Mr. Godwin Emefiele, Governor of Central Bank of Nigeria

ATMs dispense N30trn in Nigeria 6 years despite transaction hitches ─Report

*Nigerians groan over failing ePayment channels as 70,000 ATMs shortfall slows operations

*ATM dispensing error in Nigeria is highest in the world ─Interswitch Divisional CEO

*CBN should allow telecom firms to lead in building the infrastructure to ensure hitch-free e-payment services, says ATCON President

Isola Moses | ConsumerConnect

As more business meetings and transactions migrate to online platforms as fallout of the outbreak of the novel Coronavirus disease (COVID-19) in the country, the rate of transaction failures is reported to have increased in recent times.

The e-payment services, especially Automated Teller Machines (ATMs) and Point of Sales (PoS) terminals, get worse during festive periods, as more withdrawals and payments for shopping take place during the period, says report.

The Guardian investigation revealed that three in every 10 transactions failed during the last Eid-El Kabir celebration, as failed PoS transactions were put at 23 percent, according to the live transaction updates from the Nigeria Inter-Bank Settlement System (NIBSS).

The updates, for instance, showed that about 309,016 attempts to make payments on PoS terminals were not successful.

According to analysts, this was a very significant fraction of the 1.349 million transactions as of 3.16pm of the first day of the celebration.

The data indicated that the issuer banks contributed the most to failure of transactions as 68,697 of the failed attempts were attributed to errors on their platforms.

This was closely followed by errors emanating from the customers, which accounted for 37,034 of failed payments.

Akeem Lawal, Divisional Chief Executive Officer at Interswitch, who confirmed the ATM dispensing challenge, said dispensing error is highest in Nigeria than any other part of the world.

Lawal, who revealed this at the Fintech 1000+ webinar, said this was because of the type of currencies that are in the ATMs, “Abroad, ATMs dispense new mints.”

Data from NIBSS showed that Nigerians moved about N30trillion in ATM transactions between 2014 and 2019, with 2018 and 2019 each recording N6trillion worth of transactions.

The volume of ATM transactions with the six-year period stood at about 4 billion; meaning that Nigerians used the ATMs four billion times in six years.

The increasing rate of transaction failures, through electronic payment (ePayment) channels, also includes electronic money transfers, and unstructured supplementary service data (USSD), among others.

He said consumers were becoming increasingly frustrated with PoS debit errors, network glitches, card rejection, dispense errors, and non-reversal of failed transactions at PoS, and ATM terminals.

In the same vein, the supposedly instant and real-time web transactions also record untold hitches.

Report further indicated that poor e-payment services had forced many to abandon use of such services offered by banks, preferring, instead, to withdraw money inside banking halls, the queues notwithstanding.

Users of electronic banking services claimed they had experienced agonising moments owing to wrong debiting at ATMs and PoS.

They specifically complained about undue delays in electronic transactions arising from network failure.

They put the blame on government and banks for failing to provide the right infrastructure.

Peter Anselem, who narrated his recent experience to The Guardian, said he was in Abuja recently, and had urgent need to send money to his wife in Lagos to complete a transaction.

Anselm related that “you wouldn’t believe that for complete 48 hours, the transaction didn’t go through; even though I used different bank platforms, it was the same story.

“I had to enter the banking hall after two days, to do the transaction. For a fact, network services in Abuja are very poor. I don’t know what can be done about it.”

Lagos-based Theophilus Adekunle, said a bank’s ATM terminal debited his account without dispensing the N15, 000 he wanted to withdraw.

Adekunle, who said that such had been one of the issues with the ATM terminals, stressed that this was not peculiar to a particular bank. “Virtually all of them have that issue.”

According to him, despite CBN directive on instant reversal in dispensing error, “I didn’t get my money back until after seven days. I had to go and lodge complaints at one of the branches.”

Mrs. Oluchi Ibinabo, another e-payment consumer, said that ATMs often displayed “Out of Service” on its screen at critical periods, making it difficult for people to withdraw money.

Ibinabo said it was disappointing that after spending much time on the queue, “one would now be unable to withdraw cash, due to lack of service on the ATM.”

Bob Nwojo, Head, e-Channel Services at FirstBank, at the Fintech+ webinar, also confirmed the low level of infrastructure, especially ATM terminals.

According to him, effective use of ATMs has continued to evolve and find application in meeting daily cash and non-cash transactions by Nigerians.

He, however, noted that Nigeria was far behind, even as the global ATM market, which accounted for $18.44 billion in 2018, is expected to grow at CAGR of 10.4 per cent over the forecast period 2019-2022 to account for $44.18 billion by 2027.

According to him, ATM should become the bank of the future as more bank branches close.

He also informed that teller machines would adopt biometric identifiers, like fingerprint and facial recognition, to enable cardless usage and more sophisticated functions.

Experts have already recognised that cash machines were crucial to lives of consumers and still offered essential services, adding that the ATM channel “remains the primary, most convenient and most reliable way to retrieve cash,” said he.

Comparatively speaking, Nwojo stated that Nigeria lags far behind peer countries with 16.3 ATMs per 100,000 adults vis-à-vis South Africa (67.3 ATMs) and Brazil (106.7 ATMs); India with three times the population of South Africa, Nigeria has four times fewer ATMs per 100,000 adults.

Specifically, Brazil has 211 million population; 106.7 ATM per 100,000 adults; 19.2 bank branches per 100,000 adults and a total ATM base of 172,600 in 2019.

South Africa has 58 million population, ATM per 100,000 adults is 67.3; bank branches per 100, 000 adults stood at 17.3 and total ATM base in 2019 was 30,000.

India has 1.3 billion population, and ATM per 100,000 adults is 22 while bank branches per 100,000 adults stood at 16.8 and total ATM base in 2019 was 238,000.

However, Nigeria which hosts a population of 200 million people has 16.3 ATMs to serve every 100,000 and 4.4 bank branches to serve every 100,000 adults as the country’s ATM base as at the end of 2019 stood at 18,731, stated the report.

He added: “With three times the population of South Africa, Nigeria’s total ATM/100,000 adults are four times less than that of South Africa.

“With similar population figures, Brazil has nearly 10 times the number of ATMs than Nigeria and over four times the number of branches per 100,000 customers.”

Dipo Alabede, Secretary, Product, Pricing and Revenue Assurance at the Committee of e-Business Industry Heads (CeBIH), stated that Nigeria needs more ATM terminals to boost services.

Alabede, who doubles as Head of Digital Banking at Sterling Bank, revealed that it cost about N10 million to deploy a single terminal in the country.

ATM business is still run at a loss in Nigeria, he said.

To deploy more terminals in Nigeria, about N700 billion may be required by operators for more ATM terminals, the report noted.

Findings also showed that there has been significant increase in the number of ATM terminals deployed, transaction volumes and values.

For instance, statistics from NIBSS revealed that in 2014, 13,770 terminals were deployed, with a transaction volume of 214.63 million, valued at N2 Trillion.

In 2015, Nigeria had 16,406 terminals, 0.40 billion-transaction volume, valued at N3.65 Trillion.

By 2016, the ATM terminals rose to 17, 398. It delivered 607-million transaction volume, valued at N4.9 Trillion.

In 2017, there were 17, 449 terminals that carried out 800.5 million transactions, which is worth N6.44 Trillion.

The data showed that ATM terminals rose to 18,615 with 875.5 million-transaction volume, valued at N6.5 Trillion.

In 2019, active ATM terminals in the country were 17,518, and carried out 839.8 million volume of transaction valued at N6.5Trillion.

In his contribution, Mr. Olusola Teniola, President of Association of Telecommunications Companies of Nigeria (ATCON) while advising the banks on network challenges, said the financial institutions needed to ensure that they purchase enough bandwidth on various channels.

Mr. Olusola Teniola, President of ATCON

According to him, bank servers needed to have performance improvements to cope with increased demand in transactions that need to be processed, especially during peak hours.

Teniola stated: “It is obvious that they need to consider moving their services to local content-based Data Centres and Cloud offerings that reduce the latency issues and session time-outs that they experience and to which they blame the errors as ‘network problem.

“Finally, the banks need to consider outsourcing all their back-office systems, both IT and Telecoms to indigenous competent specialists that are able to manage it better and move away from in-housing IT equipment and telecoms equipment, which they are struggling to manage, so that they can focus on their core competency in banking.”

He said e-payment services can be hitch-free when the Central Bank of Nigeria (CBN) finally allows telecom operators to take the lead in building the infrastructure required to develop robust and secure underlying layer that caters to the idiosyncratic environment that depicts Nigeria and the way businesses are done.

At the moment, there is an opportunity to bring in the 63 percent of Nigerians, who are financially excluded into a Digital Financial Service (DFS) similar to MESA success in Kenya, report stated.

Teniola added: “Many of our members are capable and willing to build the same success in Nigeria and we encourage the CBN to move from Approval In Principle (AIP) for Payment Service Bank (PSB) to a full PSB licensing for all the MNOs and other Service Providers.

“We have the track record of building the biggest telecoms market in Africa, we can do the same in the DFS space.”

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