CBN explains Cashless Economic policy aims

By Kokumo Goodie, Lagos, Nigeria

The high cost of cash management, a need to minimise revenue leakages, and frequent bloody armed robberies are some of the reasons why the regulator of Nigeria’s financial sector, the Central Bank of Nigeria (CBN) introduced the Cashless Economic policy in the country.

Sanusi Lamido Sanusi, governor of the CBN who spoke in Lagos, lamented that a whopping N192 billion will be spent on managing cash in the country this year alone.

“The policy was designed to promote financial intermediation, financial inclusion, minimise revenue leakages, eliminate incidence of robbery and also to reduce the amount of cash payment and encourage electronic payment.

“This is because cost of cash and associated risk of cash-driven economy to Nigeria’s financial system is high and increasing. In fact, the direct cost of cash management is estimated to reach N192 billion by the end of 2012."

It is in an attempt to reduce these challenges that the CBN, in collaboration with the Bankers’ Committee, initiated the project “Cashless Nigeria” with the aim of encouraging Nigerians to adopt e-payment. This project commenced pilot in Lagos, tagged Cashless Lagos since January 2012 and it is to run through the whole year,” the CBN boss told guests at a three-day Cashless Lagos Fair 2012, convened at the nation’s economic capital.

Sanusi used the occasion not only to enlighten members of the public about the kernel of the policy but also “to clarify grey areas of the implementation.”

According to him, the policy on withdrawal allows individual customers to make a free cumulative withdrawal of N500,000 daily across the counters and ATM.

Withdrawals above the free limit will attract processing fees of 3% for every N1000 above the limit, adding that corporate customers are allowed to make free cumulative withdrawal of N3,000,000 daily. Withdrawal above the free limit will attract a processing fee of 5% for every N1000 above the limit.

On lodgement, he said the policy on lodgment allows individual customer to make a free cumulative lodgment of  N500,000 daily. Lodgment above the free limit will attract processing fees of 2% for every N1000 above the limit.

For corporate customers, he said they are allowed to make free cumulative lodgment of N3,000,000 daily. Lodgment above the free limit will attract a processing fee of 3% for every N1000 above the limit.

The pilot in Lagos state commenced in January 2012 and will run through till December 2012. In January 2013, the project will be extended to other major cities in Nigeria, Sanusi said.

“I need to make it clear that it is the account to which withdrawal and lodgment is made that bears the processing charges and NOT the individual that receives or deposits the cash. Cumulative withdrawal/lodgment means the totality of all withdrawal and lodgment across all the customer’s accounts in the bank,” he explained.

The CBN governor said in order to facilitate and encourage the alternative means of payment, the banks and acquirers have deployed and implemented several means for e-payments namely:

- Point of Sale (POS) Terminals - as of Monday May 7th, 2012, the banks have deployed a total of 70,000 PoS terminals to merchant locations. He said the CBN targets deployment of “over 150,000 PoS terminals by the end of the year.”

- Another channel is the Automated Teller Machine ( ATM). He disclosed that there are over 9,000 ATMs that have been deployed in and outside of the bank branches and these ATMs have the capability to enable bill payment, funds transfer, virtual top-up and other services.

- On web-based transactions, he said more merchants are being signed up to offer services on their portal and accept web payments. Airlines, hotels, telecommunication companies, government bill and others are making concrete and concerted efforts in this direction.

- On mobile money services, Sanusi said the apex bank has licensed about 15 mobile payment operators to offer payment services via the mobile phone that over 80 million Nigerian are carrying. This will also help promote financial inclusion and by extension, make the nation a cashless one.

Others are the NIBSS Payment Service, under which NEFT and NIP fall, which are also available through the bank's internet banking platform to enable P2P, P2B and B2B payments.

On internet banking, he said: “The banks have also enhanced their internet banking capabilities with a view to offering more robust, efficient and effective services for their customers in order to make instant payments within the context of P2P, P2B and B2B payments space.”

“We reckon that inadequate infrastructure, consumer education and even protection can pose serious challenges to the quick adoption of the payment options. Consequently, the CBN is working with all the stakeholders to ensure that these challenges are surmounted quickly as we encounter them during this pilot period."

The banks, under the aegis of the Bankers' Committee, have engaged in aggressive campaign in several news media. The CBN has also engaged group of traders, associations and schools to provide the needed awareness and education. "Additionally, it is gratifying to note that this Fair typifies one of the major windows of educating the public on the project,” he disclosed.

He also disclosed that since the commencement of the project till date, the apex bank has been receiving positive feedback from different quarters, adding that some merchants, especially petrol stations, have joined the league of enthusiasts by now encouraging their customers to use cards for payments.

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