THE Nigeria Inter-Bank Settlement System (NIBSS), along with numerous banks, have launched mCash as an alternative payment system in Nigeria. The payment system, which is automatically available to over 28 million account holders in Nigeria, can be used with any smart or feature phone as it rides on USSD.
The Central Bank of Nigeria has been pushing electronic payments in Nigeria for years. The elaborate programme, dubbed Cash-less Nigeria, was driven massively in partnership with banks, switches, schemes and other stakeholders. The results have been fantastic as electronic payment in Nigeria is on the rise.
Despite the massive success of the Cash-less Nigeria programme, merchant payments using Point of Sales (POS) terminals have not been as successful. Payments at POS terminals have been bedeviled by a lot of issues: High cost of terminals, which has been exacerbated by the devalued Naira, poor telco data/GPRS infrastructure and overregulation of participation and fees, have made the business to be highly unprofitable.
It was no surprise that banks started pulling back. Many at times, merchants desirous of having terminals are not given because they may not have enough transactions to allow the banks breakeven.
Not deterred by these, NIBSS and some banks rallied around to design a new payment system, which would latch on to the recent success of the USSD banking in Nigeria.
Rising from the ashes of mobile money in Nigeria, another failed experiment in the quest for a cashless society, banks quickly repurposed their USSD codes to connect directly to bank accounts instead of mobile wallets. As the average Nigerian is already used to using USSD codes to load airtime or select call back tunes, there was an immediate affinity. USSD banking in Nigeria now has more users than all other channels apart from payment cards.
The mCash payment system allows account holders to dial their banks’ codes or a special general purpose code and then pay any merchant. The paying customers and merchants do not need to be with the same bank. The transactions ride on the existing NIBSS Instant Payment infrastructure. Merchants get settled instantly instead of waiting until the next day as it would be for POS transactions. Banks do not need to create additional back office processes as the payment transactions are treated like regular NIP transfer payments. Even the merchants love the new system as they would not need to pay interchange or MSC.