Experts in Nigeria’s Fintech industry have said that the major challenges facing electronic payments in Nigeria is the inadequacy of infrastructure, including operational and telecommunications facilities, as well as reliable electricity supply.
They opined the need for stakeholders in the financial industry to work together and extend e-payments channels across the country as well as finding solutions to the growth of fraudulent activities in the system.
Chief Finance Officer Parthian Partners, Yinka Arewa while making presentation on the “Collaboration, Key to tackling challenges facing E-PAYMENT System in Nigeria, said many e-payment systems depend on stable power sources and robust IT infrastructure, such as laptops, mobile phones, POS terminals, and dependable internet connectivity.
He said during the period of cash scarcity earlier this year, banks faced unprecedented e-payment failures, prompting the urgent need for technological infrastructure upgrades.
He said the failure of e-payment channels on such a scale compelled customers to wait for banks’ networks to stabilize before completing their transactions while the FinTech companies, initially considered a lifeline, also encountered challenges due to increased pressure.
He pointed out that the recent events, such as the implementation of the cashless policy following the Naira redesign late last year/early this year, highlighted the challenges associated with the country’s transition to a cashless economy
He said the issue of failed transactions has persistently affected numerous businesses reliant on electronic payment systems.
He stated that the rapid growth in financial technology has broken down geographical barriers, introduced innovative approaches, and ushered in numerous advancements, but at the same time has exposed us to unprecedented risks, including cybercrime.
He pointed out that cybercrime poses severe societal and economic consequences, ranging from facilitating corruption, money laundering, and military espionage to terrorism, all of which undermine technological and socio-economic development.
Speaking further, he said Cybercrime’s impact on customers is substantial, as everyone desires the safety and security of their hard-earned money. Trust is the linchpin of finance, and no one wishes to witness their funds vanish. Security concerns stemming from electronic fraud and cyberattacks are real. The automated nature of payments without direct interaction between the payer and payee renders e-payments vulnerable and with the proliferation of digital financial activities, cyber threats are expected to rise”
But despite all these challenges, he said In 2022, Nigeria unlocked $3.2 billion in additional economic output through the development and utilization of electronic payments, particularly real-time payment services.
“Electronic payments continue to attract substantial global investments and have exhibited the highest returns and growth within the sector over the past decade.
Indeed, Nigeria has witnessed a remarkable digital transformation, with over 100 million active mobile phone users as of 2023.
“This statistic signals the advent of a fully digitized financial services sector. However, despite these advancements, Nigeria’s payment system predominantly relies on cash.”
Managing Director, Nigerian Inter Bank Settlement Systems (NIBSS), Premier Oiwoh, called for stakeholders’ partnership to extend e-payment channels across the country.
He said that such partnership will, in addition to wider coverage, help to checkmate abuses, dispense errors, instant resolution of errors as well as update technological resources in delivering first-class e- payment across the country.
Oiwoh who was represented by the Divisional Head, Enterprise Support NIBSS Bola Onigbokan, said: “Collaboration is mandatory; it is not a choice, adding that as we have gathered here doing our workshop planning how to move forward, the fraudsters are also brainstorming and strategizing on how to operate and often times, they are even ahead of us. I think that is even why we are even having this discussion today.”
He assured Nigerians that the national payment infrastructure of NIBSS, owned by banks, were committed to ensuring seamless transactions, customer protection, and the improvement in technologies driving e-payment systems.
