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Mobile payment transaction hits N271billion

By on June 16, 2014

In spite of the initial apathy to the mobile payment initiative of the Central Bank of Nigeria (CBN), there are indications that the policy is gaining traction as the total value of mobile payments in the country amounted to N271 billion for 25 million transactions as at end of May.
The former Deputy Governor of the CBN, Mr. Tunde Lemo, who is also the Chairman Lambeth Trust and Investment Company Limited, reeled out the figures in Lagos last week, adding that the number of mobile agents stood at 65,000 in the period under review.

Meanwhile, the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, in what looks like a build-up to the figures released by the former CBN deputy governor, said the transaction volume and value of mobile payments stood at 14,947,600 and N139,605,299,991.60 respectively as at December 31, 2013. He spoke at a forum called Roundtable on Mobile Payment Services in Nigeria organised by the NDIC last week.

The CBN had issued a regulatory framework for the operations of mobile payments services in the country in June 2009 as a measure, which would aid in the reduction of the number of unbanked Nigerians. In addition, the apex bank granted licences to 21 mobile money operators comprising 15 non-bank operators and six bank operators as at January 29, 2013.

But contrary to the insinuations that the penetration of mobile banking model is slow, key financial and telecoms operators at the NDIC’s forum said in terms of the grounds covered so far, Nigeria could not be said to be doing badly in terms of the acceptability of mobile payment in the country.

The NDIC chief said the mobile payment initiative presented new challenges part of which include the safety and security of the individual customers’ funds in the digital and new virtual environment.

Stressing the determination of the NDIC to enhance financial inclusion by encouraging mobile financial services, Umaru contended that there was a link between deposit insurance and financial inclusion.

He said: “Deposit insurance is vital to financial inclusion because the poor need assurance that their deposits are safe and available at all times they have need for them. Sound and reliable deposit-taking entities,  backed by deposit insurance for small deposits accessible to all, are therefore essential to financial inclusion. This helps in attracting the unbanked to formal banking services.”

He disclosed that the NDIC was supporting the Cash-Lite policy of the CBN because of the need to “modernise Nigeria’s payment system; reduce the cost of banking services, drive financial inclusion, improve effectiveness of monetary policy, reduce the high security and safety risks, reduce high subsidy, foster transparency and curb corruption and ultimately meet the federal government’s Vision 2020.”

Speaking on factors responsible for lack of traction of mobile money operations, Director, Banking and Payment System Department of the CBN, Mr. Dipo Fatokun, listed inadequate capital outlay on the part of mobile money operators as top on the list, saying there is need for higher investment on agent network’s marketing than initially forecasted. For instance, N500 million was the initial official requirement for mobile money operator (MMO), but Fatokun explained that the emerging realities have shown that N500 million was grossly inadequate, adding that in spite of this, mobile payment is known to have a long pay-back period unlike other investments.

Operators of mobile money, according to Fatokun, are also complaining of basic infrastructural challenges like power and telecommunications network, among others.
The operators are also said to be battling with the problem of lack of widespread agent network. Apart from being unable to build self-sustaining agent network, there is also the problem of poor quality of agents as MMOs had to build networks from the scratch with little or no previous experience.

There is also the difficulty in reaching the unbanked especially in remote areas as agents are not available and apart from being concentrated at the urban areas at the moment, the agents are grossly inadequate (about 65,000).

According to the NDIC boss, some of the problems confronted in the implementation of mobile finance services and the use of agents to enhance financial inclusion include how to determine the role of agents, their liability and optimal funds to hold to service customers. Another concern is the operation or relationship between banks and telecommunications companies.

 

 

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