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Re-evaluating NIBSS’ Capacity Amidst Increasing PoS Transaction Failures



The Central Bank of Nigeria (CBN) introduced the Point of Sale (PoS) system in 2012 to further drive home its cashless policy, however, seven years down the line, getting PoS system right remains a big challenge. For every Nigerian who wants to avoid serious embarrassment, it has become expedient to always carry cash around even when a PoS terminal is available, for the simple reason that most times, it never works.

Most individuals become even more infuriated when declined transactions at the point-of-sale leave them with debit alerts that demand rigorous reclaim process. “Sometimes, the banks will tell you it takes between 10-12 working days to reverse a failed PoS transaction even when you are stranded”, a customer lamented.

Since its introduction, the PoS, which is one of the most basic of all cashless policy initiatives, has performed below expectations and recent figures of failed transactions have become worrisome. Nigerians continue to experience declined transactions on PoS terminals all over the country despite new efficiency methods introduced by the Nigeria Inter-Bank Settlement System (NIBSS). These frequent failings have brought to bear a seeming lack of capacity on the part of NIBSS.

NIBBS, the institution that is responsible for clearing and settlement of inter-bank transfers and payments, has recorded incessant downtimes. On a typical day, as high as 15 per cent of transactions fail.

Owing to the lack of capacity, available statistics from NIBBS show that growth rate in value of transactions has decelerated in the first quarter of 2019 (Q1’19). While in December 2018, the value of POS transactions stood at N271.95 billion, that figure has dropped significantly in the first two months in 2019.

In January, transaction value declined to N222.291 billion; that’s an 18.26 per cent decline. And in February, it further declined to N193.425 billion, a huge 28.87 per cent dip from December 2018 figures. As of March, stakeholders have become more alarmed as figures continue to dip low. At some point in March, failed transactions stood as high as 25 per cent.

Niyi Ajao, NIBSS acting managing director, said in March 2019 that the glitches experienced in POS transactions were due to an attempted upgrade. NIBBS attempted to fix the issue with involved parties by increasing the turn-around-time from 15 seconds to 20 seconds and thereafter to 45 seconds. However, the supposed upgrade has not been able to savage the situation.

NIBSS is owned by all licenced banks in Nigeria including the Central Bank of Nigeria (CBN). It was set up as a Shared-Service infrastructure for facilitating payments finalities, streamlining Inter-bank payments and settlement mechanisms, to drive and promote Electronic Payments across the Nigerian Financial Industry.

A lot of Nigerians believe NIBBS is slacking in delivering its mandate and could have rammed the country into major crisis if its three-time attempt to hijack collections into the nation’s Treasury Single Account had been successful. NIBBS has not only failed to cope with rising volume of transactions, its inability to sufficiently deliver is moving the country backward in the drive for more effective payment systems.

For any national policy to work, capacity must match intention. When this cashless drive started, there was a general sense of excitement because it arguably reduced the number of armed robberies. With rate of failure of PoS terminals, Nigeria is however not ready for the cashless drive because not enough control measures have been put in place.

A Chief Executive of a Lagos state based company narrated he ordeal to this writer during a recent discussion, he said: “I went to buy drinks and other provisions urgently needed at Grand Square supermarket at Victoria Island, Lagos. I paid with my Guaranty Trust Bank (GTB) card twice and the transaction declined on the PoS machine, but I was debited both times regardless. As it was a matter of urgency, I opted to transfer the amount to the account of the supermarket to cover the cost of my items. I did this, and was debited but the money never reflected in the supermarket’s account. This makes three different debits from my account to cover my shopping. Shockingly, it has been over four weeks since this experience and I am is still calling the customer care line of my bank for this money as it is yet to be reverted”.

This case of PoS failure at critical times is quite common amongst users, but thankfully this case was not an emergency and the supermarket manager was understanding so there was a mutually beneficial resolution. This is however not always the case. The consistency in PoS failures raises some critical questions: what if it was a medical emergency where payment is the difference between life and death? What if it this was a case where a person was only in the country for a short period of time and they needed to purchase something urgently?

Complaints are rife on social media, one user Max wrote: “Had a failed POS transaction since 14th February 2018 #4100, and till date @FirstBankngr is doing nothing, I have complained to the branch several times no result, no reversal”.  Another disappointed shopper, Gifty, adds: “Am I the only one who thinks banks should stop carrying out POS transactions since they ain’t capable??? I mean how does refund for a failed POS transaction take more than 3 weeks @DiamondBankNG @cenbank”.

As at the time of putting this piece together at 12:54pm on Monday, 15 April 2019, failure rate as shown on NIBBS website was 23.55 per cent. Out of the 4,051 transactions that happened in five minutes, 954 failed. Measures must urgently be put in place to improve the poor records.

– Akapa is a post-graduate student of Economics based in Lagos


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