• Monday, June 24, 2024
businessday logo

BusinessDay

COVID-19: Fast -track cashless policy

cashless policy

The COVID-19 pandemic has dramatically changed the world of banking and payments. For us in Nigeria, it provided an opportunity to realise the importance of the e-payment system. With the observed lapses during and after the lock-down period, there is the urgent need for the government to expedite action on the implementation of the existing cashless policy to meet growing customers’ needs.

In February this year, the World Health Organisation (WHO) advised people to wash or sanitise their hands after handling physical money. And service providers world over became more emphatic in their demand for cashless transactions to ensure the health and safety of both customers and employees.

COVID-19 came with a change in people’s banking habits. Around the world, bank customers now prefer to do business from the comfort of their homes and offices than banking halls. But in Nigeria, the story is not entirely the same. Huge crowds still surge around banks’ premises. What was witnessed in June when the federal government temporarily lifted the lock-down was a pointer to the fact that the cashless policy is yet to be embraced by millions of Nigerians.

When the Central Bank of Nigeria introduced the cashless policy in December 2011, it was expected that the impact would lead to the modernisation of Nigerian payment system, reduction in the cost of banking services as well as reduction in high security and safety risks as well as curb bank frauds and foster transparency. But the card system technology, especially the Automated Teller Machine (ATM) remains a nightmare with long queues and faulty operations. In recent times, there have been an upsurge in armed robbery attacks in banks. They were attracted by the presence of huge cash in banking halls. Internet banking frauds, epileptic power supply across the country and faulty technology compound customers’ woes. On a daily basis, more and more customers throng the banks premises to resolve one problem or the other. This should not be so.

With growing enthusiasm towards cashless transactions, Nigeria should not be left out of the global movement. In the United Kingdom for instance, by April this year, consumer research found that only one in 10 percent of UK residents still wanted to pay in cash. The same scenario was witnessed in Switzerland which fell by nearly 50 percent between mid-March and mid-April, while more than 11,000 vendors joined a cashless payments system.

Other countries including Canada, Greece, Ireland, Malta, Poland, and Turkey, Mastercard and Visa actively worked with the governments to provide a touch-free experience to customers and make it easier for merchants to accept cashless payments. A cultural shift was noticed in cash-loving Germany as well.

For the first time ever, both the country’s biggest retailers and small businesses – who used to accept only banknotes and coins – joined the war on cash and actively began to promote the use of cashless payments. Overall, 57 percent Germans use cashless payment methods now more than they did before the pandemic. Japan, which is one of the most cash-based economies in the advanced world, is also contemplating a federal growth strategy to promote a cashless society culture as a response to the needs of a post-COVID era.

In Nigeria, restrictive government regulatory policies limit investment in several sectors of the economy. The CBN’s desire to have 80 percent of adults use mobile money by the end of this year is not feasible. But it can do other things such as license more mobile money agents, strengthen existing card systems, and improve online banking security, citizen awareness and sensitisation on the benefits of e-payments.

With more people staying home, Nigeria and indeed, global online payment platforms would continue to witness increase in payment volumes. Therefore, there is no other time than now for an accelerated move to a new cashless paradigm.