Stakeholders Lament Slow E-Payment Uptake

Even in growing and small economies like Kenya, e-payment has be adjudged to be a success with particular reference to its mobile money,m-pesa, but for Nigeria, the case is different as investigations revealed that much success has been recorded.  Who is to blame for this, therefore, well stakeholders think that the users are not well informed or better still someone institution of government is not doing its work.

THE high dependence of   a large number of the Nigerian populace on cash business and the seemly lack of adequate information in the public domain about the electronic payment system are the reasons why the system is still yet unable to make appreciable success like as it has been in countries like Kenya.

Investigation showed that the epileptic failure of telecommunications infrastructures provided by the mobile telephone operators, which is critical to the deployment of the electronic payment, was before now blamed for most of the challenges encountered by users, particularly in the use of mobile money, point of sales,POS, and Automated Teller machine, TM.

However, key stakeholders at a training for information and communications technology journalist in Nigeria said that the banks have been able get the telecoms operators to ensure that there are no network failure, and indeed the stakeholders which include representative from the Central Bank of Nigeria, Nigeria Inter-Bank Settlement System and Interswitch confirmed the new development.

According to them, Nigerians need more information on how the electronic payment system works saying that most problems they encountered in the use of electronic system are basically associated with the use of the system.

Speaking at the training, which was organised by the E-Payment Providers Association of Nigeria-PPAN, the Director, Banking & Payments System Department, Central Bank of Nigeria,Mr. Dipo Fatokun said that a major challenge why the electronic system is yet to fully entrenched in the economic life of Nigeria due to the fact the economic constrains and cash culture of the people.

He said that Nigeria is still a cashed-based economy and majority of its people prefer cash transactions to the detriment of e-payments noting that the public is very much not in tune to innovations.

Exe Sec,E-PPAN, Onajite Regha

He observed that infrastructure such as power, communication, roads and other means of transportations, network connectivity, arising from NIBSS, Switches, banks and telcos- unavailability of financial services 24/7 in remote locations are also challenges that are yet to addressed.

He said further that non-admissibility of electronic evidence in court is an impediment saying that lack of judicial understanding of the peculiarities of e-payments transactions as well as payments instruments limitation together with the integration of the various e-payments components in a common platform are factors limiting the impact of the e-payment system.

Also critical to the success of the e-payment success in the country as identified by Fatokun are issues related to consumer protection, lack of efficient risk management strategies, customer challenges like poor communication and literacy level as well as fraudulent and unethical practices  of banks’ staff  and customers, and skills gap of the stakeholders.

On how to effectively enhance the embrace of the e-payment system, he suggested that the continuous public awareness and seminars on electronic payments benefits saying that there should be incentives for the usage of e-payments channels

Due to the dynamics of crimes in the country, he called for improvement of security issues around the e-payments option so as to boost public confidence adding that there is the need for aggressive deployment of payments channels for easy availability and adequate training on oversight functions of e-payments schemes.

While highlighting the current challenges with e-payment landscape in Nigeria,

Group Head Industry and Retail Chains Interswitch Limited, Mr. Paul Ohakim said that government has a role to play in making a success of the system listing the key areas of challenges to include public private partnership collaboration, more investment on ICT infrastructure, addressing behavioural constraints of the people, building trust in the payment system and reduction in the cost of ICT deployment.

According to him, beyond the need for more sensitisation of the public on the benefit of the e-payment system, government need to build more enforcement mechanism saying that there is also the need not only to improve security and efficient regulation of the e-payment system so as to build trust on it but to develop proven security measures for payment security.

On cost reduction for ICT deployment in the e-payment system he said attention should be paid to outsourcing, lean operations and shared services. 

Ohakim noted that the benefit of the e-payment system spreads across aspects of the national economy covering individuals, organisations and government saying that while it offers risk reduction, convenience, cheaper option and multiple payment channels for the individual it offers reduced cash handling cost, reduced leakage in revenues and better efficiency for organisations.

He also said that government stands to enjoy increased revenue collection, transparency, reduction in wastages and reduced Risk when e-payment system is deployed in the management of its social services saying that for the economy, e-payment ensures financial inclusion and economic growth, tracing of illicit funds and reduced cash handling cost.

While assessing the growth rate of the e-payment system for 2013 a senior official of the Nigeria Inter-Bank Settlement System Mr. Osamede Odiase disclosed that for almost all identified sectors experienced growth was only 11 per cent average.

According to him, educational services recorded the highest transaction growth rate of 27 percent followed by travel and logistics with 26 per cent growth rate while travel agencies and fuel station had a transaction rate of 19 per cent each followed by fast food and restaurant services and hotel and guest house which had 17 and 16 per cent transaction rate respectively.

He said that while religious transactions was 15 per cent that drugs and pharmacy was 14 per cent adding that retail  and wholesale merchants, airline operations which should high transaction rate each had 13,12 and 7 per cent respectively.

He listed the reasons for the poor performance of the e-payment system to the competitive landscape which include substitute products like quick teller, likely entry of potent new competitors, a shift in buyer needs and tastes away from the industry product and threat to marketing campaigns from Banks.

Odiase observed that regulator policy changes such as threat to pricing, of e-payment products by CBN, PoS merchant service fee, limit of cash deposit and withdrawal as well as ATM cash withdrawals fees are responsible for the poor performance of the sector.

Other reasons listed are dearth of required skills of personal to run the system, low adoption of e-payment from the people due to adversity to change and the operating environment.

Meanwhile, since its introduction in mid-2007, M-PESA, the Kenyan e-payment system had been adopted by 9 million customers as of late 2009 by 40 percent of Kenya’s adult population and is now facilitating an average of $320 million per month in person-to-person transfers (roughly 10 percent of Kenya’s GDP on an annualized basis).

Worthy of note is the extremely rapid uptake of M-PESA and a strong vote of confidence by local users in a new technology as well as an indication of significant latent demand for remittance services.