CBN’s Cashless Policy Faced Challenges as Digital Banking Channels Prove Unreliable

The Central Bank of Nigeria’s (CBN) cashless policy, which aims to reduce the amount of cash in circulation, has faced challenges due to unreliable digital banking channels.

The Fintech Association of Nigeria has warned that the policy could damage customers’ trust in the banking system due to challenges with execution, such as merchants still requesting cash payments despite digital channels being available, and Point of Sale (PoS) merchants whose charges have increased to nearly 50 percent.

The policy was meant to bring ease of transaction for citizens but has been plagued by challenges. Due to the policy, many Nigerians have turned to digital banking channels, which have seen them face issues such as network problems, failed transactions, and fraudulent attacks.

According to reports, seven out of ten people in customer service queues at some major Nigerian banks are there because of a failed transaction or an unauthorized fraudulent transaction, particularly when using electronic banking channels.

Customers have expressed discomfort with electronic transactions due to their high risk and exposure to cybercriminals. Failed transactions are another concern for most customers who are reluctant to use electronic banking channels. Sometimes, failed transactions can take weeks or months to be resolved, forcing customers to give up on the cash, which is usually associated with a technical error.

Bank customers have raised concerns about fraud and inefficiency in electronic banking channels and are urging for them to be addressed before the cashless policy can be pushed forward.

Despite claims by Nigerian banks that they have invested over N100 billion in setting up and maintaining cutting-edge electronic channels over the past few years, the policy is still plagued by various challenges.

A cashless economy does not seem like a bad policy in itself, but it must be executed correctly and with the safety and convenience of customers in mind. Therefore, it is essential for the Nigerian banking system to address the challenges associated with the policy’s implementation, such as fraudulent attacks, failed transactions, and technical errors. By doing so, the banking system can ensure that customers can use digital banking channels with confidence and the cashless policy can be successfully implemented.