Last week, the Central Bank of Nigeria (CBN), in collaboration with the Nigerian Interbank Settlement System (NIBSS), introduced Afrigo Pay, Nigeria’s own national card, effectively ending the payment of dollars as charges on the cards. payment in the country. .
With the national card that is meant to serve as a credit card and debit card, among other functions, Nigeria is following the example of countries like China, Turkey and Brazil that have reaped transformative benefits for their respective payment and financial systems, particularly , for the unbanked.
A card system is a central payment network that uses credit and debit cards to process payments. Its main function is to manage payment transactions, including operations and clearing.
Visa and MasterCard, two of the largest global brands, offer credit and debit cards that have become synonymous with a type of payment accepted around the world; these two big brands are known as card schemes. Both Visa and Mastercard along with Verve are the current card schemes used in Nigeria.
Card schemes have four players, the cardholder, card issuer, merchant, and acquirer, who together form an open-loop system that allows consumers to purchase items or services from merchants seamlessly by allow banks to do all the work on your behalf
In addition to these four main players in the card system, there are also intermediaries that facilitate the transaction, including the payment gateway and payment processor.
Speaking at the virtual launch of Afrigo, Central Bank of Nigeria (CBN) Governor Godwin Emefiele noted that the national national card scheme, which will be accessible to all Nigerians, will help address the financial inclusion gap in the country. and also address the local peculiarities of the country.
While foreign cards remain convenient, especially for international transactions, he explained that domestic cards are expected to better serve the unbanked market and increase competition within the payments landscape.
Emefiele stated that although the penetration of card payments in Nigeria has grown enormously over the years, “many Nigerians are still left out. Challenges that have limited the inclusion of Nigerians include the high cost of card services as a result of the currency requirements of international card schemes and the fact that existing card products do not address the local peculiarities of the Nigerian market. .
“This effort is not a search to prevent international service providers from continuing to provide services in Nigeria. Rather, its goal is to provide more choice for domestic consumers while promoting service delivery in a more innovative, profitable, and competitive manner.”
According to CBN, the national card is expected to have the ability to reduce Nigeria’s reliance on foreign-owned financial services companies.
The CBN governor noted that “at this time of currency challenges that persist globally, it is important that we have this card to ensure that all card transactions, online transactions where you are using cards will now begin to be carried out automatically. effective and immediate. on the national domestic system of Nigeria.
“Sometime in the next few weeks, I’m sure the CBN will introduce the cutoff, which will mean that all domestic transactions, all domestic transactions that are going to take place in Nigeria, will have to be done through the Nigerian national network. cards
“Foreign card charges are in dollars, we are no longer going to pay dollars for those cards for the charges on those cards. We would only pay dollars in fees for transactions that are made with our domestic card or foreign cards outside of Nigeria. NIBBS and the Central Bank of Nigeria and the Nigerian banks will be working together to see how to segregate those transactions to ensure that we only make charges or fees for international transactions that are made on these two cards or Visa or MasterCard as they are. today.”
For CBN Deputy Governor for Financial System Stability (FSS), Aisha Ahmad, who also serves as NIBSS board chair, noted that with the launch of Afrigopay, “a lot of opportunities are being created within the ecosystem, and there are more opportunities that this Afrigo card will bring.
“So, taking advantage of its position in the industry, NIBBS and with strong regulatory backing from the Central Bank of Nigeria, the Afrigo card has been introduced. I think it is important to also explain what the corporate structure is like to issue this card.
“The company -Afrigopay Financial Services- is a national Card Scheme. Duly licensed by the Central Bank of Nigeria, it is a subsidiary of NIBBS, but is built as a distinct legal entity, with its world-class management team to implement and operate the national scheme for the benefit of the industry.”
The CBN governor noted that the major bank remains “committed to a strong, efficient and secure national payment system and welcomes innovation from both domestic businesses and foreign investors.” The Nigerian market is huge and the current players have done a lot in the last twelve years to transform the ecosystem. However, there is a long way to go as millions of Nigerians still do not have payment cards to carry out transactions.
“I am convinced that the National Internal Card System will make this a reality in the coming months. We can no longer neglect the vast majority of Nigerians whose daily payment needs are micropayments. We need to capture them in national statistics to better understand their transaction dynamics and adequately target interventions in that sector of the economy.”