• Monday, July 22, 2024
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Nigeria’s Inter-bank Payment System – An Elephant In The Room

ATM

The Eid El Fitri was a two-day relaxation period for Nigerians, and it began on a good note with a positive high. Residents of Badore in Ajah trouped out in their numbers to queue at the Automated Teller Machines for one or two cash transactions. The euphoria was still on top gear despite the long queue, until a man broke into curses at his financial service provider.

Apparently, the man had been unable to make cash transfer from his mobile phone as according to him, he kept getting error messages; he decided to walk all the way to the ATM only to be faced with same problem. I later learn that the irate man was not the only one affected by the predicament, so many other persons had one or two vulgar words for the banks that supposedly failed them in their time of need.

The above ineffectiveness that marred the holiday of June 4th and 5th, 2019, could have been forgiven and swept under carpet as have been the case since the advent of the system, but for a life to be affected is simply the height of it. As I later learnt on Twitter, a young lady, Abiola Razak who runs a sickle cell foundation had taken to her handle @Abby_Razak to lament her inability to do a seamless cash transfer being payment for the medical bills of a sick little boy from her foundation.

Abiola’s anger and that of the aforementioned people was ignorantly directed her bank and the other banks whose customers experienced hitches during transaction, when it should be addressed to the Nigeria Inter-Bank Settlement System (NIBSS) whose incompetence subjected Nigerians to such difficulty.

Licensed banks including the Central Bank of Nigeria (CBN) came together in 1993 to set up NIBSS Plc. They officially kicked off in 1994 to provide a single settlement window for the sole aim of ensuring that at the end of day, banks can balance each other having deciphered which bank’s customer was paid what amount of money.

Ordinarily by their name, the only job the company should be doing is settlement. But by taking up jobs as aggregators on transactions (competing with banks and fintech companies) and as providers of payment gateways, all of which are outside their primary job description, the company started to botch.

Over 30,000 industry transactions have reportedly failed on a typical “bad day”, with the accounts of banks customers debited, leaving the financial institutions at the receiving end of customers anger.

In the same vein, the 2018 Sallah celebration received similar inundation of dispense and transfer error and non-reversal of failed transactions at the Point Of Sale (POS) terminal and ATM, rocked the system leaving banks to take the fall, as usual.

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In fact, the country’s inter-bank payment system that NIBSS boasted of having world-class infrastructures to handle, has been suffering a crisis of failure in the past couple of years. Perhaps banks got tired of taking the heat from dissatisfied customers and chose to point customers in the right place of who gets the blame for the incessant humiliating interference in the country’s electronic payment.

When the spokesperson of NIBSS, Lilian Phido addressed the 2018 flaws, she attributed it to banks and customers, with NIBSS getting the less blame in her statement, “If the NIBSS platform is down, then the platform will not work in all the banks, not just one bank. This is very rare because it means the platform will not work in any of the banks.”

Just a few months before the Eid el Fitri this year, people had started to complain bitterly about the usual failure and albeit Phido pinned it to ‘industry system glitch’ as reported in a national daily of 18th March 2019, the truth remains that contrary to what is stated on their website, NIBSS lag heavily in electronic fund transfer, automated direct credits and automated direct debits.

A significant point to note here is that despite the frequent mess, NIBSS yet remains behind the scene protected from the wrath of customers who do not understand the process or who is truly responsible. By actively playing the ‘saviour of the world’ card through the words enshrined in their mission statement despite being ‘Jack of all trades and master of none’, the system of checks and balances has thus begun to self-destruct: the apex bank (who brought NIBSS on board) has bound the company hand and foot with its irrational and petty “oversight.”

No doubt, NIBSS has done well in the area of settlement such that tailbacks previously experienced with the checks and balancing activities between banks have reduced to its barest. However, if banks had not saddled the company with tasks outside their strength, maybe there wouldn’t be continuous ripples of alarm from dissatisfied customers.

Ipso facto, it has become expedient for banks to go back to the drawing board to see how another agency can be set up to solely man the inter-payment system so that NIBSS can focus on the inter-bank settlement that it was set up to do in the first place, otherwise, we might as well brace ourselves for the regression and archaic life of queuing in banks even to check account balance.

Echezona Onuigbo

Onuigbo is a Lagos-based Social Worker