Point of Sale (PoS) machines deployment has increased in recent months to serve new entrants into the digital banking space. Many cardholders, especially at the grassroots, previously cautious about digital banking and safety of their funds have embraced the scheme as COVID-19 pandemic reduced cash demand and usage but there are challenges. COLLINS NWEZE writes that only 167,000 out of the 307,000 PoS machines deployed nationwide are active as cardholders tackle banks and regulators on rising charges for using the device. Banking is getting more interesting with discoveries made almost on daily basis. Digital banking is the new route that financial service providers and regulators are traveling to achieve better results, increase transaction speed and security.

Today’s reality demands that real-time payments and banking capabilities should be available whenever and wherever they are needed by customers.

For Nigeria, the road to seamless digital banking and improved access to financial services is long and challenging. Improving financial inclusion, access to credit and getting transactions done at the lowest possible cost are challenges banks and other financial institutions should address.

Still, banks and other financial institutions with eyes on the future are taking taking advantage of digital banking that is defining the sector’s successes and reach.

Bank customers are also not left behind, as majority are now thinking and acting digital. There has been rise in Point of Sale (PoS), Automated Teller Machine (ATM), mobile and internet banking activation and usage across different segments of the economy, including among the unbanked at the base of the society but there are still challenges facing the sector.

Nigeria Interbank Settlement (NIBSS) data showed there are about 307,000 Point of Sale (Pos) machines in Nigeria, 30,000 Automated Teller Machines, and over 6,000 bank branches. However, majority of the PoS machines, which are fast being accepted by cardholders are not active. Only 167,000 of the PoS are active and majority malfunction at the point of trial. Many merchants have continued to collect legal fees from cardholders who want to use their cards on PoS.

Many customers have shared their frustrations with the platforms. Michael Nwadike, a Lagos-based entrepreneur said he stopped using PoS after the merchants constantly asked him to pay N300 before for using the device. “I have decided to either make transfers or pay with cash for goods and services because of charges that come with using PoS. I was told by one merchant to add N300 to the cost of goods I bought to cover bank charges. It was not a good experience for me,” he said.

Many bank customers have shunned PoS transactions due to charges and regular failure by the device. For instance, NIBSS data showed that the volume of electronic payment transactions through PoS terminals dropped by 4.83 billion in one month as merchants demand for N50 fee for using the device leading transactions to dip from 46.13 billion deals in December 2019 to 41.3 billion in January. The PoS transaction drop in cash value is N60 billion in January,

It was learnt that collection of the illegal N50 stamp duty charge by merchants – petrol stations, supermarkets and other business owners that deploy PoS machines for payment – has continued against the Central Bank of Nigeria’s (CBN’s) order that payment by customers should be stopped.

Although the CBN directed that the charge should be borne by merchants, not PoS users, there has not been any enforcement of the order and some merchants secretly add the fee to the cost of goods or outrightly refused to use the device where customers reject the charge.

The President of the Bank Customers Association of Nigeria, Uju Ogubunka, condemned the continuous collection, in spite of the CBN’s directive that it should stop. He said: “I expect the CBN to move beyond its directive that bank customers reject the fee and fight for customers. Another option is for the customers to carry cash and avoid the fee where the risks are minimal.”

The CBN Director, Payment System Management Department, Musa Jimoh had urged customers to reject the N50 PoS fee.

He said the stamp duty is a fee regulated by an Act, adding that the stamp duty as it is today has been misinterpreted.

Jimoh said: “Our circular that talks about merchants paying stamp duty according to the law does not say that the stamp duty should be paid by the consumer. That’s actually a misrepresentation of the CBN’s directive.

The directive on the Unbundling of Merchant Settlement Amounts was contained in the CBN circular to banks, processors and switches, titled: “Review of process for merchants’ collections on electronic transactions”.

The policy stipulates that stamp duty payments on individual transactions that occur on PoS, rather than previous plans where charges occurred on aggregate transactions.

Also speaking, Chief Information Security Officer at FirstBank, Harrison Nnaji, said there are two broad components in the financial services sector- the brick and mortar- over the counter transactions and digital transactions. He said that over the last decade, there have been migration to the digital platforms.

“You will not be surprised, that today, there are still some people that do not have payment cards because of fear. You have a situation where customers actually in the real sense do not need security, they need confidence in the digital products that banks offer,” he said.

He said that banks that have not abated a fraudulent transaction, are not supposed to be accountable for any loss due to e-fraud but added that financial service providers are expected to make sure that the products they put up are secured enough.

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First Published on The Nation