• Payment Cards’ Restriction Hurting Banks, Customers

The Chairman, Committee of e-Banking Industry Heads and Chief Digital Officer of Wema Bank Plc, Mr. Dele Adeyinka, talks about developments in the e-banking space and the need to increase the adoption of e-payment and alternate channels.

CAN you give an overview of the growth in the e-banking space over the years?

The Cashless Nigeria initiative started about four years ago. We are in 2016 and are still counting the dividends of that initiative; we are still working to grow the numbers. But if we want to appraise ourselves, we can say with a sense of responsibility that we are on the right track. The volume of cash in the economy is still on the very high side. But we can also say that between 2012 and now, the adoption of the e-channels and alternate payment options has grown significantly. Point of Sale adoption has also grown between then and now; card issuance and the adoption of all the card schemes that we drive in the country have also grown significantly. The usage of cheque has drastically reduced. The adoption of alternate e-payment platforms has grown tremendously.

The NIBSS Instant Payment and NEFT as alternate options to doing funds transfer (rather than cheque) have also grown significantly. And If you compare what we had in 2012 and 2106, we have seen some tremendous growth. I have some statistics that I can share. As of the end of 2015, the circulation of cheques in the industry had been reduced to about 2.8 per cent from eight per cent that it used to be , compared to all options of payment. Growth in cash adoption has grown by 15 per cent. Electronic funds transfer and alternate funds transfer channels (NIP, NEFT, AUTOPAY etc), on the general note in the industry, have recorded eight per cent adoption as compared to four per cent adoption that it used to be in 2012.

The deployment of the PoS terminals has also grown seriously. We have a whole of merchant locations, where the use of the PoS terminal has become so prevalent as an alternate point of payment rather than using cash. Of course the deployment of the ATMs in the industry has also grown tremendously. I will say we are on the right track even though we still have a lot to do; stakeholders and different players still have a lot to do. But we have done fairly well and we will continue on that path, encouraging our consumers and stakeholders to adopt these alternative channels of e-payment.

Commercial banks recently stopped their customers from making cash withdrawals (foreign currencies) from Automated Teller Machines abroad using the debit naira MasterCard. This has affected e-payments, especially transactions involving foreign exchange. Will banks reverse this decision soon?

My take on this is that it is a national challenge. It is a hurdle that we all need to clear together. Yes, currently, it is affecting the card space but we all know it is not only the card space. It affects virtually all sectors of the economy. If you go to supermarkets today, you will notice that it is not the type of products that they used to have one or two years ago that they have there now. This is because they are finding it difficult to source for the FX to bring in these products. If the leadership of the country is advising us to look inwards rather than look outside, it is just natural that all of us including those in this sector aligns our visions, thoughts and actions to this national directive; that as a nation, we must look inwards. The decision regarding this in our sector was taken at some meetings. It was not as if it is generally outlawed to use our cards abroad. It was just to say there has to be a limit to the funds our customers and consumers can use outside the country; it tells heavily on our external reserves as a nation because settlement must be done. Today, reports say we have one of the lowest FX reserves in the last decade as a country. And of course, we all know the beginning of this: The price per barrel in the global oil market went downwards, and again some of the countries that used to patronise our crude oil stopped doing that. All of these have affected our FX reserves. For cards, we also considered that if we allow our customers to continue to go outside the country to use these cards, it will naturally get to a state that will further reduce our FX position as a country.

This is because those other countries will need to be settled and they will not be settled in our national currency; they will be settled in foreign currencies (dollars or pounds). Of course, if anything is going to affect our country, it is in our interest as a country to put a hold on it. We are not stopping it outright, we are only saying let us put a limit to the number of what our consumers can use for transactions outside the country. So it is a temporary restrictive measure. It is hurting not just the consumers, it is hurting the practitioners – all of us, but it is a temporary pain we all have to bear now in the interest of our nation. Once we cross this hurdle, and have enough FX reserves to be able to settle our bills, the cards will continue to work.

Are you saying in the meantime, the customers should forget increase in the amount they can spend overseas?

I know that the President, Vice-President, the National Assembly and all of the leadership in the country are working round the clock to resolve this issue. I read in the newspapers how the President himself said he was looking for alternative options, seeking the NASS approval to get some loans to bring in some forex into this country. All the arms of government are working to ensure that we clear this hurdle. But am I going to advise and encourage that we continue to create more problems rather solving existing ones? No, my take will be for us to be solution-providers; and not adding to the problems of the nation. We need to align all of our products and offerings to solving the problems. It is just a temporary pain. Once we clear this hurdle jointly as a nation, it will be obvious to all. We can then increase the limit that our customers can use their cards to spend abroad.

As the CeBIH chairman, what are your visions for this industry?

There is a tag line that we have in CeBIH, it says we want to drive excellence and dynamism through collaboration. My major role and that of other members of the executive committee as we immediately took the leadership of CeBIH is to emphasise that aspect of our tag line that resonates collaboration. We want to use collaboration to achieve much more than ever before. As individual or member banks, we can achieve a lot but as an association or committee, we will achieve much more, if we collaborate. So we are bringing all players and stakeholders together, and we are using that force of collaboration to help us achieve much more. We are going round, and we are involving all stakeholders in what we do. By the way, on a monthly basis, we hold our meetings and we engage all stakeholders within the month. As much as possible, we ensure that all the gaps that we have identified are properly filled. We encourage ourselves to leverage our collective strength to see how we can achieve the Payment System Vision 2020 together. And ultimately, it will affect our businesses, our banks and consumers positively; because ultimately, they will be the beneficiaries.

This is because once our consumers adopt the usage of e-payment and alternate platforms, the business will grow and our individual banks will benefit from it; the revenue lines will increase; the industry and the nation as a whole will benefit.

Can you tell us more about CeBIH?

CeBIH means the Committee of e-Banking Industry Heads in Nigeria. It comprises of practitioners in all of the Deposit Money Banks in the industry.