As the Nigerian economy gears up to move into cashless mode which commences effectively in Lagos today, there are strong indications that banking habits will change, initially to apathy and later to full embracement. But, while this is expected to change the face of Lagos, authorities concerned must ensure that identifiable shortcomings are taken care of before moving to the second phase of the scheme.
The migration to electronic channel is seen as part of engine of change in the economy and easy platform to meeting the Vision 20:2020 in the financial sector, which is anchored on rapid transactions. Under the project, daily withdrawals/lodgments exceeding N150,000 will attract N100 for any additional N1,000 while companies withdrawing/depositing more than N1million will be required to pay a penal fee of N200 for and additional N1,000. CBN believes that these penal rates will serve as an incentive for Nigerians to migrate to alternative channels of payment such as Point of Sales (POS), Internet and electronic funds transfer.
There is the need for CBN to issue more licences to banks to operate even as most of the financial institutions have completed efforts in the area of deploying electronic channels, in preparation for today’s take-off of the policy, so that banks that have acquired the necessary facilities to be granted licences to so as to join the other 11 licensed operators to complement the implementation of the policy today, which is expected to commence in other zones very soon.
This is necessary as there is still shortage of the much needed Point of Sale (POS) terminals, to which CBN is still accusing the Nigeria Customs Service (NCS) of holding up their deployment.
Speaking on the sidelines of a seminar organised by the Committee of e-Banking Industry Heads (CeBIH) last week in Lagos, Tunde Lemo, deputy governor, Operations, said NCS has constituted itself into a roadblock for the realisation of 40,000 Pos that would have been deployed by last weekend.
“If not for the customs service’s hindrance of deployment of these PoS terminals, by now, we would have achieved even more than the 40,000 target; however, we are engaging with them and we will comply with whatever they ask us to do.
We will dialogue with them and deal with the problem as we should,” Lemo said.
Interestingly, to douse the apprehension, CBN has waved the service charges to March next year. The shift, according to CBN, will enable customers to experience the initial infrastructure challenges and also enable customers migrate to electronic channels.
This is in addition to a new target set by CBN for commercial banks to roll out additional 75,000 Automated Teller Machines across the country by 2015 in order to encourage the cash-less economy policy. Additionally, the apex bank said it is set to drive a policy that would result in the deployment of about 375,000 PoS terminals in different parts of the country in the next four years.
Analysts believe that CBN’s action is a demonstration of sensitivity to apprehension of customers despite the fact that the policy will, among others, bring out cash from the informal sector to the formal sector, while at the same time makes computation and monitoring of cash liquidity in the system more verifiable by the CBN. In essence, it will enhance data integrity in the system.
Consequently, CBN has advised banks to continue to encourage their customers to migrate to the available electronic channels and where possible, demonstrate cost accruable to higher transaction volumes of cash after the March deadline.
CBN, in a circular, ‘Modalities on Implementation of Cash Policy for Cash-less Lagos’ last week said: “The service charges/fees will not apply until March 30, 2012, in order to give people time to migrate to electronic channels and experience the infrastructure that has been put in place. Therefore, banks should continue to encourage their customers to migrate to available electronic channels, and where possible demonstrate the costs that will accrue to those that continue to transact high volumes of cash after March 31 in Lagos.”
However, transactions initiated from Lagos State, and affecting an account outside the state shall attract charges/fees (when the specific transaction is above the limit), while transactions initiated out of Lagos State, and affecting a Lagos-based account shall not attract charges/fees, and shall not be counted as part of the daily cumulative amount on that account since the policy has not been activated outside Lagos.
Only Cash in Transit (CIT) licensed companies, according to CBN, shall be allowed to provide cash pick-up services in Lagos, saying that banks will cease CIT lodgement services rendered to merchant-customers in Lagos from December 31, 2011.
“Any bank that continues to offer cash in transit lodgement services to merchants shall be sanctioned accordingly. Third party cheques above N150, 000 shall not be eligible for encashment over the counter. Value for such cheques shall be received through the clearing house.
“Banks should therefore work with their corporate customers to arrange for suitable e-collection options. The cash limits apply to the account so far as it involves cash, irrespective of the channel in which cash is withdrawn or deposited.
“The service charge for daily cumulative deposits above the limit into an account shall be borne by the account holder. However, during the pilot in Lagos, individuals paying money from Lagos, into an account outside Lagos, shall bear the charges for any single transaction above the daily limit.”
But, the deputy governor has urged all stakeholders to quicken the adoption of e-payment solutions which have been certified by the apex bank. He said the apex bank would continue to take necessary actions to restore and sustain public confidence in the Nigerian Payments System through relevant policy measures.
“Given the important role that well-functioning payment systems has on monetary policy, financial stability and overall economic activity, the Central Bank of Nigeria is desirous of putting in place a national payments system that is “nationally utilised and internationally recognised.” As you are aware, over the years, the Nigerian Payment System has been characterised by the following which the adoption of e-Payments are expected to address. Dominance of cash and paper-based activities in the economy, manual operations and delays in clearing time of cheques, infrastructural bottlenecks, sharp practices and insider abuses, shortage of technical personnel, low confidence in the banker’s clearing system. To achieve this, “your support and buy-in is essential.”