Adeyemi: Electronic Card Will Further Deepen Cashless Policy

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Managing Director/CEO, Intermarc Consulting, Mr. Adeyinka Adeyemi, spoke with Emma Okonji on the importance of electronic cards in achieving financial inclusion and the need for more Nigerians to embrace card technology in preparation for the nationwide cashless economy in July this year. Excerpts:
The Central Bank of Nigeria is planing to implement the cashless policy nationwide in by July this year. What is Intermarc doing to assist the apex bank achieve this goal?
Internarc Consulting is a financial consulting firm, with focus on electronic banking and electronic payment, using the electronic card technology. We promote electronic payment in Nigerian and we have been doing this for the past 14 years.
The firm has played important roles in the area of awareness creation among Nigerians living in the rural and urban areas, since 2012, when CBN began the pilot implementation of the cashless policy in Lagos and few other states.
Now that CBN wants to implement the cashless initiative across all states in July, our role in educating the public on the need to embrace electronic cards as well as other channels of electronic payment system will also increase and we are working with CBN to achieve this goal.
To what extent will electronic cards drive cashless economy and achieve financial inclusion in the country?
Electronic cards are instruments in the hands of customers, with which they could carryout financial transactions like payment of bills, money transfer, cash withdrawal and cash deposit.
Carrying electronic cards is as good as carrying cash. It allows customers to have access to their funds that are seated in the banks.
Electronic cards could be used as stored value card by loading and storing cash, or as credit card, for the payment goods and services, or as debit card that gives access to customer's bank account.
With these concepts about electronic cards, it clearly shows that they are tools for reducing cash in the economy, thereby driving cashless economy to achieve financial inclusion.
What are the economic benefits of using electronic cards?
Developed countries are ranked based on the usage and penetration of their electronic payment system. Nigeria ranks very low in international rating and card adoption will help improve Nigeria's rating.
It adds value to the economy, because it will reduce physical cash in circulation, while people still have access to their cash. It equally reduces cost of printing cash. The CBN had once told Nigerians that it costs so much to print cash, therefore, if electronic cards could reduce physical cash in circulation, it will also reduce the cost of printing cash, thereby saving the economy huge sums of money.
Two years down the line since the introduction of cashless policy, but it does appears that the adoption rate is slow. What could be responsible for this?
I strongly disagree with you that the process is still crawling, because the CBN has recorded tremendous growth with the cashless policy, especially in the states where it has already been introduced.
It is based on the success rate so far that the CBN wants to take the initiative to the rest states in the country by July this year, which is about two months from now. We have seen huge transformation from 2012 when it was first introduced as a pilot phase in Lagos, and 2014, where it has covered additional states.
The volume of financial transactions using electronic cards since 2012 when cashless economy was first introduced, has increased and other channels of electronic payment outside cards, have also increased in volume of transactions. There is also a significant jump in the volume of electronic funds transfer from 2012 to 2014.
The process may appear slow in the eyes of some Nigerians because CBN is still running the pilot scheme. By the time it goes nationwide by July 2nd this year as currently being planned, Nigerians will begin to feel the impact more.
The CBN recently commissioned Electronic Payment Providers Association of Nigeria (E-PPAN), Intermarc Consulting, and Bizy Mobile to carryout grassroots awareness campaign on cashless. What is your take on this?
Yes it is true that the CBN recently commissioned some of us to carryout grassroots awareness campaign on cashless initiative. Intermarc Consulting is doing that in 10 states, and the other two firms are also covering 10 states each, making 30 states.
The other six states including the capital territory have since been covered last year.
But it is not true that the commissioned campaign was as a result of the perceived slow rate in the adoption of cashless policy in the country.
It suffices the public to know that cashless policy is doing well in the states where it is being implemented.
CBN' motive on the awareness campaign is to sensitise communities in the states where cashless has not been introduced and the essence is to prepare the minds of the people on the benefits of going cashless and in using electronic payment systems, even before it is introduced in their states.
The policy is for everybody, including the market women and men, motorcycle riders (Okada), taxi drivers, contractors, teachers, doctors among many others. They must be aware of the initiative before it is eventually launched in their states, and that is the essence of the awareness campaign.
What we are doing at the ongoing awareness campaign is to put forward the benefits of using electronic cards to the various communities within our coverage areas, and encourage them to have electronic cards. We are also encouraging them to use their mobile phones for cash transfers.
Most Nigerians are still skeptical about insecurity surrounding the use of electronic cards. What security features have been built around cards to give customers the confidence in using them for transactions?
I will address the issue of security in four ways. Firstly, we started with the Max Stripe technology and discovered a lot of loopholes with it, that caused security breaches.
The CBN saw this and came up with a security policy that mandated all banks to migrate from the use of Max Stipe to Chip and PIN technology, which we are currently using till date.
Now the Chip and PIN technology has proven to be highly secured, and since it was introduced, the rate of financial fraud using electronic cards has greatly reduced.
So Nigerians that are still having some fears about financial theft with electronic  cards, should begin to think otherwise.
Secondly the CBN introduced the Dynamic Data Authentication (DDA) model that will replace the Static Data Authentication (SDA) that is currently been used.
The DDA is a superior technology that allows for a two way check in card authentication in order to ascertain the true card holder, and it makes the system highly secured.
The third aspect is on the security policy of PCIDSS, which is an international standard on card security, and banks are gradually becoming PCIDSS compliant.
The fourth aspect is on what the Nigerian Interbank Settlement Scheme (NIBSS) is doing on the shared services platform on anti-fraud. What NIBSS does is to share security information at the central level of every financial transaction and this helps to check incidences of fraud in the system.
How can the customer be convinced of these security measures you just listed?
Yes, these security measures that I just mentioned do exist with the card technology, but the customer does not know and does not need to know either.
What I am saying is that there are lots of security features being put in place to check financial fraud and the customer does not need to be worried because security is guaranteed with card technology.
The reality is that several security measures are being put in place to address insecurity and they are working perfectly, but the perception of the people is far from the reality, and this must change.
The truth is that CBN and NIBBS are introducing more security measures by the day around the card technology, but the customer does not know this. So I will advise customers to be rest assured of safe transactions, using the electronic cards.
Although card technology has some minor challenges, but the security measures put in place are addressing all forms of financial fraud. More Nigerians should therefore be encouraged to use electronic cards for their financial transactions.
What is Intermarc doing to create more security awareness on card users?
I earlier said Intermarc was among those commissioned by CBN to carryout grassroots campaign in creating awareness on cashless policy and we are doing that. Again we organise quarterly forum also known as stakeholders forum, where we invite people across different categories and educate them on the cashless policy and the security features built around electronic cards.. Apart from inviting them, we also take such meetings to market places and it has yielded so much results.
So much have been said about cards, Point of Sales and Automated Teller Machine (ATM) as channels of electronic payment, whereas there are lots of channels that are yet to be explored. What is being done to address this?
To be honest with you, I do not think that electronic payment systems are limited in Nigeria, even though so much prominence is given to some of the channels like electronic cards and the PoS. Mobile payment is also coming up but customers need to be educated on that.
The investment in electronic payment is massive and Nigerians should understand this and make use of the available channels, and we have quite a number of them. The issue is on how to communicate the benefits to customers.
What level of collaboration exists between the telecoms operators and financial institutions, since the telecoms operators are the ones actually driving the technology platform on which the electronic payment system rides on?
There are some levels of collaboration, even though minimal. It is true that the telecoms operators have the technology platform but the entire process must be driven by banks and other financial institutions because the CBN had made it clear that the cashless policy is bank-driven, while the telecoms operators remain at the background to provide technology services.
CBN did it this way because electronic payment is all about public funds and the telecoms operators were not trained on how best to handle public funds, even though they were agitating that they ought to be in control of electronic payment system in the country.
But be that as it may, the telecoms operators are cooperating fine with the financial institutions and we are moving forward.
The MPESA model in electronic payment system in Kenya, is seen as robust and the best in Africa and beyond. Do you see Nigeria attaining such feat with the cashless policy?
Yes Nigeria can and could even surpass the Kenya's record on electronic payment,
but what people should understand is that the Kenya market and the Nigerian market are two different markets with different ideologies.
The MPESA philosophy is built on the need for migrant workers in the city to transfer money to their families and relatives in rural communities in Kenya where the migrant workers hail from.
Then Safaricom was the major telecoms operator in Kenya and it came up with a model on how money could be transferred, using the telecoms platform, and the whole concept was widely accepted and today it has gained so much ground that people use it as reference point.
But the truth is that the Nigerian market is quite large and different from that of Kenya. So if Safaricom as a telecoms operator succeeds in Kenya, it does not mean that telecoms operators in Nigeria should begin to see the need for their involvement in driving cashless policy.
The size of migrant workers in the cities of Kenya and the size of Kenya's population, cannot be compared to the size of Nigeria, and as such, the model that worked in Kenya, may not necessarily work in Nigeria, because of Nigeria's large population and a large customer base.
How would cashless policy address the unbanked and under-banked in rural communities in Nigeria?
Two years ago, international survey reported that those that are unbanked in the rural communities in Nigeria, were up to 53 million. This figure appears too high, but if you look at the statistics of the Nigerian economy, you will find that there is a huge
perrcentage of people at the bottom of the pyramid that do not have bank accounts, and such people live on $1 per day.
A lot of them are outside the financial system of Nigeria, and no economy of the world will neglect that category of people. There is therefore the need to bring this set of people into the financial system, which is called financial inclusion and that is what the CBN is doing with its cashless policy initiative.
Intermarc has been into card exhibition for some years running. How has this helped in driving financial inclusion?
Nigeria has a large market and there is need to raise awareness on the benefit of electronic card payment to the individual as well as to the Nigerian economy.
For this reason, Intermarc, 14years ago, started the Card Expo, which addresses card technology and usage of cards for electronic payments. We organise conferences that address the knowledge part of it, as well as exhibitions that address the technology and technical know. 
At Intermarc, we are concerned about those at the bottom of the pyramid and how to give them the opportunity to be part of the financial inclusion that is being driven by the CBN.
This year's Card Expo is scheduled to take place at the new expo centre in Eko Hotel, Lagos in June 2014. The theme is: “Financial Inclusion: A Better Future for Africa Starts Here.” The event is coming at a time when the adoption of electronic payment is getting wider acceptance in most parts of Africa.
For 14 years running, what impact has the Card Expo created on the Nigerian economy?
The best way to measure the impact of Card Expo in the last 14 years, is to view the level of growth and usage of electronic cards since we started Card Expo 14 years ago.
The truth is that the penetration and usage of electronic cards are on the increase and the daily volume of transactions recorded on the use of electronic cards in Nigeria is equally huge.
This is one impact created by Card Expo in the last 14 years and there are more to it. Card Expo has attracted foreign investments to Nigeria. After exhibiting, some of the foreign firms took the decision to remain in Nigeria to do business. Again, the level of awareness among Nigerians in electronic payment system is on the increase. Many people now carry electronic cards as against physical cash.
How has government policies helped in driving financial inclusion?
The CBN has done very well in terms of policy implementation on cashless, especially in the last five years. The policy coming out of CBN today, is creating a level playing ground for every operator in the industry. I want to commend the CBN on that.
Do think the recent changes in CBN can affect the cashless policy?
Not at all because there is a structure in CBN and CBN is an institution. Changes in its administrative positions can never affect the structure that is already on ground. What the new CBN Governor will do is to build on the already existing structure and not to change it, because the structure is there, and it has been there for quite a long number of time. That is the way I see it.
Apart from hosting the annual Card Expo in Nigeria, Intermarc recently started international card awards in South Africa. What is the motive?
We hold two sessions of Card Expo annually, one in Kenya that covers the East African market, and the other in Nigeria, which covers the rest of African market.
The South Africa technology card award is different and it is held in South Africa, because the country has become a hub of technology innovation for Africa.
We decided to embark on the award because we have since discovered that all over the world, card awards are held on continent basis, but Africa as a continent does not have any card award event, yet Africans are involved in electronic card payment system.
So we at Intermarc sat down and came up with the idea to honour Africans that are into card technology. We started two years ago and it has been very successful. The essence is to encourage card technology innovation in Africa.
Innovation drives the world and we need to encourage those at the forefront of innovation in Africa with the award. We have panel of judges drawn from all parts of Africa and voting is done electronically and awards are given after voting.
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