No Mobile Money Transfer (MMT) License Holders Yet-CBN

Author(s): 

funmi ilesanmi

The Mobile Money Transfer (MMT) industry will sit with cautious optimism this week awaiting further directions about the licensing of operators for the revolutionary mobile money services, after discovery that the Central Bank of Nigeria (CBN) is yet to license any player in the virgin industry, Nigeria CommunicationsWeek can now reveal.

In essence, no Nigerian provider has mobile payment licence as previously claimed but there are pockets of electronic banking licenses like what any other financial institutions have which covers their financial products and services.

Mobile payment license enables a service provider to provide mobile banking, payment and associated services using agent networks and using the mobile phone as a means of authentication.

The CBN also confirmed the findings as it said that it is still fine-tuning guidelines for the take off of the scheme in the country. The apex bank had in June 2009 released the mobile payment guidelines and general misconception is that one or two operators have the license and are yet to activate their services.

Abayomi Atoloye, director Banking Operations, CBN however told Nigeria CommunicationsWeek on telephone that there is no operator licensed yet for mobile money services.

He said that the apex bank will soon start issuing the licenses to operators which are expected to leverage on the ubiquity of the mobile phone and the interoperability of the technology to provide easy to use and secure mechanism for millions of people nationwide.

As he spoke, Emmanuel Okoegwale, foremost mobile money industry expert urged the CBN to clear ambiguities surrounding the nomenclature adding that “it is confusing stakeholders. There should be clear definitions for mobile money, mobile payment and mobile Banking. Without clear understanding, stakeholders may be confused and use the term interchangeably”

According to him, the regulator should also clarify the license classes and transparently address the concerns of stakeholders.

“If a particular operator got its licence before the release of the regulatory guidelines, the regulator should be able to defend the positions and why it is so. All over the world, regulators work in peculiar situations,” he added. Okoegwale said such information about license status should also be available on the CBN’s website.

Nigeria CommunicationsWeek gathered that Nigeria is at the threshold of Mobile Money Transfer and Payment, a new revolution that is potentially more profound than the arrival of mobile phones in the country but this time sweeping and exponential.

Hailed as the next big thing, mobile payment industry will change the way consumers interact with financial services and make payments and the major plank will be the mobile phone.

With only 22 million bank accounts and less than10, 000 bank branches for 140 million citizens, mobile payments will reach over 80 million mobile phone holders and millions of others that do not have access to formal financial services in urban and rural areas.

East Africa Going Cashless: Lessons for Nigeria

Author(s): 

Emmanuel Okoegwale

Last month at the Open Africa Innovation summit  in Nairobi which was hosted by Nokia and World Bank group, subject matter experts, innovators, technology providers ,policy  / regulators and other stakeholders gathered at the Safari Park Hotel  to evaluate the challenges of mobile innovation in Africa ,celebrate the  success stories and work towards replicating the same across Africa.

Despite the good country delegate representations across many African nations, Europe and Asia, all the participants agreed that indeed mobile innovation has taken root in East Africa and most especially Kenya.

 It is beyond doubt that mobile based programs and innovations are opening opportunities for cross selling opportunity for Kenya as a Nation.

Kenya is attracting tech investments, hubs, researchers and also MPESA tourist to the country on a consistent basis.

MPESA is indeed a phenomenal and worth taking a look at.

It is available everywhere and anywhere. There is even a joke that the policemen now receive their brides via mobile money in Nairobi.  
    
I visited a midsized shopping complex about eight months ago in Kenya and it had only 2 agents that were transacting MPESA but on the recent visit, the service is now available in 38 stores in same shopping complex with only 2 stores left! That is contagion effect of mobile financial services in Nairobi.

While mobile money is Kenya’s wild child, use and adoption of card is also on the rise.

 The Central Bank of Kenya data showed that the value of transactions made through plastic cards rose by 12 per cent last year, driven by rising consumer preference for cashless transactions with automated teller machine (ATM) cards accounted for transactions worth Sh577.9 billion last year, up from Sh517.3 billion between January and December 2010 while 2.5 million new cards were issued to Kenyans in 2011 to take the total in circulation to 10.1 million.
Incentive to go cashless
For customer to go with less cash, he must understand the value proposition, experience the convenience and be well educated about the services so that His attempt to go with less cash will not result to lost cash.

Merchants’ transactions may hold the key to unleashing the potentials of e-money in any economy but the merchants must see value in terms of turnaround time to get the physical cash to restock or ability to spend same e-money to stock inventory.
Transaction cycle time
The spread, use of service and ecosystem development will determine how successful e-money adoption will be in any country.

If a quick serve  restaurant  collects e-money at Point of sale but will require to wait for 2 -3 days for the amount to get to his account and withdraw cash to restock, then e-money adoption will be limited to merchants that are able to afford the 2- 3days transaction date cycle time.

These are underlying issues that were dealt with in the early days of less cash in East Africa.
Reporting customer adoption
East African mobile money providers consistently provided the primary data of customer base, frequency of use, adoption rate and other information to enable further study of the ecosystem.

While some Nigerian financial institutions and licensed mobile money providers are making strides in signing customers and improve transaction volumes in the early days of  slow moving and  low value mobile money services, almost all the providers are shy to declare  customer base and frequency of use aside Pagatech that celebrated  crossing  the 100,000 customers  some days ago.

According to The GSM Association (GSMA) 80 percent of global transactions originated from East African countries, Several factors can explain the success of mobile payment systems in  East Africa, including a legal frame supporting innovation and a powerful distribution network.
This trend can be noticed in Kenya, Tanzania, Uganda and Rwanda. Moving into ‘Less Cash’ economy can only be a function of innovation and not legislation.

Promoting less cash in Nigeria and imposing penalties at certain transaction threshold will not deter people that do not understand other options that are available which are more secured than carrying cash.

Section: 

Mobile Money

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ATM Fraud Records Significant Reduction

Automated Teller Machine (ATM) fraud which has created fear in use of e-payments products has recorded a significant 98.5 per cent reduction, thanks to chip and pin technology, Nigeria CommunicationsWeek can report.

Before now, the magnetic stripe card in operation was fraught by a lapse that makes it susceptible to compromise by fraudsters.

As part of measures to manage fraud on the e-payment landscape, the Central Bank of Nigeria (CBN) had in 2010 effected migration from the magnetic stripe-based payment tokens, to the Chip and Personal Identity Number (PIN)-compliant channels and tokens.

The CBN also instituted an industry ATM Anti-fraud Committee which was adjusted to become the e-Payment Fraud Forum, a group that ensures that anti-fraud mechanisms are kept abreast of new challenges for proactive responses.

The chip and pin card advantage gives users the rest of mind and confidence that their accounts cannot be wiped clean over night by fraudsters.

The CBN is also set to acquire a new fraud prevention system to boost the cashless policy initiative.

Chidi Umeano, head, Shared Services at the CBN said the cash-less project is on course and the initial challenges are being overcome.

He said the goal of the fraud prevention system is to provide the facility to distinguish fraudulent and legitimate transactions based on redefined checks in online payments. This will allow only legitimate transactions to be processed.

The CBN, he said believes the adoption of the system will boost the cash-less initiative by strengthening the protection against fraudulent payment activities.

Increasing fraud rates around the world has dampened the growth of electronic payment by exposing merchants to substantial losses and unnerving security-conscious customers.

Access Bank Achieves ISO 27001:2005 Certification on e-Payment

LAGOS, NIGERIA:Access Bank Plc of Nigeria has been officially presented with a certificate of compliance with new security standards and safety of electronic payment systems of its customersThe ISO 27001:2005 Certificate for information security management was presented by the British Standard Institute (BSI), a leading organisation in the field of auditing management systems and processes.

The certification gives a systematic approach to minimising the risk of un-authorised access or loss of information and ensuring the effective deployment of protective measures for securing the same.It additionally provides a framework for organisations to manage their compliance with legal and other requirements and improve performance in managing information securely. Access Bank was commended for the certification by the Central Bank of Nigeria, which urged other banks in the country to emulate the commercial bank’s efforts in securing its transactions.

“The CBN has become aware of the need to wage war against cyber crimes, hence the emphasis on certification of banks’ information security management system,” said Mrs. Tokunbo Martins, Director, Banking Supervision, Central Bank of Nigeria (CBN), during the presentation ceremony in Lagos over the weekend.

Nigeria To Dominate Global Mobile Money Transactions By 2017

A new report from Jupiter Research has said the continued increase of Nigeria’s mobile money licence issuance and e-commerce web payments will constitute 54 percent of the total value of global mobile payments by 2017.

According to a report by BusinessDay, the study predicts total number of payments transacted worldwide over mobile phones would multiply as much as five times to over $1.3 trillion, therefore putting its 54 percent estimated contribution from Nigeria at $702 billion.

In January alone, 14 mobile payment operators in Nigeria recorded a total of recorded 35,971 transactions valued at 227.92 million naira ($1.4 million). With strategic and consistent campaigns, these digits are expected to skyrocket.

Central Bank of Nigeria’s Head, Shared Services, Mr Chidi Umeano, said at the 5th West African Convergence Forum in Lagos that said the federal government-supported cashless policy was taking root, and that 18,874 Point of Sale (POS) terminals had been stationed as at March 4, 2012 from 5,300 deployed back in June 2011.

He furthered by saying about 23,000 more POS terminals have been registered.

East Africa and sub-Saharan emerging nations have initiated near field communications (NFC) support infrastructures and campaigns to create an enabling environment and encourage the participation of mobile commerce service providers.

However, national regulatory laws and widespread acceptance between mobile service operators threaten the general adoption of the mobile payment option.

Mobile money is fast becoming the world’s preferred form of trade transactions because of its compatibility to support a cash-lite economy and comparative ease of transaction at the fingertip, short-circuiting the time, stress and long queues of waiting at the bank.

Kenya’s M-Pesa is an SMS based money transfer system leading the global mobile money sector.

Dormant mobile money operators slow cashless project

The inability of some licensed mobile money operators to roll out financial services after acquiring licenses a year ago is slowing down the Central Bank of Nigeria’s (CBN) ‘Cashless Nigeria Project’ aimed at reducing the amount of physical cash circulating in the economy, and encouraging more electronic-based transactions.

In line with its cashless policy, the apex bank had licensed 16 mobile money operators to provide financial services and assist in bridging the divide between the banked and unbanked segments of the population but a large number of them are yet to find their feet in the industry.

According to market watchers who spoke with Business Day, issues revolving around access to requisite funding and technology constraints have conspired to hinder the take-off of these mobile money operators.

Out of the licensed 16 mobile money operators, BusinessDay learnt that, GTBank (in strategic partnership with MTN and Fortis), United Bank for Africa (UBA), Stanbic IBTC, Pagatech and E-transact Plc have  resumed operations.

Among those yet to  roll out financial services are M-Kudi, Monetise, Paycom, Eartholeum, Moneybox, Parkway Projects , Chams and FETS.

Analysts have expressed reservations about this worrisome situation, lamenting that it could hinder the fulfillment of the CBN’s 2020 target of  increasing the formal use of electronic transactions to 70 percent; from the current level of 36 percent of the adult population. With over 60 percent of the population having access to mobile phones, analysts argue that mobile money is a veritable tool to provide low-cost financial services, especially to the unbanked.

Despite the huge investments already channeled into the mobile money ecosystem by mobile money operators, poor awareness, according to industry analysts have slowed down penetration rate. Francis Efe, an m-payment enthusiast argues that the current situation was expected, even before they were granted licences, observing that not all licensed mobile money operators would survive.

“Some of these mobile money operators will fall by the way side due to issues revolving around access to financing, technology, poor agency and distribution networks.”, Efe said.

Although there are some mobile money licensees who are rolling out innovative financial services and building agent networks, the process is rather slow.

Analysts at FBN Capital  disclosed recently that mobile payment was still at a low level in Nigeria.

According to the Nigerian Communications Commission (NCC), the number of active telecoms lines expanded by 12.5 percent year-on-year in May to 101.8 million. The value of electronic payment, according to industry analysts at FBN Capital reached N1.67 trillion in 2001, a 56 percent increase on the previous year.

But more importantly, transactions on Automated Teller Machines (ATMs) accounted for N1.56 trillion of the total, and mobile payment was just N21 billion as against N7 billion in 2010.

In January this year, the CBN disclosed that activities had since increased within the mobile money ecosystem and operators have recorded 35,971 transactions.

Chidi Umeano, head, shared services, CBN said the value of the 35,971 transactions was N227.92 million. “Sixteen  mobile payment operators licensed in August 2011 recorded 35,971 transactions valued at N227.92m ($1.4m) in January 2012.”

Sola Bickersteth, director, One Network, a mobile money industry development platform, strongly believes that the figure is an insignificant fraction of the huge sum of money that can be generated by mobile money operators if all the teething issues in the burgeoning industry are surmounted.