Retail Payment Systems

In the OIC Member Countries

to carry out pilot programmes. The full launch of mobile payments commenced by December

2011, but growth has been relatively slow.

Internet and the Retail Payments Sector

Only 7% of internet users worldwide are in Africa. 167.3 million Africans have access to the

internet compared with 254.9 million Latin Americans, half a billion Europeans and over 1

billion Asians. Internet penetration in Africa is 15.6% versus a world average of 34.3%.

However, Nigeria is Africa’s top internet using nation with 48.4 million internet users (Internet

World Stats, 2012). The electronic payments sector in Nigeria is dominated by ATMs, which as

at 2011 constituted 93% of all alternatives to cash. The major telecommunications changes

brought about by mobile services and growing internet use from 2001 and banking

consolidation of 2005-2006 have provided a strong foundation for growth of electronic

payments.

The Central Bank of Nigeria (CBN) notes that the volume and value of electronic card

transactions increased significantly from 195,525,568 and NGN1,072.9 billion in 2010 to

355,252,201 and NGN1,6714.4 billion in 2011, an increase of 81.5% and 55.8% respectively.

ATMs account for 97.8%, followed by web-payments (1%), PoS and mobile payments (0.6%)

in terms of volume. In value terms, ATMs accounted for 93.4%, followed by web (3.5%), PoS

(1.9%) and mobile (1.2%). The CBN’s policy of promoting electronic cards and channels is

driven by the objectives of reducing banking industry costs by 30%. It estimated the total

direct cost of cash management in the Nigerian banking Industry was NGN114.5billion

($715.6million) as of 2009, with cash in transit costs (24%), cash processing cost (67%) and

vault management costs (9%). The CBN projects the direct cost of cash to reach NGN192bn by

2012. The CBN identifies numerous benefits including enhanced tax revenue, increased

economic growth, increased financial inclusion, reduced robberies and cash-based fraud,

reduced operating costs for banks, increased payments system efficiency and increased

banking penetration.

Payment Service Providers

Interswitch. Interswitch provides domestic card issuing and acquiring processing services

through Verve and international services through MCW. All 21 banks In Nigeria currently

have connectivity to Interswitch, all MNOs connect to Interswitch for airtime top-up

through ATMs and PoS terminals.

See RTC Advisory Services (2013)