Recently, the Central Bank of Nigeria (CBN) implemented various policies and introduced new products in an effort to revitalize the country’s financial sector. These policies, such as the redesign of the Naira and the implementation of cash withdrawal limits, are intended to promote a cashless society. In the past year, these policies had a significant impact on the lives of Nigerian citizens.

In another push towards a cashless society and a disruption to the Nigerian financial ecosystem, CBN launched its card payment scheme yesterday.

What is a card payment scheme?

A card payment scheme, also known as a card-based payment system, is a system widely used in Nigeria that facilitates transactions using debit and credit cards. This type of system is not considered too complex as it is a widely adopted payment method in the global financial space. Some of the well-known brands of card schemes include Visa, Mastercard, UnionPay, and American Express.

Despite the widespread use of card payment schemes, there is often no direct relationship between the scheme and consumers. This means that card schemes do not issue debit or credit cards directly to end users. Instead, they form partnerships with eligible financial institutions that issue these cards to customers and help process payments more efficiently.

In Nigeria, we have witnessed the dominance of international players such as Visa and Mastercard in the card payment space for many years, particularly as the digital revolution swept through the financial sector in the early 2000s. However, thanks to With the increasing penetration of technology, the ecosystem has evolved and has given rise to an indigenous player, Verve by Interswitch, which has prospered significantly and has expanded beyond the borders of Nigeria to other African countries.

The card payment landscape will become even more disruptive with CBN’s introduction of its national card payment scheme. This development is not unexpected, as the country has a solid foundation for advanced development. Over the years, its banking sector and payments landscape have experienced tremendous growth. For example, the annual value of card transactions in the Nigerian card and payment market was $18.2 billion in 2021.

Before now, countries like India, Turkey, China and Brazil have launched national card schemes and have made commendable progress. For example, RuPay, the credit card scheme in India backed by the National Payments Corporation of India (NPCI) was launched in 2012 to fight the monopoly of foreign payment networks like Visa and Mastercard. Since its introduction to the Indian market, RuPay has collaborated with more than 1,100 banks throughout the country to issue more than 600 million debit and credit cards. From a card market share of 15% in 2017, RuPay had 60% in 2020. The fact that this national card scheme has registered this growth in a short time, surely has a notable benefit for users and for the entire financial market of the country.

Expected impact in Nigeria

Judging by the traction that RuPay registered in a short time, the national card scheme certainly had its impact on the entire financial system of the country, and we can be optimistic that similar growth will be experienced in Nigeria.

According to Prime Minister Oiwoh, managing director of NIBSS, the national card scheme would reduce the operating costs of cards in the country for both issuers and users. Going back in time when Interswitch’s Verve was launched in the market recalls the high cost of cards fostered by the monopoly of Visa and Mastercard, the international card payment players available in the market at that time. Apart from the high cost, it was also not available. Verve’s entry into the market collapsed this dominance structure and the cards became affordable to more Nigerians, contributing to the growth of digital payments and financial inclusion in the country. Today this indigenous player has become the largest payment card brand in Nigeria with over 35 million cards issued through Africa.

According to statist, Verve was the most widely used card in 2019 and 2020, accounting for 65 and 38% of cards used for e-commerce and point-of-sale transactions in Nigeria during the reporting period. Mastercard and Visa accounted for 17 and 37 percent, and 19 and 24 percent, respectively.

CBN’s new card scheme promises a better deal. While Nigeria may not be free like the RuPay debit card, it is expected to be lower than the cost of existing payment cards. The charges will also be lower because they are expected to be charged in Naira versus the foreign currency. The low cost would undoubtedly drive adoption, and before long, the new nationally issued cards may be the most widely used in the country.

Similarly, financial institutions would be spared the trouble of foreign exchange payments to the card payment scheme as they would now be made in naira, helping the country to conserve its limited currency. According to the bank, taming the card system would further enhance data sovereignty, enabling the development of locally relevant products and services.

Although the new card payment scheme works in a similar way to Visa, Verve and Mastercard, transactions made with it are expected to be faster because it is only accepted nationwide and comes with faster processing time.

As Africa’s first central bank-driven national card scheme, it has the potential to become the largest in Africa and one of the largest in the world when delivered at scale. There are largely positive projections that the new card payment scheme in Africa’s most populous country and largest economy would herald a transformative influence on its financial sector, but only time will tell.