Making Payments Easier

As someone who has always disliked holding cash, payment channels have been an intriguing concept to me. It is why I’m probably one of the few who didn’t mind when CBN brought the latest currency policies, which drastically reduced the cash at hand.?

Many Nigerians feel that the cashless system isn’t feasible and cannot work. I’ve seen people lament over scenarios where they think this new policy won’t work.

The other day someone used his mechanic as an illustration. He asked what would happen if he went to the mechanic and his bill was 60,000 naira. And due to the limitations of this policy, he was only able to withdraw 20,000. Then, how would he pay the balance to the mechanic? Another person complained about how you couldn’t be sure that a cow dealer had a bank account or would want to accept transfers when you went to get a cow.?

Quite weird such dealers are still looking to collect such huge sums of money in cash.

There is a need to make other payment alternatives more efficient and, of course, secure so that people can get to trust them. If you don’t improve their experience, they will not always believe in it.

Security as a concern

The biggest deal breaker for many people is security. There are still people who keep their money at home, under the bed, soak aways (we know why), etc. Some of these people genuinely believe that the banks are going to steal their money.

Sadly, they are not entirely wrong. They deposit their money in the bank, and certain charges they do not understand are deducted from their funds. We also hear stories of people whose millions of Naira vanish just like that. When these people make complaints, the banks keep tossing them around. In most cases, they cannot even show proof of what went wrong. With such experiences, people are constantly discouraged about keeping their money in the bank.?

The rampant OTP case is also a major concern. So, you mean if somebody calls me and I just make a mistake and give him an OTP, all my money is gone? Why doesn’t the bank have a more fortified system?

If we really want to improve financial happiness for everyone, these two factors (security and better experience) are huge aspects to be looked into. If you want everyone to come to the banks, you need to make sure they have easy access to their funds and that their funds are secure.?

If you want to build something, remember that you’re not building for only the technology literates (well, except if you are). In this case, you should create bank apps that are easy for people at the lowest levels to use.?

Mobile Money

Financial players are beginning to put in more effort, and it is commendable. For example, the PSB license that was given to the likes of MTN presents huge opportunities. Even your grandma in the village can have a bank account as long as she has a phone number that makes calls.?

Now, all you need to do is send money to her phone number. You tell her to meet someone near her to get the cash. When she goes there, the person would probably ask for her phone number, which she gives. He may also ask for an OTP sent to the number, and he inputs it somewhere and gives her the cash.?

So, even if she might not know that the phone number identity had anything to do with it, she has been brought into the financial ecosystem and has been financially included.? This is something that goes wide. If only 30% of Nigerians had bank accounts before, this system could help bring another 40% to 50% to the pool.?

So, I see the PSB license to network operators as something huge. If Fintechs and banks can find how to properly relate with them and synchronise the financial payment system, it will be massive.?

One of the major issues that affect PSBs is that banks are not in sync with network operations. For example, I have left the country, and my number has been recycled and let’s say I use MTN. Here, MTN is aware that the number is no longer linked to me. However, the banks are not necessarily aware. Even if I decide to go and update my records in the bank, there is still a record somewhere within the bank that would tie me to that phone number.?

We’ve seen cases where someone buys a sim but gets alerts from the previous user. In this case, the new user can buy airtime for themselves from another person's account using USSD. After all, you don’t need a pin to buy airtime. It is a serious issue - banks and network providers need to find a way to be in sync.?

In Kenya for example, it’s mainly mobile money for them, and they’ve been able to cover huge grounds. We can also do it in Nigeria, and a sync between banks and network providers would be good.?

E-naira

E-naira is another thing I see as a very good initiative. It was built to be used even by non-smartphones using USSD. You can easily open up a wallet (well some say it is not easy), have your account there and make transactions. Then it boils down to adoption; how do you convince or encourage people to use it??

These are easier payment solutions that have been provided but need more encouragement for adoption. There is also the security clause. With the latest migration rate, it is also a cause for concern. When people travel and forget their number, it gets recycled in a few months. It means the new owner now has access to whatever accounts are linked to that phone number.?

Cards

For the cards route, I’d say it’s time we go Magnetics (Mags) Stripe. Here, you have a magnetic stripe that has all your information on your card - it is contactless. A merchant that has the ready needs you to just swipe the card on it, and payment occurs.

Our main problem, again, is the security issue. If I tell someone to go and do this with their card, they’d be very reluctant. There is the argument that anyone can just take your card and tap away, and your money is gone. To implement Mags Stripe, we need to introduce certain measures to see that it is secure enough before Nigerians will agree to adopt this method.?

As a security measure, you can let the person using it decide how they want to use the card, set limits without additional authentication. For example, they can decide to set a 20,000 Naira payment limit on the card daily.? If the payment is more than 20,000, they’d need a pin or OTP to further approve the transaction.

Thinking futuristically

These are some features we need to start bringing into the markets and leave them as open as possible so that those that want to adopt it can start. Over time, more will adopt after watching earlier adopters.?

Let’s take point-of-sale (POS) terminals, for instance. I’m sure when it started, some people were still sceptical. Someone might think that robbers would attack them as POS operators. It took some people trusting the process to get others to trust it as well. So, bringing these new solutions, a few people will adopt them over time, then others will follow, and gradually it will cover everywhere.?

Definitely, part of the reason for the high inflation is the fact there is so much cash in circulation. People need to do more transactions electronically than using cash. Security concerns, political concerns, corruption concerns are other reasons we need to do more cashless transactions.

Looking at previous years, there have been technological advancements in terms of security. But sadly, hackers still find a way to breach security. As technology advances, these hackers also advance. So, we as technology experts should not slack. We have to keep learning and keep improving to combat security within the financial space.?

You need to think like a hacker to beat a hacker at his game. You should have people within your organisation and space that try to act like hackers. Whatever you think hackers could do, try it from your end and see if your solution is working or can be penetrated. It’s something you have to keep doing because these hackers would keep doing it (so much GRIT). So, you must ensure you keep finding the new ways before they do.?

Although there are hackers in Nigeria, I do not think it is the main security problem. The main issue is usually people not being security aware and giving out their private information. We also have cases of employees within the financial service providers accessing people’s information and swindling them.

So, security within the financial ecosystem should be upped. For example, there should be multi-factor authorisation before someone can assess a portal containing users private information. Asides from logging in with a password, the person should also log in with something that changes over time. Their access should be stamped on the audit log. It ensures that employees of financial organisations are not found wanting; their accessibility is secured and can be easily traced to them when there is an issue.?

Making payments easier benefits not just the consumers but every single player in the financial sector. That’s why we must work together and keep finding better ways to secure our customers and let them enjoy their money.