Is NIBSS NQR Truly The Answer To Nigeria E-payments Conundrum
Is NIBSS NQR truly the answer to Nigeria's e-payments conundrum?
My senior year of high school was approaching, and I had little or no knowledge of any payment methods other than cash at the time the Central Bank of Nigeria (CBN) first implemented the cashless policy in 2011.
Take a look at the data from the Statista Global Consumer Survey from 2021, which shows that cash was used to pay for 77 percent of purchases in stores, restaurants, and point of sales (PoS) in the previous 12 months.
Make no mistake about it: the Central Bank of Nigeria has approved a number of e-payment methods to help it implement its cashless policy. Point of sale (PoS), bank transfers, NIPS, Mobile Interscheme, and other methods are examples of such methods. However, the use of these e-payment systems has continued to dwindle as well as their popularity.
With only 75.6 million transactions in August 2021, the Point of Sale experienced its lowest transaction volume in six months. Compared to the 81.6 million dollars transacted in July, this represents a 7.4 percent decrease in transaction volume. Despite a 3.9 percent increase in the number of registered point-of-sale terminals, this is the case.
The total value of transactions for the month decreased by an impressive 9 percent (N49.8 billion), to N504.9 billion, from the previous month's record high of N554.7 billion. According to data recently released by the Nigeria Interbank Settlement System, this is the case (NIBSS).
On a monthly basis, the volume of e-payment transactions decreased from N402.3 million in July to 397.9 million in August, representing a 1.09 percent decrease from the previous month. Also suffering a massive N190 billion loss, the value of e-payment transactions plummeted to N23.97 trillion in August 2021 from N24.16 trillion in July, a N190 billion decline.
What remains to be seen is how much real progress has been made on the cashless policy in the intervening decade.
As a result, the Nigerian Inter-bank Settlement System (NIBSS) introduced Nibss Quick Response (NQR) – Pay Sharp Sharp – in response to this situation. A secure QR-code-based payments and collections platform designed to allow merchants and customers to receive and make payments for goods and services in a safe and secure environment.
What is the NQR payment process like?
NQR Payments are made in the same manner as normal transfers. In order to make instant transfers and payments, the technology relies on the Nibss instant payment infrastructure (NIP), which is the same technology that is currently used by various banks and payment service providers (PSP) for this purpose.
It was hailed for its ability to upend the payments landscape by lowering the costs and inconveniences associated with pre-existing payment technologies such as point of sale (POS) and credit cards, among other things.
For business owners and customers, the NQR Payment Solution is a secure QR-code-based payments and collections platform that enables them to receive and make payments for goods and services.
This indigenous payment solution will unify all of the closed QR code schemes currently in use in the country, resulting in a more consistent user experience and an acceleration in the adoption of digital payments. It provides a contactless payment option that is simple, secure, and convenient.
Contactless payments are becoming increasingly popular around the world. Following the pandemic, contactless payments increased from 35 percent to more than 50 percent in Germany, while e-wallet purchases increased by 23 percent in China when compared to cash purchases, according to the government. Visa anticipates that more than 300 million contactless cards will be in use by the end of 2020, according to their estimates.
Google, Apple, and Samsung, among other technology giants, have developed payment apps to facilitate payments via mobile phones, all in an effort to increase the number of contactless payments.
NQR intends to do the same with its technology, which allows users to make payments with the least amount of contact and with greater privacy than currently available. Can this system, however, provide a long-term solution to the country's e-Payment problems?
NQR may not be suitable for everyone
Nigeria has approximately 170 million mobile phone users, based on subscriptions, despite having a population of more than 200 million people. A Vanguard report, however, states that smartphones are used by only 10 to 20 percent of the population on an average day. According to this estimate, the total number of smartphone users ranges between 20 million and 45 million people.
While the projections predict rapid growth, the reality suggests a smaller population that is capable of utilizing NQR technology because it requires the use of a camera to scan the QR code, which is not widely available. Even though the QR code is inexpensive because it is free, its use is limited to only 23 percent of the nation's population who can afford a smart phone, according to recent data.
NQR is critical for a Nigerian government attempting to transition away from Covid-19. However, while it is not necessarily a new technology, it is relatively new to the Nigerian population. When you consider how much money financial institutions have spent on Point of Sale (POS) terminals over the years for which they have yet to see a return on their investment, it's no surprise that Nibss has decided to make this solution available.
NQR, on the other hand, is not here to challenge the existing payment systems; its technology is only available to those who can afford a smartphone and are sufficiently empowered to use it. Despite the fact that it lowers the risk of fraud and is cost-effective, it is not suitable for everyone.
