CBN’s Customer-centric Approach Enhances Seamless e-Payment Transactions

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By Kayode Tokede, Lagos –

As the Information Technology continued to drive innovative across sectors, the financial institution by means of Electronic- Payment (E-Payment) has recorded growth in cashless transaction volumes due to rising adoption of alternate payment instruments.

The growth has also leverage on increased financial inclusion, enhanced payments network infrastructure and regulatory initiatives based on digital payment models.

The payments system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other.

It, therefore, represents the major foundation of the modern market economy its advances.

The 2017 World Payments Report said, 2015 global cashless transaction volumes shows volumes grew 11.2per cent during 2014–2015 to reach 433.1 billion, the highest growth of the past decade.

The report noted that two regions fueled this increase: Emerging Asia with a growth rate of 43.4per cent and CEMEA (Central Europe, Middle East, and Africa), with 16.4per cent growth.

The 16.4 per cent growth in CEMEA implies that cash usage remained high despite increased adoption of digital payments, the report pointed out.

According the report, the growth in cashless transactions across the global is taking place in a regulatory environment that is transforming processes, business models, and solutions in the payments arena.

The Nigerian electronic payments industry has been evolving in line with the evolution in global payments in both Wholesale and Retail systems.

Banks, Payment Service Providers (PSPs), and the Central Bank of Nigeria (CBN) have played various roles in developing the E-payments system and creating products and channels for electronic payments.

The Retail Payments Transformation Programme of the CBN has led to the introduction of various electronic payments products, created jobs and services by operators in the industry.

Commercial banks are reaping huge profit from the CBN cashless policies with the introduction of various Mobile Application (APP) and Unstructured Supplementary Service Data (USSD) that ease fund transfer at instant.

The global mobile wallets market is growing steadily with mobile proximity payments expected to grow from $3 billion in 2013 to $53 billion by 2019

According to the CBN, the electronic products are gradually reducing the usage of cheques and cash, as noticed consistently in the annual performance report since the inception of the Cash-less policy in 2012.

The Director, Banking and Payments System Department, Mr. ‘Dipo Fatokun established   that the Volume and value of transactions based on Cheques and National Electronic Funds Transfer (NEFT) have been consistently reducing annually since 2013, while same data for Instant Payment (NIP) , Automated teller machine (ATM), and Mobile Money channels have been on the increase.

He explained that ATM Channel accounts for the highest volume of transactions, while the NIP accounts for the highest value of transactions annually.

“This is because the ATM is usually the e-payment channel that new and lower value account holders always interface with, while corporates and upwardly mobile middle class customers make transfers using NIP,” he explained.

The CBN has taken a transformative approach to infuse competition and innovation among payments services.

The apex bank approach towards cashless economy has the potential to achieve substantive results in terms of standardization and transparency, which are expected to bring visible changes to customers in terms of innovative solutions and seamless E-Payment transactions.

This is expected to have far-reaching effects across banks, PSPs, FinTechs, and corporates. It is also inspiring other geographies to develop similar initiatives to fuel digital transformation of payments.

The challenges of E-electronic payment in Nigeria are numerous considering online fraud, processing timeline, cyber security, dispute resolution when transactions were not successful, among others.

On this, the apex bank drive for cashless policies stressed the need for operators to ensure operational focus on delivering customer-centric steps to provide safe and seamless E-payment transactions.

Fatokun at bi-monthly forum organised by the Finance Correspondents Association of Nigeria (FICAN) had said, commercial Banks and other electronic payment service providers operate in a highly regulated environment.

He noted that regulation is necessary to ensure that operators focus on delivering products and services that enable compliance, efficiency, financial stability and a positive customer experience.

He noted that the CBN is attention to the critical elements, with consumer concerns as a top consideration that include SIM Swap, Phishing, among others.

According to Wikipedia definition, Phishing is the attempt by fraudsters to obtain sensitive information such as usernames, passwords, and credit card details (and, indirectly, money), often for malicious reasons, by disguising as a trustworthy entity in an electronic communication.

On this, the CBN is collaborating with the Nigerian Communication Commission (NCC), is set to introduce regulations to curb SIM swap, USSD and Phishing in the financial industry.

Fatokun said the CBN is aware that fraudsters are exploiting the SIM swap process and USSD to defraud people, adding this would soon be a thing of the past.

He said, “Some of the fraud we are still battling with is the issue of SIM swap. We had an investigation recently and we discover that one particular fraudster, which we discovered through the help of NCC, has been using SIM swap and USSD to collect people’s money and using the money to recharge his phone.

“We hope that before the end of the year the issue of SIM swap and USSD frauds would be a dead issue.”

Highlighting the regulatory Issues on Electronic Payments, he pointed out that, “The regulatory landscape remains complex for operators; they not only need to comply with existing regulations but also adhere to new regulatory initiatives, some of which affect established operating or business models.

“Required rate of policy review is increasing due to technology changes and innovations. This creates disruption in the smooth flow of implementation, where a policy becomes ineffective as a result of better technology.”

He explained further the Electronic payments continue to be a growth story across the world and Nigeria is not an exception, but banks and other service providers face a number of challenges in ensuring that they make the most of this opportunity.

“As in many other areas of financial services, cooperation and collaboration between the regulator and operator is critical to the development of the electronic payment industry’s security and level of confidence,” he added.

A safe and effective payments infrastructure is core to the financial stability of any country.

The CBN embarked on the Payments System Vision 2020 project in 2007 with the development of the PSV 2020 Strategy document which attempted to benchmark the Nigerian Payments System in line with global best practice.

The Payment Systems Vision 2020 provides a roadmap that looks at the infrastructure in the context of customers focused initiatives, service providers, CBN, financial institutions and the international community.

The Vision is to create an electronic payments infrastructure that is nationally utilized by all sectors of the economy and all regions of the country and internationally recognized as being world class.

In furtherance of its activities towards the development of the National Payments System, the apex bank continued to issue guidelines and implement policies and initiatives to increase the safety, reliability and efficiency of the payments system.

A time like this, the CBN is focused on operators’ high level of trust in form of secure authentication to protect customers against fraud.

EFInA Access to Financial Services 2016 Survey, recommended that financial ser-vices providers should provide improved technology platforms, new product streams, and enhanced customer service cashless products.

In summary, the CBN action for financial services providers are to develop targeted out-reach and innovations, leveraging on digital platforms to reach the excluded population across the country.