Cash-less Nigeria: Lagosians Still Contend With Old Challenges

Saturday, 29 June 2013 00:00 By Geoff Iyatse, Chijoke Nelson, Ikechukwu Onyewuchi and Kayla Grage Business Services - Business News User Rating: Poor /0 Best

NOTHING in the template that announced Lagos as pilot sample of the cashless policy revealed what informed the choice. But considering the technological literacy of residents of the countrys financial hub, the thought of Lagos did not come strange. Yet, the choice did throw up germane questions when weighed against the wisdom of sample drawing. Sample makes sense when the remaining variables identify with it, on average. Otherwise, it is faulty sampling. Lagos stands out in Nigeria. Barely can any state contest with it in terms of advancement in Information and Communication Technology (ICT), which drives cashless transaction. Hence, issues were raised on why the Central Bank of Nigeria (CBN) handpicked Lagos to test-run the novel scheme. Could an idea that succeed in an extremely literate Lagos, in Nigerian context, succeed in disparately unequally fortunate states? Supposing the Lagos scheme achieved success, does it, in any manner, testify that it will succeed in other states? Yet, just as the kicks-off second-phase implementation tomorrow in Anambra, Abia, Ogun, Kano, Rivers states and the Federal Capital Territory, Lagos manages to wobble arround with the policy believed to have been imposed on Nigerians, in the first place. Cash transfer, supposedly, is a critical support-base of the policy. But this, perhaps, suffers the greatest hitch in recent years. First, the ICT infrastructure of banks that supports seamless transfer is still very weak. Down time has become an everyday challenge, obstructing quick transmission of cash to recipients accounts. Here is a relevant instance: an account holder of a old generation bank, Braimoh, had a transaction with a client that involved a fee of N850,000. It was an urgent job. Hence, he either picked cash payment or source money elsewhere to execute the project pending when a cheque would be cleared. Meanwhile, it was against the corporate management style of the client, a

Lagos-based packaging company, to pay in cash. It chose to do instant transfer from its new generation banks account. The company paid the stipulated fee and wired the money on a particular Monday morning as the service was very crucial and needed to be executed by Wednesday of the same week. Behold, the money remain on floating status for the whole of that week while the parties kept angling on what could have gone missing. Sorting codes were exchanged among parties involved; account officers of the two banks knew no peace. But the transaction remained inconclusive until it was too late to execute the purpose for which the money was released. Daily, banking halls are inundated with complaints about fund transfer applications not cleared in time. While bank officers simply implore complainants to bear with server challenge, irritated customers do not see why they should be the ones to suffer poor infrastructure ultilised by banks. They would do the transactions using other means if it is just to avoid the with transfer service. The cost of transaction has always been an issue. Some banks still charge for intra-bank transfer. A certain bank was still recently charging N150 per in-house transaction. The attention banks give to transfer desk also raises question about their commitment to improving that aspect of banking. A single staff that may spend average of 30 minutes to finish a transaction could attend to ten customers, in some cases. That is if the network does not run into trouble halfway. And customers do not see any reason they should pay for a transaction that does not improve the quality of life they live. Findings, thus, shows that much of the volume of cash handled through transfer are for corporate organisations. Individuals, a much as they can, shun transfer for the hassle faced in the process. And the culture, perhaps, is growing. The Automated Teller Machine (ATM) offers wide-range services, including transfer. But nine out of every10 customers who spoke in Lagos last week said they have never done a transfer through the medium. Many of them said they never made attempt while some said efforts in that direction were never successful. Surprisingly, a scanty number admitted they have used the machines to pay bills or top up telephone and paid pay-television charges. What most people do on the ATM is the traditional cash withdrawal, which merely slightly decongests banking halls rather than advancing the real objective of cashless policy reducing cost of cash management. Of course, there is attitude dimension to the low transfer patronage. At a branch of a leading bank on Airport Road, Lagos, last two weeks, a car dealer accepted to turn down a deal for want of physical cash. The buyer was to pay over the sum of N1.8 million but was shocked to realise he would pay reasonably high for above-the-limit charges if he withdrew cash. The teller suggested a transfer could materialise in cash by evening of the same day. The buyer said he wanted cash. Not even the assurance by the attendant that he should see her the following day if his account was not credited the same day could change his mind.

The buyer was left with no option but to withdraw cash, and pay the penalty because I need the car. However, a fund transfer officer at an Oshodi branch of a regional bank, said transation has been less stressful since the inception of the cashless policy, noting that complaints about network challenges are not peculiar to Nigeria. There are a lot of people moving money here and there with the aid of money transfer service. The system has been smooth. As for the network issue, we should know that there is no perfect system in the world. The issue we have been having are not too threatening. Sometimes, they are things we cant avoid. When I try and it does not go through, I quit the system and try again. It works perfectly. There is no issue on inter-bank transfer. I do, at least, 10 transfers a day and it has been pretty smooth. Before now, we have been doing transfer, but not on the same platform. What we used before was not crediting the receiver instantly. The receiver would have to wait for a day. But this system is much faster; it is seamless. The response and perception have been encouraging. CBN has stipulated cash withdrawal limits of N3 million for corporate organisations and N500,000 for individuals, yet people want to buy cars and other items, which requires higher value. They easily make transfer to the other persons account to ease the process. When customers come to withdraw above the limit, we advise them to pick up the slip and do a transfer instead. A lot of our customers are quite responsive except for the retail traders who withdraw small amount, say 50,000 to 200,000. But some customers really make use of and appreciate the platform. If you walked into banking halls those days, you would see long queues But that era has gone. Sometimes we urge our customers to use the transfer service instead of waiting on the queue for their turn. We ask them how much they want to withdraw and advise they use transfer instead of going through the stress associated with withdrawal and later depositing into another account. We even encourage them to make use of the ATMWe are not even allowed to withdraw across the counter. I go out to use the ATM machine. And you can also do transfer through the ATM. The banker noted that the major challenge facing the system is illiteracy. He said people are not well informed to know how to use money transfer. He said: We dont have many literate here. If you go to our branches in Ikeja and Victoria Island there is difference because the number of literate people in those areas is high. People in Oshodi are mostly market men and women He noted that corporate customers embrace transfer payment option more than individuals. Findings revealed that some customers, indeed, are eager to use cashless platforms such as recently reinvigorated point of sales (PoS). But some retailers are rather indifferent to the full utilisation of the smart machines

Two retailers at The Arena (the Nigeria Army Shopping Arena) in Oshodi said the PoS machines they use are unreliable and that they sometimes debit customers while they are not credited, thus slowing down their businesses. They said they decided to revert to cash payments because of the growing challenges. Another retailer in the market, Mrs Florence, MD of Estee Apparel, said her experience with PoS has been great. Though, she said she only support cash aspect of the business with two PoS. When there is no network, I use the other one, she disclosed, displaying the two devices with the logos of two different banks. It is for efficiency and effective payment, because there might not be network when a customer wants to make payment, she said about the gadgets. Mrs Ifueko Osagiede, a retailer in the modern market has a similar story, although with a little twist. She said she also has two of the machines, issued for free by two banks, adding that she procured two for better service. She said: I was using the one issued by Diamond Bank Plc before it was complicated, it was connecting but lost it. It works like an ATM machine; it requires stable network to work effectively. The bank recently issued another one to me. The new one is quite user-friendly. It is effective; that of Guaranty Trust Bank Plc is also effective. I had an experience with Guaranty Trust Bank. After a transaction, they didnt credit me after the stipulated 48 hours. When they eventually did credit me, I saw just N98 credited to my account. I had to report the issue to the Bank. The customer paid 15,000 to me later when I told her I didnt get the money. They later credited me with the remaining 14, 902, which means the customer had now paid twice for the item she bought. I called her for the excess. Thats not the only case Ive had. At times, I would wait for my cash for more than 48 hours. They would not pay me so I will just exercise patience and wait till they do. At SLOT, a major information technology store and repairs service provider, the story is not different. Its Sales Floor Manager, Mr Daniel Olise, who oversees transactions, including PoS terminal, stated that the store has had its fair share of challenges using the payment platform. He said although they have been using the terminals before the official policy was launched, the major issues they have faced are those of extra and transaction charges. He said: The POS has a software version, which most people dont usually understand. There are different cards like Master card, Verve and Visa. So the terminals may accept Master but not Visa card or Verve. Some may collect Verve but not Master Card while others may take all cards. We even have diamond card, international card, credit card and debit card. Customers are reluctant to use POS for some reasons like extra charges.

Sometimes when using the PoS, it shows transaction decline on our terminal. The bank sends a text message stating that the account has been debited. But SLOTs account wont be credited. PoS is a sensitive device, and as it tells you that the transaction is declined, the bank would make a mistake and notify a customer through text message that their account has been debited. But a user should know that the bank would not make a mistake. So, it is better to wait for about 24 hours, and then the reverse would be done. He advised that anybody using the PoS should be properly trained on network and error codes. Sometimes some error codes like issuer and Interswitch error, not enough balance, inactive transaction, incorrect pins and others are likely to come up. So the handler should be trained so he or she can explain to the customer the challenges. Another salesperson at the Army Shopping Complex, who indentified herself as Shehu, said he charged N200 per transaction because my money will not be complete if I dont do that. He said he was billed for each transaction completed using the e-payment platform; hence, I collect the money from customers. But a user at an Oando petrol station at the Ketu axis of Lagos, who said the low attention given the electronic payment means should not bother anybody because it is a matter of choice, said she does not charge customers who decide to use it. I dont think anybody should charge customers for using the service. We dont charge; if others do so, it is their business, she noted. The CBN had earlier said the cost for use of PoS would not be borne by customers but the service providers, which would pay 1.25 per cent of the transaction fee. It said the fee would be distributed to different parties that play different roles in ensuring that the system works effectively. The fees, according to a statement by the apex bank, would enable parties recover the costs, support maintenance and connectivity among others. Nigerians may have questioned why they should pay more than the face value of their transactions because they choose to pay electronically. Still, there are deeper issues that might have taken the shine from the system originally designed to make transaction more convenient and reduce the cost of cash management. Mobile banking is another support tool created to support the electronic payment. There was excitement when one of the first tier banks launched its product that was expected to drive the financial inclusion campaign vigorously. About a year after the product considered to create a life of its own as a quasi bank, not much success has been recorded. Patronage is still very low, noted a success. At some branches, attendant are completely ignorant about processes involved in the mobile account opening, as that was initially designed to be the practice. The agents, which the bank planned to roll out, have not come on board. Unlike other mobile banking, non-account holders were expected to open and run account on the platform; they could send and receive money. Also, non-subscribers would receive cash transfer on their mobile line after which they would

cash the value at an agent who would earn a commission. But the impressive dream started and ended on papers. CBN seemed to have contracted itself on cashless drive when it called for the withdrawal of offsite ATM points. The double-standard directive led to reduction of the number of ATMs deployed. It also impacted negatively on customers confidence in going for shopping with just a card in the wallets. That is just an aspect of the challenge with ATMs. The assumption that more sophistication in the use of PoS will automatically solve the prevailing challenges is as accurate as the efficiency of ATM technology. Today, the efficiency of ATM, the most popular, cashless support infrastructure, dims by the day. Maybe, the banks were had better reason to load currency-spilling machines with cash when the inter-bank N100 charge was in force. Not many of the issuers still fill the vaunt religiously. Besides, there are challenges ranging inoperative issuer to wrong debit, problem that takes some banks a week to fix irrespective of CBNs order that such problem should be fixed within 72 hours, still persist. And as customers move from one ATM point to another without success, they keep evaluating their stance on continued reliance on the option. Interestingly, Country General Manager, IMB West Africa, Taiwo Otiti, said this the network challenge suffered by ATM would continue for as long as power supply remains epileptic. Titi, whose employer serve 70 per cent information technology needs of Nigerian banks, said because over 80 per cent of PoS run on telecommunications services, any congestion on cell sites affect them. The congestion, he said, is majorly caused by indiscriminate service rerouting as a result of power outage that grounds some cell sites. Once there is a delay for a long period, transaction will be rejected. ATM is slightly different from PoS. You put cash in ATM; if there is no cash or experts who will quickly fix faults when service is not available, there will be problem, he noted. < Prev Next > Author of this article: By Geoff Iyatse, Chijoke Nelson, Ikechukwu Onyewuchi and Kayla Grage