E-Payment Space in Nigeria [Emerging Trends: PART 1]

Recent edicts by the Central Bank of Nigeria; has positioned Nigeria to embrace E-payment as a payment alternative in place of cash. Coined the "cashless" initiative; pundits and other observers later convinced the apex body to re-christen it to "cash-lite" to more adequately reflect the true nature of  E-payment systems as systems to enhance payments and purchases while reducing cash handling.

There is still a need to sensitise the populace on the many benefits and at the same time set-up the required frameworks and infrastructure to handle seamlessly payments. Fears and slow adoption are normally as a result of dis-information or misunderstanding of the overall objectives.

However the rate of adoption is still largely stalled by the infrastructure limitations and the requirement of a cheaper and more efficient means to implement such systems without incurring un-necessary costs.

Hence the positioning of mobile payments as the best possible channel and avenue to facilitate E-payment in Nigeria. By sheer statistics; mobile phones are more prevalent than payment cards. There are an estimated seventy million active mobile lines - it is thus perceived as the easiest mechanism to entry and equally cheaper.

Recent collaborations and partnership based on the frameworks promulgated by CBN have specified three models for the implementation of mobile payment systems.

• Bank driven model
• Telecom operator driven
• Third party driven

Each of these models has potential advantages and disadvantages - telecom driven models would favour the unbanked populace but would need to create collection or payment points which handle cash based transactions. The bank driven would favour banked clients but would need means to break away from bank tailored solutions that would mainly favour ONLY banked customers and this would largely be within the same bank and would be largely restricted to the number of bank branches or the branch strength. The third party driven model depends on independent solution providers who can create strategic partnerships among the various stakeholders.

However today, there are various solutions and business concerns that have been licensed by the Central Bank of Nigeria (part of the requirements for operating in the mobile payment space to keep it regulated) and each goes about its solution using any of the above listed models.

The major model that has not been fully exploited is a collaboration between telecom operators and payment processors - the idea is that a payment processor has connections to many/multiple banks. The telecom operators also have both banked and unbanked users distributed in various geographical areas. hence this provides the best value proposition among the stakeholders.

There are also the direct and immediate advantages such as individual to individual payments; individual to business payments and other variations. These can facilitate direct payments without the physical medium of money. By relying on mobile phones as the payment medium there are limited costs restricted to infrastructure already available and in use; it can provide additional revenue for telecom operators and payment processors or third parties involved in the process, commissions can be earned by agents and can thus create employment opportunities.

Additional value added services can equally be built into the mobile payment structure.