Future of the Payment System in Nigeria: 2020 and Beyond

Posted on Jun 26, 2020 by Musa Itopa Jimoh, Director, Payment System Management Department, Central Bank of Nigeria


Background

The crucial role played by the payments system in any economy, whether developed or developing, represents the major foundation of the modern-day market economy. This is in view of the fact that it is the channel through which financial resources flow from one segment of the economy to the other.

Nigeria is acknowledged as a major economic force within Africa, and also an active player in the global economy. To participate actively therefore, her payments system must be credible, reliable and efficient, and successfully benchmarked against the best practices adopted by the most developed nations. This has underscored the enormous efforts put in by the Central Bank of Nigeria (CBN) to modernize the payments system which hitherto, was cash based.

These efforts culminated in some remarkable achievements in the recent past, with the introduction of a number of initiatives under the Payments System Vision 2020 (PSV2020) as listed below, amongst others:

  1. Implementation of the Bank Verification Number (BVN) Scheme to address issues associated with the absence of a unique identifier of bank customers across the industry.
  2. Issuance of Guidelines on International Money Transfer services in Nigeria.
  3. Issuance of Guidelines for Card Issuance and Usage in Nigeria.
  4. Enforcement of Payment Card Industry Data and Security Standards (PCI DSS) for banks and payment system service providers.
  5. Implementation of Cheque Truncation and reduction of clearing cycle to T+1 from T+2.
  6. Issuance of Guidelines for the Regulation of Agent Banking in Nigeria.
  7. Establishment of Nigeria electronic Fraud Forum (NeFF).
  8. Implementation of the National Central Switch.
  9. Implementation of Mobile Money.
  10. Deployment of the Real Time Gross Settlement (RTGS) System.
  11. The Cash-less Policy.
  12. Issuance of Guidelines on Unstructured Supplementary Service Data (USSD) Banking, etc.

In retrospect, the past 14 years, since the PSV2020 was originally birthed in 2007, have been momentous for the payments system in Nigeria. Landmarks abound which have transformed the payments space, opened it up for investment and drove adoption of electronic payments in the country.

Largely driven by the national payments system strategy, the Nigerian payments system gained efficiency and safety through key infrastructure and institutional improvements. These include....Read more in the CBPN Members' Library with your annual subscription.

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Modernisation, Infrastructure, Financial Inclusion, Mobile Payments, Open Banking, Fintech, Sandboxes, Cybersecurity