E-payment stakeholders see smart regulation, innovation critical to achieving PSV 2020

Electronic payment (e-payment) stakeholders have identified smart regulation and increased innovation as critical factors to achieving the objectives of the nation’s Payment System Vision 2020.
Speaking at the 2014 annual retreat of the Committee of e-Banking Industry Heads (CeBIH) held in Abuja, recently, e-payment experts, including officials of the Central Bank of Nigeria (CBN) and Nigeria Interbank Settlement System (NIBSS), emphasised the need for review of the policy regulatory environment of the country’s payment system, so as to improve on the progress recorded in the adoption of electronic payment in the country.
Making a case for smart regulation of the payment system in Nigeria, John Chaplin, a global retail payment expert, noted that though banks desire less regulation, regulation was critical to sustainable competition necessary for the growth of the payment industry.
Banks however have a right to better and smarter regulation, he said, saying “frequent rule changes are a sign of bad regulation and deter investment, industry must actively work with regulators to achieve a good outcome. Clear, consistent, even handed and risk-based regulation is the goal.”
Speaking further, he said “leaving the market to market forces will lead to higher cost, which would drive out everybody. Hence, the aim of regulation should be to drive down cost.”
In a presentation titled, “Towards smart payments regulation: Global best practice in balancing growth, profit, innovation and fairness in retail payments,” Chaplin called the attention of participants at the retreat to the outcome of a 2012/13 project, which reviewed the role of domestic approaches to card payments in global world: Input from 17 schemes. He said among other things, the study revealed a consensus among e-payment operators on the need for regulation that encouraged level playing field and promote sustainable competition.
On his part, Akeem Lawal, divisional chief executive, InterSwich, called for a review of some aspects of regulation of e-payment in Nigeria. For example, the regulation of pricing is not encouraging to investment, he said, adding that the CBN should allow flexibility in pricing of services in the industry. He said that though the CBN can regulate interchange, it should allow banks to determine incentives offered to merchants and customers.
In his opening remarks, CeBIH chairman, Tunde Kuponiyi, called for regulation that would enhance prosperity and innovation in the industry, saying “it is worthy to note that for the industry to prosper and for innovation to thrive, a sound complementary regulatory framework is very much required. Such a framework should provide a level playing field for all players to enable the customer to exercise his choices as regards choosing a particular service provider. Other important components for such a regulatory framework would also encompass customer protection issues, fraud prevention issues, security related issues and fair pricing.”
In his keynote address, Suleiman Barau, deputy governor, operations directorate, CBN, said the apex bank was ready to adopt regulation that would facilitate the achievement of the objectives of the Payment Vision 2020, and hence called on participants at the retreat for ideas that can further strengthen the nation’s payment system.
Represented by Dipo Fatokun, director, banking and payment system department, CBN, Barau disclosed that in line with global best practices, the CBN had decided to adopt a more collaborative approach to its regulation of the payment system in the country as well as promote self regulation among epayment schemes.
He said: “Our clear objective is to facilitate economic activities by providing safe and efficient mechanisms for making and receiving payments with minimum risks to the central bank, payments service providers and end users, extending the availability and usage to all sectors and geographies, banked and unbanked, and conforming to internationally accepted regulatory, technical and operational standards.
“We are not oblivious of international best practices and global standards, and we strive continuously to ensure that the Nigerian payments system is at the forefront of payments system development.
Having benchmarked against the Principles for Financial Market Infrastructure issued by the Committee on Payment and Settlement System (CPSS) of the Bank for International Settlement, we seek to bridge observable gaps through specific recommendations.
“Let me also highlight that the Central Bank of Nigeria has indicated a shift in its payments system regulatory stance. The bank through the Payments System Vision 2020 signified a more collaborative approach to overseeing the national payments system through the following recommendation within the strategy: The strengthening of scheme governance structure to reflect the significantly greater responsibility of scheme management, covering all aspects of risk, business management and operational resilience; The setting up of Scheme Management Board which has the responsibility to complete an annual self-assessment against the CPSS/IOSCO PFMI.