectory. That is taking an active approach to solving remittance problem by providing liquidity and taking on the challenges of building out the required infrastructure to power remittance in a way no one is thinking about it today. In all honesty, we need more competitors looking at this problem with each coming up with a unique and innovative way to tackle the problem. At the end of the day, it’s a win-win for everyone.

[READ ALSO: Here is why Facebook’s cryptocurrency will threaten Europe if launched]

What’s your biggest threat?
Our biggest threat is regulation. Don’t get me wrong we are not against regulation, we are currently in line with Know Your Customer (KYC) and Anti Money Laundry (AML) best practices for financial institutions. Rather, regulation without a proper understanding of the cryptocurrency space is what we are wary of.

Although we are definitely in support of cryptocurrency regulations to ensure a safe climate for users. We would rather it is done with players in the space at the table to ensure innovation isn’t stifled just when it is starting to grow.

Risk Taking: A Dangerous Financial Game

Successful entrepreneurs are good at taking risks. If you don’t come to terms with risk-taking, you’ll need to rethink being a business owner. Many entrepreneurs have taken risks to grow their businesses to wherever they are currently. 

Taking risks, however, doesn’t mean going into business blindly expecting nice results. Taking risks in entrepreneurship involves careful planning and diligence. It involves moving forward despite fear and/or uncertainty. Till you experience discomfort, real growth and development don’t exist. Realizing that failure leads to success when you learn from those mistakes will allow you to take risks more often.

If you wish to attain true success along with your business and smash your goals, you will be compelled to take risks. Part of the explanation numerous people make taking risks in business is as a result of them attempting to manage the end result. They want the “safe” route. Well, there’s really no such factor as safe. Everything has a drawback and “security” is basically simply a myth.

If you actually want to be an entrepreneur, you’ll ought to embrace risk and let it become a part of your business strategy. Risk-taking identifies you as a frontrunner and shows others you’re able to head and make decisions.

Risk vs. Calculated Risk

The reasons risk is therefore vital to entrepreneurs is that true innovation was never accomplished without risk. There’s a distinction between taking dangerous risks and calculated risks. Calculated risk takers are those who carefully take steps toward their goals.. These people don’t simply gamble everything into their venture—they realize ways that to cut back risk as they move forward with their business. Calculated risks involve knowing how you’ll receive a come back.

Risk taking becomes a drag once it’s kept away from the implications, The secret is to search out the proper balance.

If the definition of risk is being exposed to danger, then is there a such factor as a good risk? The secret is within the syntax; taking a risk is never going to be danger-free however taking a calculated risk brings a better likelihood for rewards. By weighing the outcomes, you decrease the potential loss and increasing your odds of a positive outcome.

Preparing A Risk Management Setup and Business Impact Analysis

By understanding potential risks to your business and finding ways that minimise their impacts, you will facilitate your business recovery quickly if an event happens.

It’s important to apportion time, budget and resources for making ready a risk management setup and a business impact analysis. This will assist you meet your legal obligations for providing a secure workplace and may cut back the chance of an event negatively impacting on your business.

Even if you fail, you learn one thing

Finally, bear in mind that notwithstanding you eventually fail, you’ll still learn a lot of things valuable. It’s important to understand a way to learn from your mistakes therefore you’ll grow as an entrepreneur and as an individual. If you’re taking a risk and it fails, acknowledge what went wrong so you don’t create identical mistakes again. Rather than pouting over mistakes, learn from them.

The more you’re taking risks and succeed, the lighter you’ll become at taking them. Once you overcome one failure it becomes easier to overcome others.

 

Fintech Trends: Fast-rising Niches in the Nigeria Fintech Ecosystem

Financial Technology (Fintech), has been characterized as a new revolution remodeling numerous sectors of the Nigerian economy. Nigeria cannot be classified as early adopters of fintech however the concept is gradually gaining traction within the nation’s financial system with its disruptive approach to banking services in relative to the conventional approach.

Recently, a lot of Nigerians depend on financial technology (fintech) companies for fast fixes to their pecuniary desires. A cross-section of the population use these applications to pay their bills, transfer money, and even borrow cash. The disruption fintechs have caused within the financial services sphere is definitely evident, and their effectiveness and potency are just some of the qualities that have popularised them within the country. In 2018, Nigeria FinTechs raised over $95million according to public accessible information. If you have been following the startup environment in Nigeria, you’re most likely immersed with news concerning FinTechs and their activities on a usual.

Major Niches in Nigeria’s burgeoning fintech ecosystem

Payment solution providers

Consumers in Nigeria now gravitate towards online payments instead of the standard approach to traditional (physical) payments. Online payments are safe, fast, convenient and it is the most active of the fintech niches in Nigeria. This for sure is as a result of the fact that Nigeria is largely a cash-based society and thus, there’s a huge chance for digitalization.

In as much there are different classes and scopes of operation within the electronic payment space in Nigeria, there still seems to be an overlap as various payment providers now operate across multiple value chains. Many operate in the reach of underlying infrastructures that process end-to-end electronic payment solutions, systems and services to stakeholders within the financial space. In some cases, their systems are directly integrated into the core banking systems to provide payout and bulk disbursement services, also with payment gateway services that process web/mobile transactions on behalf of merchants. These firms offer consumer-facing platforms (web/mobile) for data and airtime purchase, fund transfers, bill payments, merchant payments, and the likes.

They are companies who operate the overall spectrum through mobile money licenses of cash deposit and withdrawals, issue debit cards, funds transfer, and different financial services on their mobile phones by utilizing on the telecommunication infrastructure.

We even have the software application providers i.e payment infrastructure setup assistants. These include system integrators and pure IT firms that build computer software codes and different IT infrastructure for the general financial services ecosystem.

Lending Platforms

Access to loans from conventional Nigerian institutions is tough for people and small entrepreneurs. On rare occasions where accessible, the procedures are physically rigorous, slow and it takes a lot of time.

The Digital lending platforms in Nigeria provide fast loans without collateral, no queuing, no fee charge, while some need a type of collateral and have different exciting features.

This space is active and it’s due to the large chance that exists because banks don’t appear to be doing a good job in providing loans to customers and small businesses.

Savings and Investments platforms

Designed for users to manage their finances, particularly in terms of savings. Online savings and investment platforms are some of the positive disruptions Financial technology (Fintech) has delivered to financial services. These platforms are making savings easier for people who were unable to access financial services through regular deposit cash banks. With these portals, websites and mobile apps, many people can now save effectively, invest wisely.

This area taps into customer’s want for higher returns on their investments, an automated way to simplify their savings and comes with improved customer experience.

Another area that has boomed in terms of investment is the Agro-tech space for startups that play a passage role to smallholder farmers—who compound 80% of the farmer population—to upper-middle-class Nigerians who can provide abundant required capital. The capital injection permits the farmers to cultivate larger farmlands, plant a lot of crops and expand at a quicker pace.

Others

They are other areas in Nigeria’s ecosystem where emerging fintech platforms worthy of mention are building operations.

– Remittance platforms: Sending funds back home from abroad has traditionally always been a tedious and expensive task, exemplified by chains of middlemen, manual work, and hidden charges. Fortunately, developments within the industry over the past number of years mean that people and even small-to-mid-sized firms can now enjoy quicker, cheaper, and value-added foreign cash transfer services.  Remittance product Korapay falls under this category.

– Cryptocurrency Platforms: The rave and uptake of various digital currencies across the globe in the 2016-2017 period didn’t pass Nigeria by as saw a variety of websites and apps allow Nigerians easily store, trade and learn about cryptocurrencies.

– Digital Insurance Platforms: Nigeria is presumed to have the lowest insurance penetration rate in the world with almost about 1% of the population being insured, it’s attention-grabbing that there’s no single absolutely digital insurance company in the country. However, traditional insurance companies are taking note and investing heavily in their digital platforms.

Written by

Steve Onwuka | Community Manager at Korapay.

Institutions Providing Payment Services
4.2.1 NIBSS
The Nigeria Inter-Bank Settlement System Plc (NIBSS) was set up by the decision of the Bankers Committee
in 1992, as a Banking Industry Shared-Service, to help streamline inter-bank payments and settlement
mechanisms, and to promote electronic payments in Nigeria. Incorporated in April 1993 it commenced
operations on 13th June 1994.
NIBSS is owned by all licensed banks in Nigeria, and the Central Bank of Nigeria. The Board consists of
representatives of banks, two Executive Directors and the Managing Director of NIBSS with Deputy
Governor (Operations), Central Bank of Nigeria, as the Chairman. The shareholding of NIBSS is
periodically realigned based on the volume of payments from participant organisations.
The scope of operations of NIBSS in the Nigerian financial sector is such that fulfils its mandate as enshrined
· in the company’s Memorandum and Articles of Association:
To carry on business as a service oriented institution that provides the mechanism for same day clearing and
· settlement of inter-bank transfers and payments;
To provide infrastructure for the automated processing and settlement of transactions between banks acting
on their own account as regards deposit placements, Treasury Bills transactions, Naira settlement on inter-
· bank foreign exchange transactions;
To initiate and develop an integrated nationwide network for the electronic or paperless payments, funds
· transfer and settlement of transactions.
To provide framework for elevating the level of efficiency in funds transfer services generally
NIBSS is responsible for the management and operation of much of the retail payments infrastructure, as well
as offering some value-add services to payment systems participants
4.2.1.1 NIBSS Electronic Funds Transfer (NEFT)
The NIBSS Electronic Funds Transfer (NEFT) service is widely used by all banks to process inter-bank
electronic funds transfer instructions of their respective customers.
4.2.1.2 Nigeria Automated Clearing System
NIBSS operates the central Nigeria Automated Clearing System (NACS) infrastructure that clears majority
of the deferred net settlement payment systems.
4.2.1.3 Nigeria Central Switch
The national Electronic Funds Transfer (EFT) switch ensures inter-connectivity / interoperability amongst
Banks and licensed EFT Switches in Nigeria, and serves as an international retail payments gateway for
Nigeria.
4.2.1.4 NIBSS Instant Payments
NIBSS developed and operates NIP (NIBSS Instant Payments), a real-time account-to-account payment
system
4.2.1.5 Settlement Services
Private switching companies and the Central Securities Clearing System Plc(the clearing and settlement
system of the Nigerian capital market) rely on NIBSS for the cash settlement of their operations.
4.2.1.6 e-Dividend
NIBSS secured the consent of the Securities and Exchange Commission (SEC) and other major stakeholders
of the Nigerian capital market in 2007 to be the sole processor of shareholders’ dividends.
4.2.1.7 Central Mandate Management System (CMMS)
Central Mandate Management System (CMMS) was introduced by NIBSS to address the problems and
challenges faced by Banks, Insurance, Leasing and Utility Service Providers when handling the
administration and validation of direct debit mandates.

4.2.1.8 NIBSS Intra-Day Exposure System (NIDES)
NIBSS enriches settlement operations, particularly in the banking system with the NIBSS Intra-day Exposure
System (NIDES). It enables all Bank Treasurers and Fund Managers to monitor settlement exposures of their
respective Banks
4.2.1.9 Automated Bulk Clearing Service
NIBSS leverages her expertise in payments service provision and credibility in the Nigeria financial system
to provide EFTservices to select corporate bodies and government agencies directly.
4.2.1.10 Payment Terminal Service Aggregator
NIBSS provides reliable data channel, effective interoperability and ensures higher POS availability.
4.2.1.11 NUBAN Account Verifier
NIBSS provides an online tool for verifying that a NUBAN is valid.

2 NIBSS e-BillsPay
NIBSS eBillPay is an account-number-based, online real-time Credit Transfer product that enables
customers to make payments by leveraging the security provided by the banks. The service also facilitates
electronic bill payments, collections, and purchases

Interswitch

Interswitch is a commercial organisation that offers payments processing services and a switching
infrastructure for payment routing. Itprovides online, real-time transaction switching that enable businesses
and individuals have access to their funds across the 22 banks in Nigeria and across a variety of payment
channels such as Automated Teller Machines (ATMS), Point of Sale (PoS) terminals, Mobile Phones, Kiosks,
Web and Bank Branches
Interswitch’s Electronic Funds Transfer (EFT) switching application, supports major networks including
Verve, MasterCard, and China Union Pay, besides other proprietary networks.
Interswitch also offers AutoPay, a scheme similar to NIP that uses the card/PAN for payment routing. This
scheme is run by Interswitch and uses the same settlement as Verve. The settlement scheme run by
Interswitch has not been formally reviewed as part of this release of PSV2020, but operates a settlement
process that requires collateral to be posted by scheme participants and processes inter-bank settlement on net
basis with the NIBSS settlement services.’.

SystemSpecs

SystemSpecs offers Remita e-Payment, e-Collection, Payroll and Biometrics end-to-end electronic payment
platform to government entities and corporate organizations.
Remita has been widely accepted and is connected online, to all Deposit Money Banks and a sizeable number
of Micro Finance Banks. Other MFBs and Primary Mortgage Institutions are supported in an off-line model
thereby enabling payment to all financial institutions in the country. In addition to the delivery of funds to
bank accounts, the platform simultaneously delivers reconciled associated schedules to relevant non-bank
bodies such as Tax offices, Pension Administrators, Cooperative Societies and Trade Unions.
Remita accepts single and bulk payment instructions and passes these through the predefined internal work
flow of the organisations. Upon final approval, the payer’s bank account is debited and funds transferred to the
credit of the beneficiary bank. The transaction does not create exposure for the beneficiary bank which would
have received funds before crediting the beneficiary’s account. The payers are able to monitor online, the
status of all their payment instructions which are typically closed between two to six hours.

Payment is considered final upon consummation by the final payment approver. Payment reversal function is
available on the platform as a separate process that can be initiated and authorised by the beneficiary bank
where necessary.
Remita Direct Debit – This module of the platform centrally manages direct debit mandates for fixed sum
debits and Variable amount debits as signed up by the service beneficiary. The mandate forms are approved
once by the paying bank and thereafter automatically processed for payment and credit into Collectors’
accounts on the due dates. Collectors are also able to monitor the status of all their due funds.

Remita is the central payment platform supporting the payments of Federal Government Ministries,
Departments and Agencies under the Treasury Single Account (TSA) programme.

Unified Payments
Unified Payment Services Limited otherwise known as Unified Payments® is a card-neutral and optionneutral Payments Service Provider founded in 1997 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 to the growth of electronic
· payments in Nigeria through the following business offerings:
Processing, Unified Payments provides a secure and reliable infrastructure that enables Issuers to provide
cards and other payment options to their accountholders or customers and for transactions across different
electronic channels – Internet, Physical Points of Sales, ATMs, Telephone Handsets, etc. Unified Payments
also provides the backbone infrastructure that enables Acquirers to acquire transactions at all acceptance
· channels including Points of Sale and at ATMs. They are thus Issuer-Processor and Acquirer-Processors.
Acquiring, Unified Payments provides acceptance services, enabling merchants to accept cards and other
electronic means of payment for goods and services. Unified Payments has the largest non-bank acceptance
· infrastructure in Nigeria.
PTSP (Payment Terminal Service Provider), Unified Payments has the privileged license of deploying,
monitoring and maintaining Points of Sale terminals to Merchant locations on behalf of other Merchant
· Acquirers.
Switching: Given their network of links with banks in Nigeria, Unified Payments is also able to provide
switching services between Issuers and Acquirers in Nigeria, thereby significantly reducing connectivity
costs between Issuers and Acquirers as well as increasing the throughput, through a significant reduction in
· potential points of failure.
Value Added Services: Unified Payments provides other value added services like settlement agents,
Dispute management agents, Bills payments, collections, Air time vending and various other solutions that
enables e-commerce

Other Local Switching Schemes
Other local switching schemes include VIZ Etranzact, UPSL, EMP& 3LINE

Payment Instruments in Nigeria
Nigeria offers the typical forms of payments used within most countries in the world

RTGS Payments
CBN has recently deployed a new infrastructure (NISS) to support RTGS payments. The new system uses
the SWIFT Y-copy methodology for transmission of payment instructions between NISS and Participant
Banks, allowing banks to support Straight-Through-Processing (STP)for high-value payments – a
significant improvement over the previous system that forced participating banks to manually enter
transaction on-line. In 2012, RTGS payments represented 0.6% by volume, but 75.1% by value of domestic
payments.
NISS also supports the Central Securities Depository (CSD) function for Government Securities, a critical
function for creating a flexible Collateral Management solution for payment system resilience.

2 ACH Credits and Debits
The high-volume batch payment method, NEFT, is a typical ACH system that supports both credit and debit
payments. NEFT transactions settle in two of the three daily settlement sessions of the national clearing
system (NACS) operated by NIBSS. Settlement 1 (10:00 hrs.) and Settlement 2 (15:00 hrs.) offers same day
value for ACH credits. There is no value limit (minimum or maximum) on NEFT payments. In 2012, NEFT
transactions continued their strong growth pattern and now represent 38.1% by volume and 9.1% by value of
all payments

Cheque Clearing
Cheque processing has been streamlined by the consolidation of the previous 37 clearing centres into one
national automated clearing centre and the introduction of cheque truncation to dematerialise the original
paper instrument into a secure electronic form. As a result of these changes, the cheque processing cycle has
been harmonised into a standard process regardless of branch location, and the cycle reduced from a 3-5 day
cycle to a 2-day cycle. In 2012, cheques represented 49.0% of transaction by volume and 13.1% by value.
The average cheque value has fallen by 48% to 529,000 Naira since 2009 reflecting the cheque limits imposed
by CBN.

NIBSS Instant Payments (NIP)
A new payment scheme was introduced in 2011, offering real-time inter-bank account-to-account electronic
funds transfers. The scheme, operated by NIBSS and offered by all major banks in Nigeria, has met with
overwhelming approval from the user community as witnessed by the impressive adoption rate.
NIP allows the payer to confirm the account holder name before sending funds. It uses the central switch to
pass the payment instructions real-time to beneficiary bank which applies funds on receipt. Settlement
rd
occurs once per day in the NIBSS 3 clearing cycle at 15:30 hrs.
In 2012, NIP represented 8.5% of all payment transactions by volume, and 15.5% by value, and in June 2013
NIPtransaction exceeded cheque payments by volume for the first time.
The monthly figures since June 2012 show the strong growth of NIP transactions (Note: the volumes below
reflect only the NIPpayments between different participating banks and so understate the total volume)

Mobile Payments
CBN has licenced 26 individual mobile money operators (MMO), allowing them to offer mobile
payment schemes. Nigeria has adopted a ‘bank-led’ model for mobile payments, requiring the mobile money
operator to work with a sponsoring bank. All client funds are held by the sponsoring bank in trust accounts
and customer funds are covered by a deposit insurance scheme of the Nigeria Deposit Insurance Corporation
(NDIC). All mobile money operators are required to provide interoperability to other mobile schemes,
enabled through connection to the Central Switch operated by NIBSS. Adoption has been strong, and in 2012
mobile payments represented 3.0% of payment transactions by volume, although only 0.02% by value
highlighting the usage of mobile money for small value person-to-person flows and mobile air-time top-up.
rd Settlement of inter-scheme flows occurs once per day in the NIBSS 3 clearing cycle at 15:30 hrs.
CBN has determined that sufficient MMOs now exist and has announced an increase in the capital
requirements for new and existing MMOs. It is likely that this will result in fewer new applications and a
potential consolidation amongst existing providers.

Card Payments
There are three card schemes in operation, the international schemes of MasterCard and Visa, alongside other
domestic card schemes such as Verve, Genesis and Freedom cards. Any organisation offering payment
switching services must, by policy, connect to the Nigeria Central Switch to ensure full interoperability across
different schemes.
The overwhelming use of cards in Nigeria is for ATM withdrawals, representing 99.3% of all card
transactions in 2012). ATM transactions are excluded from the overall payment volume analysis, since they
are not payments per se, merely a simpler way of obtaining cash to support cash transactions. However, the
strong growth in ATM transactions indicates a migration to the formal banking sector even though the
resulting payments may be cash.
Use of cards for payments is predominantly by debit card since there is a limited credit culture.
rd
Settlement of net flow from issuer to merchant occurs once per day in the NIBSS 3 clearing cycle at 15:30
hrs. Nigeria operates a non-standard process by remitting funds direct to merchant accounts rather than
through the industry standard approach of funds flowing through the merchant acquirer. This local regulation
was in response to a common complaint by merchants that payments from acquirers were being delayed.
NIBSS, as a neutral party in the card payment value chain, is responsible for remitting the funds to the bank
holding the merchant account.
In addition, CBN has imposed a maximum interchange fee of 125 basis points (1.25%) for all card
transactions (both debit and credit cards) subject to a maximum of N2,000 with the exception of the
hospitality industry where maximum cap of N5,000 is allowed. For ATM transactions, the cardholders pay
no charge which is absorbed by the issuer or paid to the acquirer depending on the nature of transactions (Onus or Not-On-Us) respectively
POS transactions are growing strongly (3.4% by volume and 0.03% by value) driven largely by a focus on
initiatives such as Cashless Lagos. Monthly statistics since July 2012 show a strong growth in POS
transactions

However, the deployment, availability and active usage of POS devices continues to be a challenge as highlighted in
the statistics from NIBSS. Many deployed POS devices are not connected or are inactive (no transactions over a one
month period). Several studies on usage of POS terminals have highlighted the numerous challenges such as
telecommunication and power issues, preference for cash by store staff due to the ‘no change’ culture, and lack of user
awareness and acceptance.

NIBSS Instant Payments – A new payment scheme, NIBSS Instant Payments (NIP), was launched in 2011. NIP enables real-time inter-bank account-to-account electronic fund transfers. All major banks in Nigeria · support this scheme, resulting in an impressive uptake by consumers Mobile Money – Following the development and release of a Mobile Payments Rules and Regulation framework, 26 mobile payments schemes have been licensed by CBN. The volume of mobile payments has grown rapidly since 2011 reflecting the natural appeal of mobile as a payment method. Nigeria has adopted a ‘bank-led’ model for mobile payments, thereby ensuring the financial resilience of all schemes and creating an open market to encourage innovation and competition.

Infrastructure enhancements · CSD for Government Securities – In August 2013, CBN successfully completed an ambitious project to deploy a new Real-Time Gross Settlement (RTGS) payments system plus a new Central Securities Depository (CSD) for Government debt instruments. A robust RTGS payment system underpins a sound Financial Markets Industry, and the inclusion of the CSD functionality supports greater flexibility in · Collateral Management for the payment systems EMV Cards – The Nigeria cards infrastructure successfully migrated to EMV Cards (Chip and PIN) to · significantly improve the security of plastic cards NUBAN – Astandardised bank account structure – Nigeria Uniform Bank Account Number (NUBAN) – has been implemented to improve the quality of payment validation and automation. Arrangements to extend the · NUBAN to non-bank financial institutions are nearly concluded Clearing Cycle Reduction – The Cheque Clearing Cycles were harmonized across the country, and clearing · cycles for ACH payments and cheques has been reduced from 3 days(T+2) to next day (T+1) Centralised Clearing – The Clearing centre infrastructure has been rationalized, reducing seven automated and thirty manual clearing centres to one national automated clearing centre that handles all ACH and cheque · payments. Nigeria Central Switch – NCS has become operational enabling interconnectivity and interoperability among deposit-taking institutions and licensed payment service providers. The NCS also facilitates inter- · scheme card and mobile payments. Payments Terminal Service Aggregation – this model has been put in place to facilitate seamless and interoperable card payments, clear regulatory visibility for the retail payment infrastructure, and reliable · industry retail payment system statistics for analysis and planning purses. Cheque Truncation – Cheque truncation has been introduced to dematerialise the physical cheque and hence · processing purely on the basis of secure electronic images Cheque amount cap – Acheque cap of N10 million was introduced to encourage higher value payments to be · made electronically. Mandate Processing for Direct Debits – A centralised Direct Debit Mandate Processing infrastructure has been created to streamline the administration of the mandate process, and banks have been required to · improve the validation of payment requests against the lodged mandates. Credit Bureaux – Three separate but interlinked credit bureaux have been launched, providing the first steps in creating a database of credit history which is essential as the financial community offer new banking · products ATM and POS Deployment – Under direction from CBN, banks and other financial service providers have been required or encouraged to increase the deployment of ATM and POS devices.

Discouraging the use of Cash The CBN adopted the following initiatives to reduce the cash intensity in the economy, encourage electronic · payments and enhance the Nigerian Payments System: Limit on Cash Deposits – Fixed a daily cumulative limit of N500,000 and N3,000,000 on free cash withdrawals and lodgements by individual and corporate customers of banks respectively, effective April 1, 2012, in Lagos. Individuals that make cash transactions above the aforementioned limits shall be charged a service fee of 2% and 3% on deposits and withdrawals respectively while the service charge for corporates are · 3% and 5% on deposits and withdrawals respectively. Limit on Cheque Encashment – Disallowed encashment of third party cheques above N150,000 over the · counter. Value for such cheques shall be received through the clearing house. Cash Lodgement restricted -Directed that Cash-in-transit lodgements services rendered to merchantcustomers by banks shall cease. However, customers could engage the services of CBN licensed CIT · companies to aid cash movement to and from their banks at mutually agreed terms and conditions. Public Awareness – Massive enlightenment campaign to increase adoption of electronic payments by the banking public’ 3.2.5 Momentum from Federal and State bodies · Government e-Payments – The drive to electronic payments was given a huge boost with the 2009 Presidential mandate that all payments from Federal Government entities must be made electronically. Work continues on the full automation of these flows, but this mandate was a key driver to the growth in electronic payments since 2007. ‘· Cashless Lagos’ – In 2012, a pilot scheme, ‘Cashless Lagos’, drove a significant ramp-up in the deployment of Point-of-Sale (POS) terminals. The program is now formally extended to five further states and Abuja FCT, increasing the availability of POS devices 3.2.6 Guidelines and Framework documents CBN embarked on an extensive update of all payment systems Rules and Regulations to ensure that they reflect the desired state for the respective system. The most significant guidelines to be revised or issued for · the first time include: · Mobile Payment Regulatory Framework · Guidelines on Transaction Switching Services ·

Guidelines on Stored Value/Prepaid Cards · Direct Debit Rules · Guidelines on ATM Operations · Operational Rules and Regulations of the Nigeria Central Switch · Revised Nigeria Bankers Clearing House Rules · Guidelines for Cheque Truncation Guidelines for Point of Sales (POS) Card Acceptance Services Most other CBN Rules and Guidelines have been updated and published on the CBN web-site.