By Folasade Folarin
When the Central Bank of Nigeria (CBN) announced its intention to embark on a cashless policy to reduce cash handling, many citizens expressed reservations about the policy.
While some predicted that it would intensify fraud; some said that the nation’s economy was not ripe for that kind of policy.
Yet, others applauded it, saying that it would enhance commercial activities and boost the nation’s economy, as new platforms for businesses would be explored.
However, the CBN explained that the policy was introduced to drive development and modernisation of Nigeria’s payment system, in line with the goals of the Vision 2020, which aimed at transforming Nigeria into one of the 20 largest economies in the world by the year 2020.
The apex bank also argued that an efficient and modern payment system was a feature of economic development, adding that it was also a key enabler of economic growth.
A well-organised payment system would also reduce the cost of banking services (including cost of credit), while driving financial inclusion by providing more efficient transaction options and greater reach, it added.
The policy, which commenced in Lagos State in 2012, was extended to Abia, Anambra, Ogun, Kano, Rivers states and the FCT on July 1, 2013, before its total implementation across the entire nation on July 1, 2014.
The policy stipulates a “cash handling charge’’ on daily cash withdrawals and deposits that exceed N500,000 for individuals and N3 million for corporate bodies.
It also specifies that third-party cheques above N150,000 shall not be eligible for encashment over the counter; value for such cheques shall be received through the clearing house.
Cash withdrawals and deposits above the ceiling for individual accounts attract a three-per-cent charge, while corporate accounts attract a five-per-cent charge to be borne by the account holder.
However, charges on deposits were removed recently, while charges on withdrawals were retained.
The policy also aims to curb some of the negative factors associated with the high usage of physical cash in the economy. These include high cost of cash, high risk of using cash, inefficiency and corruption, among others.
Observers note that the cashless policy has helped to drive online and mobile-based transactions, using the Internet, Point of Sale (POS) and the Automated Teller Machine (ATM).
This has also facilitated better convenience, more service options, reduced risk of cash-related crimes, access to credit and financial inclusion for the customer.
In particular, corporate organisations are expected to enjoy faster access to capital, reduced revenue leakage and reduced cash handling costs.
Although e-commerce was not very popular when it was introduced in Nigeria, it has been able to achieve greater penetration after the introduction of the cashless policy.
According to a CBN report on e-payment, POS transactions had increased from N38 million per month in 2012 to N24 billion monthly in June 2014.
“The POS transaction increased in volume from less than 2,000 in January 2012 to 1.6 million per month as at June 2014.
“Over 150,000 POS terminals are presently across the country and 22 mobile money operators have been licensed,’’ the report added.
Besides, the licensed Payment Terminal Service providers increased from five to 10 and the increase boosted POS terminal penetration across the country. [eap_ad_1] It noted that Nigeria Inter Bank Settlement System (NIBSS) instant transfer had increased in volume from 87,000 transactions a month in January 2012 to 3.1 million transactions a month as at June 2014.
The report added that NIBSS instant transfer had increased in value from N51 billion monthly in January 2012 to over N1.5 trillion monthly as at June 2014.
Analysts say that the figures indicate the level of public acceptance of the cashless policy initiative in the two-year test period, prior to its full implementation in July 2014.
In spite of such comments, there are strong indications that many citizens accepted the cashless policy with mixed feelings.
While some people are of the opinion that the policy would aid effort to improve the economy, others fear that if unregulated or properly checked, the policy would aggravate the menace of fraud.
Mr Bashir Akinola, a businessman, expressed pessimism about the cashless policy.
“Personally, I do not support the policy and I will never support it unless the CBN can assure us that if we embrace it, we will not experience online banking fraud,” he said.