The Operations, Problems and Prospect of Pos Adoption in Nigeria
CHAPTER ONE
Introduction
1.1 Background to the Study
The recent cashless policy of the Central Bank of Nigeria CBN has generated mixed reactions, controversies and public debates over the citizens’ preparedness and relevance of the policy. For1 instance, public argument on the one hand is that banking services in Nigeria are faced with low penetration, financial exclusion and poor infrastructure. Notwithstanding, the CBN has made it known that there is no going back on the policy because of the enormous challenges and cost associated with the cash based system, Clearly, according to the CBN governor, the policy is aimed at reducing the cost of cash management which was estimated at N114.5 billion in 2009 and projected to reach N200 billion by 2020. Further, he argued that the policy was not to scare customers but make banking easier and more convenient as Nigerians would be encouraged to use internet mobile banking and point of sale machines to make bulk payments.
Banks in the country and the regulators seem to have taken a common front. This is understandable. Clearly, banks of the future realize that the banking of tomorrow requires more of electronic manipulations and shuffling of bits-based money and other banking transactions, instead of paper. Paper based transactions are being replaced by card payment both debit and credit card for making payment online or making purchases at supermarkets, hotels obtaining services such as education, settling debts and transfering funds on electronic-based platforms over Automated Teller Machines, the Internet, the telephone and now through point of Sales terminals. Whether a bank would be successful or not depend on the extent to which it is prepared for the full take-off of the e-payment system, its infrastructure and IT investment, its readiness to forsee and overcome nagging problems, its level of innovation and adaption or compatibility with the Nigerian business environment. Although,
Introduction
1.1 Background to the Study
The recent cashless policy of the Central Bank of Nigeria CBN has generated mixed reactions, controversies and public debates over the citizens’ preparedness and relevance of the policy. For1 instance, public argument on the one hand is that banking services in Nigeria are faced with low penetration, financial exclusion and poor infrastructure. Notwithstanding, the CBN has made it known that there is no going back on the policy because of the enormous challenges and cost associated with the cash based system, Clearly, according to the CBN governor, the policy is aimed at reducing the cost of cash management which was estimated at N114.5 billion in 2009 and projected to reach N200 billion by 2020. Further, he argued that the policy was not to scare customers but make banking easier and more convenient as Nigerians would be encouraged to use internet mobile banking and point of sale machines to make bulk payments.
Banks in the country and the regulators seem to have taken a common front. This is understandable. Clearly, banks of the future realize that the banking of tomorrow requires more of electronic manipulations and shuffling of bits-based money and other banking transactions, instead of paper. Paper based transactions are being replaced by card payment both debit and credit card for making payment online or making purchases at supermarkets, hotels obtaining services such as education, settling debts and transfering funds on electronic-based platforms over Automated Teller Machines, the Internet, the telephone and now through point of Sales terminals. Whether a bank would be successful or not depend on the extent to which it is prepared for the full take-off of the e-payment system, its infrastructure and IT investment, its readiness to forsee and overcome nagging problems, its level of innovation and adaption or compatibility with the Nigerian business environment. Although,