As the cash-less policy of the Central Bank of Nigeria, CBN begins its nationwide journey, extending to the Federal Capital Territory, Abuja, and five other states, KEHINDE IBRAHIM examines the challenges facing the policy in its pilot stage as well as those likely to be faced by the new entrants.
The Central Bank of Nigeria, CBN, last year estimated that over N192 billion was spent on cash handling and management in the country, an amount that the regulator, the banks and their customers had to pay for in a cash based economy. CBN statistics reveal that about 86 per cent of in-branch bank cash withdrawals are less than N100,000 in value, while less than 10 per cent of transactions are more than N100,000. But only 10 per cent of branch cash transactions are above N150, 000, but make up 86 per cent of the volume of cash handled. As cash based economy, the CBN says as the volume and value of currency-in-circulation (CIC) grows, the cost of cash management will also grow and with retail and commercial payments primarily made in cash, the cash transactions represent over 99 per cent of customer activity in banks. This huge amount involved in cash servicing had kept on growing year by year and this formed one of the basis for the cash-lite economy being initiated by the apex bank that took off with a pilot stage in Lagos last year. According to the CBN, the policy is an arrow that will hit three main targets to significantly reduce the huge costs of handing cash and thus allow banks more funds to lend out to the real sector. The cash-lite arrow is also expected to help establish a payment system that will instigate an economic growth and help attain Nigeria’s Vision 20:2020 and lastly, with more cash within the banking sector, the apex bank’s monetary policies will be more effective. With the cash-lite policy, individual customers are allowed to make cumulative withdrawal of N500, 000 daily across the counter and the ATM. However, withdrawal above this limit will attract the payment of a processing fee of three per cent for the amount above the limit. Also, corporate customers are allowed to make cumulative withdrawals of N3 million daily while withdrawals above the limit will attract a processing fee of five per cent. The policy on lodgment allows individual customers to make cumulative lodgment of N500, 000 daily. Lodgment above the limit will attract a processing fee of two per cent above the limit. Corporate customers are allowed to make cumulative lodgment of N3 million daily. Lodgment above the limit will attract a processing fee of three per cent above the limit. Although the policy has been met with criticisms on the readiness of the country to support a cash-lite economy, the CBN had last week, commenced the extension of the policy to other states of the country. There had been arguments on unavailability of the required technology to support the policy as well as the right enlightened populace. For many customers in Lagos, where the pilot stage took off, while the policy may have brought some convenience, the technological hitches and security of funds have remained a major issue. However, the CBN believes the policy has been a success at the pilot stage and has decided to go ahead with the propagation of the cash-lite policy in the Federal Capital Territory and other states of the country such as Abia, Ogun, Anambra, Kano and Rivers, where it says there are high volume of transactions. As the policy takes off in these other states with the enlightenment stage, there have been mixed feelings across the Federal Capital Territory and five other states. First Bank of Nigeria Ltd definitely knows that millions of Nigerians have peculiar banking challenges and they need solutions. The leading bank, at the 2nd FirstBank Product Fair showcased innovative products that will not only give the needed solutions but will also sustain the relationship with its ever teeming customers. According to Temitope Omoniyi, Expression on Cards, one of the products is unique because it can be customized. He went on to explain that FirstBank customers are unique and should be treated as such. Every user of Expression on Cards can self customized card design from any convenient location, get immediate access to his Naira Savings or Current account anywhere in the world, use Expressions card globally wherever the MasterCard logo is displayed and receive alerts on all transactions (purchases, transfers and withdrawals).The card which is valid for 2 years is also accepted across all channels and is secured by Chip and PIN technology. Mike Ogbalu, Head Mobile Financial Services at FirstBank said Firstmonie is a revolutionary product. According to him, it is a mobile payment service by FirstBank that enables phone users to send and receive money, pay bills, buy airtime and do lots more with their mobile phones without a bank account. The mobile phone number serves as the account number. The service which can be accessed by using a USSD, the website/mobilesite and mobile application download can be linked to the user’s FirstBank account. Firstmonie can be used to send money to anyone, withdraw, make instant bill payments and shop. The product has three types, namely, Firstmonie Classic, Firstmonie Gold and Firstmonie Platinum. They have daily transactions limits of N30, 000, N100, 000 and N1m respectively. In her own presentation on First Travel Card, Adefadeke Adegbesan said the card is a dollar denominated non-personalized e-card. She said, the card, which is made for frequent traveler, easy to acquire and reload is accepted worldwide. FirstOnline on its own provides what customers want from an online banking. The product which offers Two Factors Authentication, (authentication of transaction is done by password and token device; this provides additional security for transactions done on FirstOnline), secured connectivity, a controlled system whereby transfer process can be carried out through desired workflow by corporate customers and audit trail for all functions is the first of its kind. Head, Media and External relations Mr Babatunde Lasaki , Mike Ogbalu, Head Mobile Financial Services both at FirstBank Nigeria Plc and Ayodeji Olusina, Head, Distribution FBN Life at the 2nd FirstBank Products Fair held at the bank the bank’s headquarter Head, Media and External relations Mr Babatunde Lasaki , Mike Ogbalu, Head Mobile Financial Services both at FirstBank Nigeria Plc and Ayodeji Olusina, Head, Distribution FBN Life at the 2nd FirstBank Products Fair held at the bank the bank’s headquarter Benefits of FirstOnline include, international funds transfer and other transfers, airtime recharge and bills payments, online cheque confirmation instant access to account information and downloading of bank statements in different formats. Ayodeji Olusina, Head, Distribution FBN, Life informed that the First Life Benefit Plan, First Life Plus benefit Plan and First Family Shields are all novel products. He said that the products are novel in the sense that their offer to the public will make it the first time a bank will give insurance policies in collaboration with an insurance company. He further explained that the collaboration, FirtsBank /FBN Life Bancassurance is the distribution or sale of Insurance products through the Bank’s channels. The need to further exploit the group synergies between FBN Life Assurance Limited and FirstBank is the stimulus in setting up a Bancassurance model that leverages the Bank’s customer base and FBN Life’s insurance offerings. The model is focused at increasing insurance penetration in the mass market segment of the population. It offers FBN Life a broad base for the sale of insurance products. The Head, Media and External relations Mr Babatunde Lasaki at the fair said customers should always expect products like these from First Bank. “The array of products is apt to reiterate our commitment to customer service. We are always ready to give the best to Nigerians” he added. FirstPay is a work-flow driven automated payment solution that enables corporate customers initiate payment instructions electronically from any Internet enabled computer to beneficiaries in any Bank in Nigeria. FirstPayLink serves as a consolidated Internet payment gateway that allows Internet payments for mer merchants using InterSwitch, eTranzact, Visa and MasterCard cards, giving you the flexibility to operate online sales. FirstCollect is an e-Collection platform that is customizable and enables corporates receive payments for goods and services through FirstBank branches nationwide as well as other alternative channels like web and POS. FirstDomestic Transfer (FDT) is a product that enables funds transfer within Nigeria by both customers and non-customers. Recipients have the option to pick up cash or cheque. FirstOnline serves as an Internet banking platform that allows you carry out transactions such as bill payments, intra- and inter-bank transfers, etc. from the comfort of your home or office. FirstBank POS terminalis an electronic device that facilitates payment for goods purchased/ services rendered through the use of an electronic card on an online real-time basis. Firstmonie is a mobile payment service that enables you send and receive money, pay bills, buy airtime and do a lot more with your mobile phone without a bank account. As a way of de-emphasising the use of cash as the only means of payment in the country, the Central Bank of Nigeria (CBN) came up with its cash-less policy, which the apex bank believes would go a long way in making payment transactions less stressful and risk-free. For instance, as part of the policy, the apex bank had stipulated a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies, adding that the new policy on cash-based transactions (withdrawals and deposits) in banks, aims at reducing (not eliminating) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions for payments for goods, services and transfers, among others. The CBN had assured that the new cash policy would drive development and modernisation of the nation’s payment system in line with its Vision 2020 goal of being amongst the top 20 economies by the year 2020. The apex bank also believes it would help reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach, as well as improve the effectiveness of monetary policy in managing inflation and driving economic growth. “In addition, the cash-less policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy,” the apex bank had argued. Interestingly, as a way of drumming up support for the new policy, the apex bank has been run-ning a set of targeted stakeholder engagement sessions as a first stage of its planned communication campaign, targeting key groups that will be most impacted by the cash policy. The apex bank had argued that by engaging stakeholders it would create awareness and provide them an opportunity to raise issues and concerns. According to it, the stakeholders so far engaged by the apex bank included markets, associations and professional bodies, with the apex bank insisting that the communication strategy to push out the policy had entered the second stage, which include mass communication campaign, leveraging on the inputs derived during the stakeholder sessions. For instance, despite the huge amount of cash being used for daily transactions at the major markets in Lagos, such as Oshodi and Idumota, there is nothing in the markets to suggest that those transacting businesses there have started imbibing the cash-less policy culture. “What do I stand to gain from the new policy?’ asked Mrs. Yusuf, a shop owner at Idumota Market. “There is no way I can adopt that policy in this business, since most of my clients are not even favourably disposed to the policy. I believe it is safer for me to continue to transact my business this way, than go the way I don’t really understand,” she added. An auto dealer in Ikeja, Martins Koleosho, believes the new policy is a disincentive to business and bank customers. “Why would anybody tell me that I have no right to issue a cheque of over N500,000 to my client, to be cashed across the counter?,” he queried. “The fact remains that the major beneficiaries of this policy are the CBN and the bank in which such transactions are done. There is always a sharing formula between these two banks. So in what way does it benefit the people, the ordinary bank customers?” he asked rhetorically. He counselled that the required basic infrastructure should be put in place before moving everybody towards the direction of a cash-less economy. “This is a society that is still battling with some basic infrastructure such as epileptic power supply and lack of good roads. How many of the Automated Teller Machines that we have now are actually working? Before its introduction, the ATM was meant to decongest the banking hall, but today both the banking halls and the entire bank premises are congested with those waiting to transact one banking business or the other. People are having issues with the ATMs installed in those banks, but the apex bank is not doing anything about this,” he argued. He believes what the apex bank ought to have done is to perfect the existing payment systems instead of introducing a new policy when it is obvious that the existing ones have been faltering. While the skepticism of Koleosho and his likes may constitute a clog in the wheel of the progress of the policy, operators of small, medium and large scale businesses are not even helping the policy.