Unbanked Nigerians seen flocking to payment service banks

…as CBN insists on cash limits

Payment service banks (PSBs) are expected to see increased patronage, especially in the rural areas where most of the unbanked population reside, when the new withdrawal limit policy of the Central Bank of Nigeria (CBN) comes into force.

The CBN had, in a letter to banks and other financial institutions last week, slashed the limits on cash withdrawals over the counter and via Automated Teller Machines, Point of Sale channels and cheques.

BusinessDay reported in October that Globacom launched its PSB, called MoneyMaster PSB, joining Hope PSBank, 9PSB, MTN MoMo PSB, and Airtel’s SmartCash PSB.

According to the central bank, the key objective of issuing PSB licences is to boost financial inclusion, especially in rural areas, by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other entities through high-volume low-value transactions in a secured technology-driven environment.

“There should be sensitisation on the use of USSD banking for those who can’t afford to use mobile transfer; no matter how we see it, we have to adjust to this policy,” Joseph Anazia, a financial expert, said. “Telcos can leverage more on this system, with cash gradually becoming less used, and Nigeria is gradually becoming digitalised.”

A recent report by Enhancing Financial Innovation & Access shows that up to 38 million Nigerian adults, translating to about 36 percent of the total adult population in the country, are financially excluded.

Many of these Nigerians who are financially excluded are low-income earners and low-literate individuals who reside in geographically inaccessible areas characterised by information and communications infrastructures that are weak or absent.

Tajudeen Ibrahim, director of research and strategy at ChapelHill Denham, said instead of looking at the negative impact of the decision by the CBN to limit banknote availability in Nigeria, Nigerians should rather look at the embedded opportunities. “And one of such opportunities is the fact that we can as a country improve on our mobile money services.”

He said: “The government has issued licences to a couple of telecommunications companies; now is the right time for them to walk with those licenses, and let them work particularly in the rural areas.

“If people can make calls in the rural areas, they should also be able to use their mobile phones to do mobile money transactions.”

Ibrahim said it would be challenging in the short term. “In contrast, in the medium to long term, the telcos such as MTN and Airtel will rise more to the challenge by deepening their mobile money service, particularly in rural areas.”

Joe Abah, country director of DAI, said on his Twitter page that banks would not expand to rural areas. “It is not financially profitable for them to do so. But telecom companies will. The infrastructure needed is just a phone, a POS, a table, and an umbrella.”

“Telcos indeed will make more yields from this and create a form of the market through access to online banking, apps, and USSD,” he added.

A survey by Global System for Mobile Communications (GSMA) showed that mobile phone subscribers stood at 46 percent in Sub-Saharan Africa, while smartphone adoption was at 64 percent as of 2020. This is expected to grow to 50 percent and 75 per cent respectively by 2025.

It said: “By the end of 2020, 495 million people subscribed to mobile services in Sub-Saharan Africa, representing 46 percent of the region’s population – an increase of almost 20 million from 2019.

“With more than 40 percent of the region’s population under the age of 15, young consumers owning a mobile phone for the first time will remain the primary source of growth for the foreseeable future. There will be around 120 million new subscribers by 2025, taking the total number of subscribers to 615 million (50 percent of the region’s population).”

Data from the Nigerian Communications Commission (NCC) show that the number of active mobile subscribers stood at 214 million as of October 2022.

Telephone connections per 100 people stood at 112.5 percent between January and October 2022, according to the NCC.

More Nigerians are using mobile devices to carry out transactions, thereby reducing the circulation of cash in the economy, and this can be done by using the USSD code and apps made available by these telecom operators.

Read also: Nigerian Banks compete for N2.7trn of deposits on banknotes redesigns

How to turn your phone into a bank

MTN MoMo has an agent network of over 188,000 active agents and a digitised partnership infrastructure. By dialling *671# on any network, customers can open a MoMo wallet, send money to any phone number in the country and pay their bills.

Airtel’s SmartCash expects prospective users of its services to download the app or dial *939# USSD code from their phones to carry out transactions.

9PSB allows customers to transact with their phone numbers, send money, receive money, check their balance, make deposits, cash withdrawals, and more. By dialling *990*0# from your phone, you can open a 9ra instant account or fixed-term deposits, to earn upfront interest on your savings. This is done by registering with your date of birth, National Identification Number, and state of residence.

Hope PSBank can be used to open an account for both individuals and business owners. Customers can either download the app or use the USSD by dialling *569*9#. You can open an account, check your balance, send money, buy airtime, and lots more.

Also, Glo’s MoneyMaster PSB allows customers to open by dialling *995# and then follow the prompts from a Glo line or from any other telecommunications network.

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