The Central Bank of Nigeria, CBN, has named weak risk management framework and security issues among the major challenges affecting electronic payment system in the country.
The CBN Governor, Godwin Emefiele, made the disclosure as a keynote presenter at the 8th Annual Conference of the Chartered Institute of Bankers of Nigeria in Abuja on Tuesday.
The theme of the conference was “Positioning Nigeria’s Payments System for Global competitiveness”.
“While CBN efforts have gone into transformation of the payments system in line with global trends, we should not lose sight of the associated risks and challenges.
“These challenges include, but not limited to weak risk management framework, security issues, resistance of target customers to patronise and embrace new products,” Mr. Emefiele said.
He said another challenge was the “lack of unique identifier for customers across institutions and high operation cost”.
According to him, other challenges are interoperability and interconnectivity of networks, low level of card usage on Point of Sales, non-transparent pricing, among others.
Mr. Emefiele, who was represented by Sarah Alade, CBN Deputy Governor, Economic Policies, urged the institute to deliberate on the issues and come out with good suggestions to improve the payment system in the country.
“By this, we will be able to strengthen consumers’ confidence in the safety, security and reliability of our payments system bearing in mind that when this trust is undermined, then public confidence in financial services is eroded and the economy loses,” he said.
Commenting on the payment system in the country, he said that it had witnessed remarkable achievements in the recent past.
Mr. Emefiele said that in the whole sales payment sector, a new real time gross settlement, RTGS, system in December 2013 replaced the old that was used for over seven years.
RTGS is an inter-bank payments infrastructure that facilitates the real time settlement of electronic funds transfer on gross and irrevocable basis.
Mr. Emefiele noted that the new RTGS was integrated with “scripless security settlement system” to manage and settle government and other money market securities processed as electronic records in a central securities Depository system.
He added that in the retail payments sector, a series of initiatives had been implemented toward building confidence and positioning of the payment system for global competitiveness.
The governor said the initiative included the migration from magnetic stripe to Europay, Mastercard and Visa (EMV).
He said that CBN had introduced chips on the cards and mandated all banks to migrate.
“I want to place it on record that this singular effort of the bank led to a drastic reduction in card related frauds by over 98 per cent which were hitherto prevalent in the industry.
“This has also instilled confidence in the payment system as Nigeria issued bank cards are now used in other parts of the world,” he said.
He said that an efficient payment system would go a long way to strengthen the growth and development of the nation’s economy.