Mobile Money: Telcos and license palaver

The Central Bank of Nigeria (CBN) revelation recently that no mobile telecom operators in the country is a licensee of mobile money system calls for an urgent attention to avoid clash of the titans, writes REMMY NWEKE.

Preamble:

Recently the Deputy Director, Banking and Payment Systems, Central Bank of Nigeria (CBN), Mr. Musa Jimoh revealed that no mobile telecommunications operators in the country have been licensed to operate mobile money.

Reacting to the recent launch of mobile money by the trio of GTBank, Fortis Mobile Money and powered by MTN Nigeria Communications Limited and network assurance as it concerns the mobile, Mr. Jimoh said that for the best of his knowledge, there is no mobile operator in the country that has been licensed to conduct business in the mobile money space.

He noted at the event that though MTN has been very supportive to CBN and working groups at all times, but it has not been licensed, likewise any other mobile operator in the country, saying that any of the Global System for Mobile (GSM) communications to approach CBN.

He said at a seminar organized by the Committee of e-Banking Industry Heads (CeBIH) in Lagos recently, while speaking on Overview of Regulatory and policy Framework for Retail Payments Transformation in Nigeria that they have been working with the apex telecom regulator, the Nigerian Communications Commission (NCC).

CeBIH’s attempt:

Chairman of the Committee of e-Banking Industry Heads (CeBIH), Mr. Chuma Ezirim in his remarks pointed out that CeBIH was formed among other objectives to drive the adoption of electronic banking services through the right technologies, policies, standards and public awareness in Nigeria.

Additionally, he said that membership comprises of Heads of Electronic-Banking (e-Business) in the 23 banks in the country, stressing that recent academic findings based on empirical data revealed that shifting from paper-based payments to electronic ones could entail yearly savings to a country’s economy of about 1 per cent of its Gross Domestic Product (GDP).

Thus, he said, mainly explained by the realization of economies of scale in the provision of electronic payments, the overall increase in the total number of payment transactions, a greater reliance on cost-efficient service delivery channels as well as impact on the technological change in terms of lower telecommunication and processing costs.

He emphasised that countries the world over has seen the role of cash as still very strong, acting mostly as a preferred payment instrument for smaller transactions, but CeBIH believes that the recent policy by CBN to reduce the number of transactions settled with cash in the country is very laudable and should be supported by all well meaning Nigerians.

“There is a cost associated with every cash transaction. It is just a question of who pays for that cost,” he asserted, adding that the seminar was aimed at assessing and discussing the preparations for implementation of the cash-lite policy ahead of the pilot scheme, which commenced in Lagos on January 1, 2012.

“We have invited key stakeholders in the electronic industry, including Finance and IT journalists from major media organizations in Nigeria, whose roles are very critical in the realization of the Cash-lite policy objectives,” he said, expressing the gratitude of the Committee to Mr. Tunde Lemo, Deputy Governor, Operations, Central Bank of Nigeria, who has continued to play the leading role in the retail payments transformation initiatives in the country.

Although he commended the guest speakers, Mr. Niyi Ajao, General Manager, NIBSS, Ms Tope St. Matthew-Daniels, Head Shared Services, CBN and Mr. Musa Jimoh, Deputy Director, Banking and Payment Systems, CBN, Mr. Ezirim said, CBN must be appreciated for the formulation and implementation of policies and regulations affecting deployment of electronic banking in the country.

“We commend CBN for other various initiatives to reduce the volume of cash transactions in the economy such as the setting up of a National Switch, introduction of retail payments transformation policies, which amongst other benefits have reduced the cost of POS terminals by over 30 per cent and the regulation of mobile payment services,” he said.

ATM fraud reduced by 99%

Deputy Governor, Operations at the Central Bank of Nigeria (CBN), Mr. Tunde Lemo disclosed that the apex financial institution in the country has cut down the incidence of Automated Teller Machines (ATM) frauds by 99 per cent.

In a keynote address to the seminar organized by the Committee of e-Banking Industry Heads (CeBIH) in Lagos recently, on ‘Payment Systems Transformation – Key Priorities’ Lemo said this reduction was achieved by the setting up of ATM Fraud Prevention Group earlier in 2011 by CBN.

“It is also important to note that the ATM Fraud Prevention Group convened earlier this year, was successfully able to drive down ATM fraud incidences by 99 per cent,” he asserted.

Lemo also said that the inauguration of this group enabled the introduction of the more secure CHIP & PIN cards versus the magstripe cards that were formerly in use in the industry. 

The success of this group, he noted, demonstrated practically what could be achieved as an industry when working together to address issues, for the good of the system and the public at large.

CBN recognizes innovations in e-payments:

Further, he said, CBN recognizes that innovations in payments system require institutional support; hence, the issuance of relevant rules and regulations in order to provide a level playing field for all stakeholders in the retail payments industry.

Consequently, Lemo said, the CBN has commenced the review of the some guidelines including those on transactions switching, regulatory framework for mobile payments, National Central Switch Operations Rules.

Other guidelines, he listed were earlier issued comprising those of Point of Sale (POS), guidelines on Stored Value Card and Prepaid Card Issuance and the regulatory and supervisory framework for the operations of credit bureau provide requisite regulatory support.

These guidelines, according to him, were aimed at fostering consensus and cooperation amongst a broad number of payments service providers and increase public confidence in the system, among others.

The deputy governor pointed out that notwithstanding the progress made so far, the Nigerian payments system and settlements are still facing some constraints which include infrastructural challenge such as epileptic power supply, slower adaptation to new initiatives, human capacity challenge as well as high level of illiteracy especially in the rural areas.

“It is however, expected that the full implementation of the Payments System Vision (PSV) 2020 project complemented by government efforts at reforming the power sector would address these challenges,” he said.

Equally, he said its pertinent to note that most payments systems evolve based on the peculiarities of their environment and as such global best practices are being adapted to fit individual environments.

In this regard, the ‘global best practices’ would be adapted to the Nigerian environment in order to ensure that CBN create systems that would work for Nigerians and not against the Nigerian state.

“I have no doubt in my mind that Nigeria is destined to be an economic power and a force to be reckoned with in the global economic arena if we consistently do the right things at the right time,” he assured.

He submitted that CBN is committed to ensuring a virile and stable financial system, so as to achieve this objective via taking proactive policy actions in the areas of financial system stability, national payments system, currency management and price stability.

Lemo, therefore, implored stakeholders in the nation’s payment system to closely work with the banks in the interest of sustainable national development.

… Another value added service @ MTN

Speaking at the launch of of Mobile Money, a mobile payment and remittance service powered by MTN in partnership with GTBank and Fortis Mobile Money, in Lagos, the chief executive officer, MTN Nigeria, Mr. Brett Goschen, described mobile money as innovative, easy to use, convenient and very secure.

He also said that the much awaited Mobile Money service would dramatically change the face of communications and financial services in the country, in addition to providing a whole new and exciting experience to customers nationwide.

Goschen said reliable sources estimated that as many as two thirds of mobile phone users in the country do not currently access formal financial services, with majority of them living in rural communities and fringe urban areas. And for MTN, he said, Mobile Money represents another opportunity to bring additional added value services to over 40 million and growing subscriber-base.

Noting that the use of mobile money products would not only improve the quality of people’s lives, but would further encourage banking as opposed to storing one’s earnings in cash.

“Nigeria will also benefit as the impact of Mobile Money will flow into other segments of the society and have a multiplier effect on the economy,” he said, stressing that MTN is all about enriching lives and acting as a significant catalyst for Nigeria’s socio-economic growth and development.

Globally, he said, smart phones have driven an explosive growth in mobile data usage and Nigeria is no exception, even as the increasing convergence of industries such as banking, media, Information Technology (IT) and entertainment with telecoms, thus providing further opportunities to meet the needs of customers in the short and long term horizons.

Airtel’s micropayment deal

However, noteworthy is that Airtel Nigeria and fast growing micropayments company, Prepay Nation recently entered into partnership.

Through the partnership, ITRealms Online gathered that individuals living in the United States (US), Canada, and Europe would be able to transfer small currency values to Airtel Nigeria customers in the form of airtime minutes, from a diverse array of convenient retail locations.

The partnership will provide the significant and growing Nigerian expatriate community in North America and Europe—estimated at over 5 million individuals—as well as those with loved ones living and working abroad in Nigeria, with access to instant International Mobile Top Up (IMTU) service through Prepay Nation’s retail distribution network.

The service provides a vital avenue through which customers could support their Nigeria-based friends, colleagues, and loved ones, instantaneously replenishing their mobile airtime minutes from a nearby partner retailer.

Head of Marketing at Prepay Nation, Sarah Feidt,”We are proud to join forces with Airtel Nigeria. Our services bring great value to mobile customers, and Airtel Nigeria is exactly the kind of operator whose dedication to their customer base makes a natural fit.

“We’re also pleased to serve the Nigerian diaspora, which remits an estimated $20 billion annually; being able to send small amounts to their loved ones instantly in the form of airtime minutes will no doubt be extremely valuable to this supportive demographic.”

The Executive Director and chief operating officer (ED & COO) of Airtel Nigeria, Mr. said Deepak Srivastava said that the partnership was yet another example of the mobile operator’s commitment to Nigerian customers, and dedication to continual and reliable growth and improvement.

“Our customers rely on us to provide top performance and services that enhance their lives, and making IMTU available through Prepay Nation is one more way that we’re accomplishing that,” he said.

Conclusion:

The bottom-line is that the Cash-lite is here to stay and the best of practices is for the telecommunications operators and mobile money licensees as well as CBN and NCC must as matter of urgency come to a round-table to ensure that mobile money licensees operations or activities will not be interrupted in the name of the regulations, which could be mis-interpretted by most Nigerians as incapacitated by the network operators who in all ramifications would double as the mobile money carriers.

The earlier this roundtable is held, the better for the entire ICT and electronic transaction sectors of the economy.

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