The global system of payments is evolving at a remarkable pace and Nigeria is not left out of the revolution from cash, into cheques, cards, digital payments, and the era of virtual wallets, contactless payments platforms, among others. JACKLYN OKAFOR, managing director, eTOP in this interview with BusinessDay’s EBUNOLUWA LAIDPO speaks on the history and future of the payment system in Nigeria. She also talks about the edge Nigeria has over other African countries in the payment world.
What is your overview of the Nigerian payment system?
The payment system of Nigeria is very dynamic. I can say that we are very proactive, fast, and highly innovative. This is in the sense that, in the year 2000, the first e-payment company was established in Nigeria, it was called value card, which I happened to be a pioneer staff, as a fresher from the university.
I was given the opportunity, even though as a telephonist, just taking and passing calls. However, I got interested, as I saw something that was not theory, something that was not done anywhere. It had to do with high IQ and critical reasoning which I keyed into it.
Today, from that Value Card, where you have the first card issued in the industry, you can’t compare the growth we’ve seen so far in the industry. We are talking about cards, also, cardless transactions, unstructured supplementary service data (USSD), and recently there’s biometrics.
We are looking forward to using phone numbers for transactions that are ongoing right now. So I can say confidently that the payment industry is fast growing.
Therefore, it is safe to say that the future of the payment industry is definitely going to get bigger and better.
Are there any low-hanging fruits that can be adapted to better the Nigerian payment system?
Presently, I must give a very big kudos to the government, via the Central Bank of Nigeria, for coming up with policies that regulate and manage each and every one of us as players in the industry.
As you know, there will always be loopholes, especially in terms of pricing. Yes, favorable to the end-user, but not too favorable to us, going by the fact that there is a huge investment we’ve put down. Today in the world, Nigeria is the only country that deploys PoS without charging for it in terms of the merchant acquiring business.
The CBN expects that we provide the channel to drive financial inclusion. Still, on the other side of it, we have the merchant acquiring which is the payment terminal service provider (PTSP), and that is what eTOP is all about.
So there are two different angles, all of them drive transaction payment, but there are two different models of business. For example, you go to a supermarket, fuel stations, eateries, and you see terminals there. These terminals were given to them for free, and the prices have been reduced twice since the inception of the cashless initiative. When you look at this, it’s a little bit discouraging, but the more volume, the more money we get to recoup the one invested.
Also in terms of security, the government has done quite a lot, still, there is a loophole where merchants are attacked. Totally out of their hands, so if the government could help do more, it will go a long way because that issue can hinder growth.
Where would you say Nigeria is, when compared to other African countries?
Just a quick look at how we are doing compared to other African countries, we are unbeatable. In between my career, I had grown from a telephonist to becoming the country manager for Verifone. Verifone was the first PoS that was deployed in this country, owned by an American company before others like Ingenico, Nexco started coming in, and I happened to be the country manager after spending 12 years, (six years in Value Card, six years as the head of PoS Intercontinental bank) I found myself in such a very challenging role.
It was a big role in terms of handling the big business in West Africa, where I was opportune to tour most of Africa. What I saw is incomparable, some of them are just upcoming while we’ve gone from magstripe to chip and pin, Linux terminal to Android terminals. We’ve gone through all the levels involved in the payment card industry and data security standard (PCIDSS) certification.
Although in Kenya, due to the mobile money that was introduced which got frustrated in the long run, however, you can’t compare to how it’s been in Nigeria. Also, take note that the CBN is fully behind it, and you and I know that whatever the government is backing, definitely has no choice but to be rooted, having also established the central switch, controlling the processing of transactions, harmonising each and every one of us, putting in checks, among others.
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Another example is Zimbabwe. I took e-payments to Zimbabwe despite the fact that they had PoS, but there were quite a lot of things they were lagging. Out of 110 countries that use Verifone, Nigeria was the first country to request terminals with a dual SIM. This is a solution that I worked with the American company to proffer to the huge network challenge which was at an alarming rate at the time.
I will also like to mention to you that initially, there’s what we call the PC idea. It is a type of security, a global standard of security on terminals. One of the measures Nigeria took when we came up with ours, was to put what we call the Chip and PIN.
While all over the world, it was what they called the magstripe. The magstripe at the time encouraged a lot of fraudulent activities because all it needed was your signature and anyone could forge that. But we came out from day one, in Nigeria with the Chip and PIN and that’s why you have the four-digit.
There are fraudulent activities associated with payments, and as we see continuing growth in e-payment transactions, in terms of volume and value, that’s how we see a rise in cyber crimes as well. What is being done by agencies, private bodies, including your company to tackle this challenge?
I’ll answer this from the perspective of eTop as a licensed payment terminal service provider. We comply highly with the world and the global security requirements for payment transactions. We have what we call the PCI-DSS (Payment Card Industry Data Security Standard.)
Remember I told you that I’m a pioneer in the growth of e-payment in the industry starting from scratch. There are what they call certifications by Visa, they do the certification with the PCI-DSS that I just mentioned, and it goes from one point to about five.
This measure was put in place to curtail fraud on payments via cards and remember I told you it is Chip and PIN that was used in Nigeria while magstripe was prone to fraud. So for us as a company, we complied. We cannot deploy any terminal that is not PCI-DSS certified.
Also, we cannot deploy terminals that have not been certified by Nigeria Inter-Bank Settlement System (NIBSS). When I say certification, I mean that NIBSS has to see our terminals, run through our application, look at the security, make sure the transactions flow to the right processes, following the correct requirements.
The process is up to 10 stages which one must not fail at any point. If it does, the certificate will not be given. So, as an organization, we’re fully compliant with that, and so far, so good for us, we’ve not had any record of fraud. However, just like you said, there are some people whose minds are running on how to hack systems and get dirty.
In addition, I can say that the government via the CBN is highly strict on every license, which includes PTSB, payment service solution provider (PSSP), the agency bank, among others. There are requirements we must as well as inspection, I have my data room where the inspection takes place, fully guided by requirements.
If you fail those requirements, your license will definitely be truncated. On our own part, these measures are what we’ve actually put in place to ensure that we have minimum cases of fraud.
As individuals, we also have a role to play. Let’s be guided, just like how banks will always sensitize us on how we shouldn’t give out our pins, passwords, let us be vigilant. Be careful who you share these details with, if you have to release it, be guided.
What’s your outlook for the Nigerian payment industry in the next five years?
It’s going to be massive. Fintech is the future of payment and looking at what we have now, it can only get better. Especially with the fact that the government is driving the financial inclusion aspect.
This initiative has gone viral, it’s no longer a situation where people are oblivious of the future with e-payments. People feel the POS machine is more convenient to use, and the POS medium is the bank in the rural areas. There is also the ease that comes with USSD.
So in the next five years, I see a more robust industry, more infrastructures being put in place because all these things do not come cheap. And I tell people that if you don’t ‘Uber’ yourself now, in what is going on in the payments system in terms of technology, you will be ‘Kodad’ out.
We are coming into a place where phone numbers will be used to make transactions. I’ll be able to send money to you just via your phone number. We are also coming to where we begin to use our eyes to complete transactions as well, and Nigeria is fully embedded with this technology.
You’ve been speaking very highly of the Nigerian government, can we say they are doing well in the area of financial inclusion?
In terms of my profession, we wouldn’t really be where we are today if the government isn’t backing us. Today, we have licensed bodies, anybody from nowhere can not just begin to sell PoS machines. It is well managed such that without the license, you can not have access to sell them.
Although, some people can say ‘let us go and bring it in they cannot deploy it if it is not certified by NIBSS. So you must go through the certification requirements. Back to the government’s role in financial inclusion, they came up with financial inclusion, in collaboration with EFInA and all the other bodies.
Today, we see what agency banking is doing which is being driven by CBN. And the banks came together to form SANEF- the body that all the banking agencies come under, which acts as an umbrella.
How is eTop contributing to future payments in Nigeria?
eTop is 15 years in the industry. They were one of the first five licensed PTSP in the country. They have grown and contributed in terms of infrastructure channels. One of the unique things we’ve done recently is to come up with an Android application, one that can fit into any Android phone in the country today.
So what people are conversant with is one application in which you will need an OEM and you have to keep going for the certification, and you will pay for it.
We are highly innovative. eTOP is one of the best in terms of applications. Our delivery timeline is second to none. We have offices in three regions including Lagos, Port Harcourt, Abuja, and Ibadan.
What we did was decentralize the head office. You don’t have to depend on us, everybody is equipped to run their region, to ensure that business is covered. Relationships are of the essence in this business in terms of swift response to issues, timely delivery of services to our clients.
Another way we are driving the future of the payment industry is through our customization. People can come up with new ideas, and we sit down when we deliver to give you what you want. We have well-trained manpower in terms of our developers, our customer service runs 2,4/7.
