By Chinwendu Obienyi
When the Central Bank of Nigeria (CBN) decided to launch a domestic card scheme tagged “Afrigo” developed in partnership with the Nigeria Inter-Bank Settlement System Plc (NIBSS) in January 2023, this left a few people puzzled and led to several questions.
Questions like; “What is the priority use of this card and why is the CBN launching this? What happens to our current Automated Teller Machine (ATM) cards and how secure is this card kept ringing in the minds of bank customers.”
According to a global data report, the cards and payments market size in Nigeria was valued at $22 billion in 2022 and is expected to achieve a CAGR of more than 25 per cent during 2022 to 2026. However, critics were of the opinion that since cash remained the preferred method of consumer payment in Nigeria, the introduction of the card scheme would not hold enough “forte”. Their reasons stemmed from the fact that the country had a highly unbanked population, limited public awareness of electronic payments and limited access to banking infrastructure and therefore, their reasons were genuine.
But the CBN during the launch of the card scheme, said that this was done to compete with international scheme providers, make payment more accessible and affordable for Nigerians as well as strengthen the national payment system. This made sense because Nigerians did about $18.2 billion dollars of card transactions in 2021 and most of the debit cards used for those transactions were reportedly issued by Mastercard and Visa.
Procuring those cards as well as maintaining them costs customers quite some money as seen in debit alerts via SMS or emails by most commercial banks. Transactions done on them need to also be settled and that may often entail looking for foreign exchange to manage the obligations.
Eleven months after its launch, AfriGo, otherwise known as the Nigerian National Domestic Card Scheme, has achieved several positive milestones. A document obtained by Daily Sun revealed that currently about 24 banks including Tier-1 Banks are live in production compared to when only two banks offered AfriGo debit cards in the country at inception. Also 18 out of the 24 banks are transacting across acceptance devices.
Similarly, instant settlement across all channels is live and merchants can now receive credit on the same day. There are also seven payment solution service providers (PSSPs) live on the AFSL web payment gateway including three banks and can accept the AfriGo cards. To top it all, AFSL has recorded about 832 transactions across the channel from April 2023 till December 5, 2023 in Lagos, Abuja and Port Harcourt.
Other notable achievements include; AfriGo card acceptance on 70 per cent PoS and PTSP’s terminals nationwide, two financial institutions can be connected to the AfriGo CMS and can issue the AfriGo card and CBN-licensed institutions can now place orders for their cards from the approved AfriGo card manufacturers. Furthermore, the AfriGo card can be accepted on 16,552 ATMs nationwide across 16 banks. It is thus expected that more Nigerians will try and get their AfriGo cards but what are the advantages of having an Afrigo card?
Advantages: Pretty much every Nigerian that occasionally follows the news knows the difficulties encountered when trying to get FX for transactions outside the country. From students who need to pay their fees to businesses that need to pay for goods and services, there is scarce dollar for those who need it, and the CBN plans to free up some of that through AfriGo. For example, if you used a card issued by your bank at your local supermarket, the fees for that transaction was previously paid for in dollars. With AfriGo, that would no longer be the case.
According to the CBN, AfriGo will reduce the operating costs of cards in the country. For example, charges on the cards will be paid for using naira and will not be susceptible to dollar fluctuations. Also, the card will work in the same way as Visa, Mastercard, and Verve cards. An individual can be able to use it for transactions across the country, subject to specific limitations by his or her bank.
Furthermore, security is an important topic when choosing a card scheme as cybersecurity attacks increased globally and according to the CBN, AfriGo complies with global security standards, including EMVCo.
Although the success story of the card scheme (AfriGo) is something worth celebrating, stakeholders have stated that CBN along with NIBSS should seek to improve its action plan for the card and not rest on its oars. Co-founding partner, Comercio Partners Limited, Nnamdi Nwizu, had earlier urged the regulatory bodies (CBN and NIBSS) to create more acceptance points especially in rural areas where electronic payments are less prevalent.
“If the two bodies want this to work more effectively, then they need to collaborate with more merchants and businesses to increase the acceptance points of AfriGo cards especially in rural areas. They can also work on partnering with government agencies, utility companies and other service providers to integrate the card for various transactions.
Again, they need to establish a feedback mechanism to gather input from users, banks and merchants. They can use the feedback to identify areas for improvement and to implement changes that address specific concerns or suggestions”, Nwizu said.
Conclusion: The Nigerian National Domestic Card Scheme has, no doubt, surpassed expectations. However, for sustainable progress, CBN, NIBSS can develop targeted marketing strategies to promote its use and consider introducing incentives such as cash back rewards, discounts, loyalty programs to encourage more adoption and active use of AfriGo cards. For now, the card scheme stands as a growth potential for the nation’s financial markets.