Nigeria Inter-Bank Settlement System (NIBSS) reported that Nigerians withdrew a whopping sum of N4.7 trillion through ATMs in 2016. Why are we will still depending so much on cash despite cashless policy initiatives? You will recall that the Central Bank of Nigeria initially set policies for the cashless state in Nigeria but later amended the goal to a Cashlite one, Vanguard reports.
So the intent of the policy is to reduce the amount of cash used for our day to day transactions. In a sense, an element of success has been achieved in this regard as transactions done via the cashless channels have increased over time.
However, we have cases where due to failure of the payment acceptance touchpoints consummating transactions, customers have gone ahead to withdraw cash from the ATMs to make payment for their purchases. A school of thought has advocated that ATMs are not part of the cashless initiatives as they only lead to more cash flowing into the payment space.
One of the reasons for the reduced traction of the policy is the willpower of the regulators to push through needed incentives to enhance behavioural change. When the policy started, the CBN set cash handling charge on daily cash withdrawals that exceed N500,000 for individuals and N3,000,000 for corporate bodies. Equally, thresholds were also set for cash deposits.
The charge was later reduced due to political pressure and that removed the bite and some of the incentives to drive merchants to alternative payment methods. Another impediment is the high cost of the POS terminals for payment acceptance.
A lot of the transactions carried out are of small value and justification for these devices became a hard sell. However, the introduction of Mcash, mPOS and MasterPass will cater for these target market and would lead to greater success in our cashlite initiatives.