NIBSS Instant Payments (NIP) – The Game Changer

Overview of the NIBSS Instant Payments (NIP)

NIBSS Instant Payments (NIP) is an account-number based, online-real-time Inter-Bank payment solution developed in the year 2011 by NIBSS. It is the Nigerian financial industry’s preferred funds transfer platform that guarantees instant value to the beneficiary. The NIP service commenced with only two (2) commercial banks as participants. However, today, the number of participants has grown to include all commercial banks, Micro-Finance banks (MFBs), and Mobile Money Operators (MMOs).

Over the years, Nigerian banks have exposed NIP through their various channels i.e. internet banking, bank branch, Kiosks, mobile apps, Unstructured Supplementary Service Data (USSD), POS, ATM, etc. to their customers

Key Benefits of NIP to consumers and businesses

NIP offers great value to all parties in the value chain:

  1. Consumers benefit from the increased convenience
  2. Corporates enjoy payment processing efficiency, increased liquidity and reduced payment risks and
  3. Banks and Other Financial Institutions are able to build services around it to meet their ever changing customer needs, particularly digital banking offerings.

 

 

Why an instant payments proposition is important in Nigeria

The following explains some of the fundamental reasons why NIP value proposition is important within the Nigerian banking community:

  1. NIP as a platform of Trust – The prevalent atmosphere of lack of trust among parties to a trade in Nigeria has necessitated the need to adopt a reliable, trusted and efficient payment solution that guarantees instant payment finality to the beneficiary in any trade transaction. NIP has been able to fill that gap hence, its popularity even among players within the informal sector of the Nigerian economy.
  2.  NIP as the closest substitute to cash – Nigeria is predominantly a cash based economy, as a result, there is a need to develop a payment solution that is very close to cash in terms of some of its unique characteristics – immediate, readily available and universal (i.e. can be used and accepted by all). NIP fulfills all of these characteristics hence its wide use as the preferred payment solution of choice.
  3. NIP as a platform of confidence – The “Name Enquiry Service” and “Transaction Status Query” features of the NIP has helped evidenced a belief in the minds of its users that NIP transfer can never go wrong. While the Name Enquiry Service on one hand, allows a payer to confirm the account name of the beneficiary before committing a transaction, the Transaction Query Status on the other hand enables a bank to query the status of a transaction that has been done. It should be noted that before the advent of NIP, the payment solutions that existed lack both of these features.
  4. NIP as a platform for other services – In Nigeria today, NIP has become a platform that commercial banks, MMOs, OFIs, etc. can build new services on e.g. collection services, funds transfer services, recurrent debits, balance enquiry service, merchant payment service (mCash) etc. There are limitless opportunities for financial and non-financial services that can be built on NIP for it is the closest electronic form of cash payments.
  5. NIP Platform is available round the Clock – The fact that NIBSS instant payment transactions can happen in real time, 24 hours a day, 7 days a week, 365 days a year (i.e. 24/7/365) and the transferred funds will be available immediately for use by the recipient has made it a platform of choice to the average Nigerian who is dissatisfied by other payment methods that are lacking in these features.
  6. NIP promotes digital banking – NIP has become a foundational tool for digital banking in Nigeria. Banks and other payment service providers leverage the NIP platform to operate services such as Chat Banking, card-less payments, and IOT proof of concept initiatives.

 

Taking NIP across borders

With the success of NIP in Nigeria, there has been some discussion around extending NIP services beyond the Nigerian borders. First, to neighboring African countries and second, to the rest of Africa and other continents. Furthermore, the fact that some Nigerian Banks have presence in other African countries as well as other continents has given the much needed impetus to the possibility of a cross border payment solution that will ride on the NIP platform. Some attempts were made by some Nigerian banks in recent time to facilitate cross border payments between Nigeria and other African countries where they operate using a combination of their Intra-Bank funds transfer solution and the NIP platform.

Again, there are on-going discussions with International Money Transfer Operators (IMTOs) on the use of NIP platform to facilitate international remittances.

 

Upcoming Developments

NIP Picture Enquiry Service – As a way to further boost confidence level as well as enhance KYC on the NIP platform, a Picture Enquiry Service will be made available as an additional service to the current name enquiry service of the platform, particularly, for non-bank payment service providers who do not have KYC details of account holders.

NIP Central Listing – Today, to initiate an NIP transaction, the initiator (Payer) will be required to provide the account number and bank name details of the beneficiary. However, with Central Listing, all that will be required is the account number of the beneficiary.

 

 

Conclusion

Going by available statistics, the current volume of transactions on the NIBSS instant payments platform is still very low based on the number of users (account holders) currently using the platform. With NIP service being made available by Nigerian banks via the mobile USSD channel coupled with the roll-out of mCash, an industry recognized, Mobile USSD channel based merchant micropayment solution that rides on NIP, it is expected that NIP services will become available to more users (account holders). Furthermore, NIP has great potential to displace cash payments in the Nigeria’s largely cash-based economy. Consequently, the exponential growth in the volume and value of NIP transactions in a few months from now can only be better imagined.



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