Like other emerging markets across Africa, the payment industry has led
the way with technological advancement in Nigeria. However, while several sectors
of the industry have been decentralized, the cards and tokens sector has stood
out considerably, with the same key players innovating consistently to progress
the sector over the years.
Initially, there were no indigenous players; but mainly two foreign card
schemes of international repute - Mastercard and Visa- had recognised the
opportunity in Nigeria’s developing payment sector and had swiftly cemented
Nigeria’s adoption of ATMs and digital payments with different variants of
their cards. Their activities in Nigeria were of course effectively guided by
the Central Bank of Nigeria (CBN) who has remained the chief regulator of the
sector.
While these card schemes delivered value in their own way, there were
obvious challenges with Nigeria’s complete dependence on international card
brands to facilitate and power local payments. Costs of production and
processing cards posed a challenge that actively affected the customer’s
experience and expense when using these cards. The culture gap was also evident
as most semi-empowered Nigerians with lower disposable cash could not relate to
or afford to use these cards. Naturally, this impacted on general adoption and
usage statistics, somewhat frustrating the attempt to reduce cash’s reign and
engineer a new way of life that was more card or code dependent, than cash
dependent.
It was therefore extremely remarkable and a thing of national pride when
an indigenous company launched their own card scheme – Verve. It is perceived
that Verve was deployed as a domestic card scheme with a broad appeal to other
African countries. The birth of Verve meant that banks could now process payments
card quicker, and at a lesser cost. It also meant that more people could access
a card scheme that was readily available and affordable for them. The card also
empowered more Nigerians-including the bottom of the pyramid- to own a card at
affordable cost.
It has been over 12 years since Verve emerged and the card scheme has
achieved several remarkable feats, further demonstrating CBN’s ability to
regulate the industry in a sustainable manner and support local advancement.
Since it is more affordable to produce and process, Verve card enjoys massive acceptance across Africa and the globe. The
other card schemes are also owning their own, delivering value to the more
elitist group, their major offerings revolving around international payments
and cross-border shopping. The collaborative competition between the major card
schemes in Nigeria has enhanced payment experience for Nigerians, and also positioned
the CBN as an agency with the ability to regulate the industry in a sustainable
manner while providing support for local advancement. However, the Verve card, hinged
on its cost effectiveness, enjoys massive acceptance across Africa whilst leveraging
strategic global partnerships.
The CBN has done a great job moderating a healthy competition amongst
the card schemes that has benefitted both the financial sector and customers over
the years. While Mastercard and Visa have continued to promise and deliver on
seamless digital payments both locally and internationally, the foremost fully
indigenous card scheme, Verve, has also consistently innovated, delivering
simple and seamless payments at home, and expanding to cater to digital and web
transactions as well. It has been observed that The Verve Card Scheme recently
activated online payments for household platforms like Facebook, Spotify,
Netflix and more. It seems like the gap is reducing, as all levels of the
socio-economic class in Nigeria now have card or cardless options catering to
their needs at every level.
The CBN’s moves in recent times have however compelled analysts to put
on their analytical caps and banter with hypotheses and scenarios, leading one
to wonder at the agency’s recent actions and policies. First, the unique
selling point for international cards like Mastercard and Visa seemed to have
been handicapped when the CBN directed against making international payments
with Naira cards beyond 20 Dollars. Some have argued that the policy seemed to
have been aimed as part of the solution to the FX volatility with respect to
the Naira with, perhaps, some unintended demystification of the offerings of
the card giants, putting them in a precarious position. Not long after, the
cashless policy was announced, startling the market, and raising several
questions. While many analysts have argued that it would eventually benefit the
man on the street and drive increased dependence in favour of the card schemes,
others have expressed concern at the timing and purpose of it all.
The latest development may have compounded the debates and analysis some
more, while seemingly complicating the situation. Partnering with the Nigeria
Inter-Bank Settlement System Plc (NIBSS), the Central Bank is set to unveil a
new card scheme, in January 2023. This singular development may have triggered
genuine concerns and questions about CBN’s actions, even if their intentions
and strategies were well thought out.
It is common knowledge that regulators are expected to be non-partisan,
with a bird’s eye view on the industries they regulate, such that they can take
objective measures to ensure sanity and progress within the industry,
prioritising the economy and ordinary citizens. With CBN and NIBSS set to
launch a domestic card scheme; there are questions about CBN’s ability to both
regulate and still play in a sector it once only regulated.
There are concerns that this move could easily dissuade innovators and
investors from pushing the envelope to deliver new possibilities for Nigeria. Such innovators would wonder if at the peak of
their efforts, when success becomes apparent, the country would make policies
that would cannibalize their efforts unduly.
Some observers have argued that if anything, the CBN, NIBBS and Nigeria
should rally round a successful indigenous card scheme like Verve to overcome
the challenges combating businesses that are fully owned and driven by
Nigerians, while encouraging independent new entrants to take a dive in the
pool and create many more viable and beneficial alternatives for Nigerians.
If NIBSS and CBN succeed with launching this card, would Nigeria’s
payment sector seem like the proverbial house divided against itself? The
future of Nigeria’s payment sector, among others, would to a significant degree
be dependent on the outcomes of the recent policies and plans of the CBN. I
hope and pray the CBN has factored in the myriad of possibilities, both positive
and otherwise.
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