review of evolution of payments in nigeria between 2000 & 2019 · 2019. 12. 19. · no of atms...
TRANSCRIPT
Review of Evolution of Payments in Nigeria between 2000 & 2019
Background
Evolution of Payments in Nigeria
Payments: Journey so far
Regulatory Journey
Key Industry Metrics
Volume Trend of Electronic Payment Transactions
Current Status of Payments
Financial Inclusion Journey
Forces Driving Digital Payment
Digital Payments …..Today
Digital Payments …..Tomorrow
Table of Content
• More and more banked customers are migrating from the traditional banking platforms like cheques, over-the-counter (in-branch)transactions etc. to the digital platforms like USSD, mobile banking and web.
•
• Between 2000 and 2018 digital payments have grown by about 400%
• Digital payments have also grown with a CAGR of 30% while cheque payments have declined by a CAGR of 26% between 2000and 2018
• In Q1 2019 , over N23trn worth of payment transactions were generated from about 500m transactions (about three times theNigerian 2019 expenditure budget)
• Financial inclusion growth has been slow up till 2018 with major policy thrust from the CBN
Background
Evolution of Payments in Nigeria
• Value Card proliferation• Introduction of mobile telephone
• Commencement of Universal Banking
• Mastercard started operation through CTL (Cards Technology Limited)
• Interswitch started operation
• Interswitch, began ATM operations with 5 ATMs from United Bank for Africa (UBA) and First Bank of Nigeria (FBN).
• Commencement of e-Cash
Commencement of Internet Banking
Commencement of Naira Credit Card
2000 2002
2004
2006
2007
Evolution of Payments in Nigeria……\contd
2009 2010
2011
2012
2013
Verve Cards commence operation
• Introduction of NUBAN• Commencement of e-commerce
(online shopping) in Nigeria
Commencement of NIBSS Instant Payment ( NIP)
Commencement of Mobile Money• Licensing of Paga,
Teasymobile, Eartholeum and other Banks
• Commencement of Interoperable POS
• Introduction of cashless policy
Payment through USSD started
Evolution of Payments in Nigeria……\contd
2014
2015
2016
2017
• Commencement of BVN• Outbound cross-border remittance
Introduction of Treasury Single Account (TSA)
Fintech penetration • Flutterwave• Paystack e.t.c.
Digital Lending commenced
2013
Payment through USSD started
2014
• Commencement of BVN
• Outbound cross-border remittance
2015
Introduction of Treasury Single
Account (TSA)
2016
Fintech penetration
• Flutterwave• Paystack e.t.c.
2017
Digital Lending commenced
Evolution of Payments in Nigeria Contd.
The chart above which shows the annual trend of electronic payments from 2012 to 2019 (H1) by NIBSS reveals Compounded Annual
Growth Rate (CAGR) of 120% i.e. transaction volume doubles yearly. This is a strong indication of the rapid growth of digital payments
with great potentials to do more as the financial inclusion rate increases.
SOURCE: NIBBS
Payments: Journey So Far
< 1999
1994 Establishment of Nigerian Interbank
settlement System
2000-2003
2002 Full implementation and live operation
of Nigeria
Automated Clearing
System
(NACS)
2004-2005
2004 New settlement framework for
cheque clearing.
2002 Reduction of clearing cycle to
T+3 (local) and T+5
(upcountry)
2003 Definition of guidelines for e-
banking
2006-2008
2006 Implementation of RTGS System
Temenos T24
2006 Establishment of National Central
Switch (NCS)
2006 Cheque standard and cheque
Printers
Accreditation
2007 Payments System Vision 2020 (PSV
2020)
2007 Harmonization of clearing
cycles(upcountry
and local) at T+2.
Regulatory Journey
2009-2010
2009 Issuance of Mobile Payment
Regulatory
Framework
2011-2012 2013 2014
2014 Issuance of revised Guidelines for card
issuance and
usage in Nigeria
2014 Abolished fees on cash deposit above
the Cash-less
Policy threshold
2014 Implementation of Bank Verification
Number (BVN)
Scheme
2014 Guidelines on International Money
Transfer services in
Nigeria.
2009 Guidelines on Transaction switching
2009 Guidelines on Stored Value/ Prepaid Cards
2009 Establishment of Direct Debit Rules
2010 Directive enforcing a cheque cap of N10
million
2010 Migration to EMV Cards
2010 Guidelines on ATM Operations
2010 Nigeria Uniform Bank Account Number
(NUBAN)
2011 Issuance of Cash-less policy circular
2011 Guidelines for card issuance and usage
in Nigeria
2011 License of 6 PTSPs for deployment and
maintenance of POS
2012 Introduction of charges on cash
withdrawal/deposit
charges above the
cash-less policy
threshold (Lagos)
2012 Implementation of cheque truncation in
Lagos
2012 Reduction of clearing cycle from T+2 to T+1
in Lagos
2013 Nationwide Implementation of
Cheque truncation
2013 Reduction of clearing cycle to T+1 from
T+2
2013 N150,000 limit on encashment of 3rd
party cheques
2013 Licensed 10 additional PTSPs
2013 Compliance monitoring with
Payment Card
Industry Data and
Security Standards
(PCIDSS)
2013 Issuance of Guidelines for the
regulation of Agent
Banking in Nigeria
2013 Payment System Vision 2020
Release 2
Regulatory Journey…../contd.
2015
2015 Regulatory Framework for
Mobile Money
Services in Nigeria
2016-2017
2015 Guidelines on Mobile Money Services in
Nigeria
2015 Guidelines on International Mobile
Money Remittances
in Nigeria
2016 Guidelines for the operation of TSA by
State Governments
2016 Guidelines on Operations of
Electronic Payment
Channels in Nigeria
2016 Guidelines on Transaction Switching
in Nigeria
2018 2019
2019 Regulation on Electronic
Payments and
Collections for
Public and Private
Sectors of the Economy
2019 Regulation for the Operation of
Indirect Participants
in the Payment
System
2018 Guidelines for Regulation of
Payment Service
Banks
2018 Regulation for Bills Payment in Nigeria
2018 Circular on the Regulatory
Framework for
use of USSD in
the Nigerian
Financial Service System
2018 Regulation of instant
(Interbank)
Electronic
Funds Transfer
Services in Nigeria
2018 Regulation for Direct Debit Scheme in
Nigeria (Revised)
Regulatory Journey…../contd.
2000 2010 2019
No of Banks 64 commercial Banks24 merchant Banks
24 23 commercial Banks2 non-interest Bank, 5
merchant Banks, 3 PSBs
Bank Accounts 12,989,993 43,209,198 124,116,098
Debit Card issued 0 20,910,344 92,894,384
No of ATMs Live 0 10,003 17,808
No of POS Deployed 0 11,455 287,759
Cheque processed 2,893,979 10,097,340 8,401,947
Interbank Transfers0 26,088,634 803,149,223
Mobile Payment0 0 217,841,265
Key Industry Metrics
Volume Trend of Electronic Payment Transactions
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
1,800,000,000
2,000,000,000
2012 2013 2014 2015 2016 2017 2018
Volume Trend of Electronic Payment Transactions
Cheques ATM POS NIP
Cheque transactions thinning out
0M
250M
200M
150M
100M
50M
VO
LU
ME
CHANNEL
Mobile USSD Internet
Banking
TPP ATM Other
ChannelsVendor
Mench
POS
80% of all instant payments, over the stated period, occurred using a Mobile Phone (and or a Tablet).
2019 (Jan –Jun)
Current Status of Payments
(43.1%)
(36.9%)
(8.1%)(5.9%)
(4.9%)(0.7%)
(0.3%) (0.1%) (0.2%)
20162001
2018
2019
Mobile
MoneyPolicy
Ubiquity
of USSD payment
Commence
ment of SANEF
CBN Revised
regulation on licensing of PSBs
for mobile money
Interoperability
of Mobile wallet/ Banks and
Micro Loan/ Micro
investment and Savings
Aggressive
payout of social intervention
funds2020 and Beyond
Continuous Improvement
Licensing
of Super Agents
Licensing
of PSBs
Licensing
of Mobile money
operators
Toda
y
Social
Intervention funds
payment
Popularity
of Agency Banking
Financial Inclusion Journey
Physical distribution is no longer an advantage New Narrative
• Failed attempts to challenge the incumbents
• Tough to disrupt banks
The rise of the Millenials and the Digital Natives
• Significant demographic shift and impact on positioning
The proliferation of Mobile• Building a strong case for personalization and
customization
The Force called Data• Glabally available, transparent and accessible
Each of the highlighted forces come with mineable opportunities
Soucrce: Interswitch
Forces Driving Digital Payment
Digital Payments …..Today
Source: CBSINSIGHTS
Thank you
B y 2 0 3 0 c y b e r s e c u r i t y w i l l b e
b u i l t a r o u n d e n t e r p r i s e - w i d e
p r e d i c t i v e a n a l y t i c s s e c u r i t y v u l n e r a b i l i t y a n d t h r e a t
r e c o g n i t i o n , a l l p o w e r e d b y A I .
AI driven cyber security
2 0 3 0
A h y p e r c o n n e c t e d
w o r l d w i l l b e t h e n o r m .
I n t e r a c t i n g w i t h s e r v i c e p r o v i d e r s
t h r o u g h w e a r a b l e d e v i c e s .
Connected everything
D a t a , m a c h i n e l e a r n i n g a n d A I
w i l l e n a b l e b u s i n e s s e s t o
s w i t c h f r o m b e i n g j u s t a ‘ f i n a n c i a l s e r v i c e ’ t o o l t o a
m o r e p r o a c t i v e ‘ e n a b l e r o f n e e d s ’ .
Engagement as a service
B a n k s o f t h e f u t u r e w i l l h a v e t o
r e c o n s i d e r t h e i r p o s i t i o n a s j u s t
a f i n a n c i a l s e r v i c e p r o v i d e r .
Distributed Trust
R e w a r d s ,
p a r t n e r s h i p s a n d
l o y a l t y p o i n t s w i l l b e c o m e t h e k e y
d i f f e r e n t i a t o r b e t w e e n p a y m e n t
p r o d u c t s a n d
i n t e g r a t e d r e w a r d s .
Payments
T h e r i s e o f d i g i t a l c u r r e n c i e s
t h a t w i l l b e i s s u e d b y c e n t r a l
b a n k s a n d c o r p o r a t e p l a y e r s w i l l f u r t h e r a c c e l e r a t e t h e
t r a n s f o r m a t i o n o f p r o d u c t s a n d s e r v i c e s .
Digital currencies
Digital Payment …..Tomorrow