Nigeria - Digital Payments

This video features Premier Owoh, MD/CEO of the Nigeria Inter-Bank Settlement System (NIBSS), discussing the evolution and impact of Nigeria’s digital payment infrastructure. It provides insights into the key components developed by NIBSS, the benefits realized compared to cash-based systems, and the strategic direction for future enhancements. The practical value lies in understanding the building blocks, challenges, and strategies behind a successful national digital payments system, offering lessons for other countries.

Synthesized Summary

Premier Owoh explains that Nigeria has made significant strides in digital payments, driven largely by NIBSS, which was established as a shared platform to reduce costs for financial institutions [00:44]. Key components include the Bank Verification Number (BVN), a functional ID linked to the national ID (NIN) that secures the financial ecosystem [01:11], and the NIBSS Instant Payment (NIP) system, which revolutionized payments by enabling real-time transfers [01:51]. NIP is particularly beneficial for SMEs needing immediate access to funds, contrasting sharply with the slowness and high cost associated with cash [02:01, 02:37].

To enhance financial inclusion, the Shared Agent Network (SANEF) was created, deploying POS agents across the country, especially in rural areas, to provide basic banking services like account opening and cash-in/cash-out, thereby reducing the cost of banking [05:05]. Other innovations include QR code payments (usable without smartphones) [06:51], e-BillsPay, NIP Direct Debit [07:04], and the new AfriGo domestic card scheme offering instant merchant settlement (T+0) and offline capabilities [04:27, 12:27]. Government-to-Person (G2P) payments also leverage the NIP rails for efficient disbursement [06:05].

Challenges encountered included building trust in digital systems, which was overcome by ensuring high performance and reliability [08:00], and driving adoption, which requires ongoing awareness campaigns and catering to different user segments, including those without smartphones [08:19]. The future involves accelerating adoption, further layering payment functionalities onto digital identity, expanding cross-border payments via PAPSS [10:54], and leveraging open banking frameworks [10:38].

Key Learnings & Recommendations

• Digital Payments Superiority: Digital payments (like NIP) are superior to cash due to speed, lower cost, and better mobility of value [00:07, 02:31]. Cash handling involves significant hidden costs (counting, insurance, transport) [03:16].
• Shared Infrastructure (NIBSS): Establishing a shared payment infrastructure (like NIBSS) lowers the operational costs for all players in the financial ecosystem [01:40].
• Functional ID (BVN): A functional digital ID specific to the financial sector (like BVN), linked to a foundational ID (NIN), is crucial for security, identification, and KYC [01:11, 15:04].
• Instant Payments (NIP): Real-time payment systems are revolutionary, providing instant value crucial for economic activity, especially for SMEs [01:51, 02:08, 03:34].
• Financial Inclusion (SANEF, AfriGo, QR): Reaching excluded populations requires targeted initiatives like agent networks (SANEF) [05:05], offline-capable payment methods (AfriGo card) [12:27], and technologies like QR codes that don’t require smartphones [06:51].
• Building Trust: Trust in digital payments is earned through consistent high performance, reliability, and instant settlement [08:11].
• Driving Adoption: Adoption requires persistent awareness campaigns, demonstrating clear value propositions (like instant value), and engaging different demographics (e.g., youth) [08:19, 09:25]. Start with willing partners (“coalition of the willing”) [09:59].
• Government & Central Bank Buy-in: Success requires strong support and collaboration from both the central bank and the government [14:51].
• Layering Identity & Payments: The next stage involves deeply integrating payment systems with foundational digital identity to enhance efficiency and security [11:14].
• Collaboration is Key: Developing DPI requires a collaborative design approach involving all stakeholders and continuous engagement with partners (banks, fintechs, telcos) [04:00, 14:06, 16:29].

Key Visual Information

• [00:45] NIBSS Definition: Nigeria Inter-Bank Settlement System.
• [01:12] BVN Card Example: Shows a sample Bank Verification Number card.
• [01:23] NIN Definition: National Identification Number.
• [01:41] Text Overlay: NIBSS has lowered costs for financial players by providing shared infrastructure.
• [01:53] User with Phone: Illustrates mobile payment adoption.
• [02:11] NIP Definition: NIBSS Instant Payment.
• [02:14] Text Overlay: Instant payments by NIBSS ensured immediate credit to SMEs.
• [02:39] Text Overlay: Mobility of cash is slow and the costs of cash are very high.
• [02:58] Text Overlay: Instant payment helps in effective mobility and delivery of cash.
• [03:17] Challenges of Using Cash Slide: Lists Counting, Insurance, Cost, Movement (A to B).
• [04:31] AfriGo Scheme Card: Image of the domestic card.
• [04:39] Text Overlay: AfriGo card enables instant settlement on POS transactions.
• [05:06] SANEF Definition: Shared Agent Network Expansion Facilities.
• [05:11] Text Overlay: SANEF is a pool of agents with POS devices to bring banking to even rural areas.
• [05:22] Through a SANEF Agent You Can Slide: Lists Open Bank Account, Get Banking Card, Deposit/Withdraw Cash.
• [05:31] Text Overlay: SANEF has reduced the cost of banking.
• [05:59] Text Overlay: SANEF has been one of the reasons for increase in adoption of Nigerian payment DPI.
• [06:17] Text Overlay: All G2P payments use NIP rails for payment disbursements.
• [06:35] P2P Definition: Peer to Peer.
• [06:53] Text Overlay: With QR codes, those without smartphones will also be accommodated in payment systems.
• [07:04] e-BillsPay Dashboard: Screenshot showing biller selection interface.
• [07:13] e-BillsPay Dashboard: Screenshot showing biller product selection (EasyPay, Test Product).
• [08:04] Text Overlay: People have traditionally trusted cash as a system.
• [08:12] Text Overlay: Trust has to be won by ensuring high performance, real & instant settlements.
• [08:20] Text Overlay: Adoption is critical.
• [08:37] Text Overlay: Cybersecurity and transaction safety is another challenge that needs to be addressed.
• [09:07] Text Overlay: Building network is the other challenge that needs to be met.
• [09:35] Text Overlay: It is cheaper to have money in bank that can be used as against depositing/using actual cash.
• [09:59] Text Overlay: Start the process with those who are willing to adopt to change.
• [10:22] Text Overlay: Next Stage: Accelerate Adoption and Financial Inclusion.
• [10:58] PAPSS Definition: Pan African Payment and Settlement System.
• [11:00] Text Overlay: PAPSS - Connecting business across Africa in terms of payment.
• [11:15] Text Overlay: Next Stage: Layering Identity and Payment Together.
• [11:59] AfriGo Scheme Card: Image shown again.
• [12:34] Text Overlay: Next Stage: AfriGo card is going to provide instant settlements to merchants.
• [12:40] Mobile Phone Interface: Shows a mobile app interface likely related to payments/banking.
• [13:32] Advice Slide: Be Bold, Be Determined, Be Focused, Start with the Willing.
• [14:10] Text Overlay: Work with relevant partners and telcos in the country.
• [14:53] Text Overlay: Countries need buy-in from both Central Bank and Central Government.
• [15:05] Text Overlay: Payment is layered on top of Identity.
• [15:18] Issues Slide: Issues of KYC, Issues of Transparency, Issues of Fraud.
• [15:41] Text Overlay: Make provisions to include people in rural areas too.

Key Questions Addressed or Raised

Addressed:

• How has Nigeria developed its DPI-enabled payment system? (Answered throughout, detailing NIBSS, BVN, NIP, SANEF etc.)
• What is the future of payment systems in Nigeria? [02:24] (Answered: Deeper digital adoption, less cash, layered ID/payments, cross-border, open banking).
• How were the payment DPI components designed and implemented? [03:49] (Answered: Collaborative design, stakeholder involvement, focus on value).
• What are some use cases? [03:49] (Answered: SME credit, G2P, P2P, Bills, POS, Rural Banking, QR).
• What challenges were faced and how were they mitigated? [07:50] (Answered: Trust, Adoption, Cybersecurity, Network - mitigated via performance, awareness, inclusion focus, security measures, offline options).
• What is the future envisioned for Payments DPI in Nigeria? [10:13] (Answered: Accelerated adoption, financial inclusion, layered ID/payments, AfriGo instant settlement, open banking).
• What other use cases will be enabled? [10:13] (Answered implicitly: more services via open banking, offline payments, cross-border trade).
• What is the key message for other countries adopting DPI-based payments? [13:22] (Answered: Be bold, focus, collaborate, include rural areas, layer ID/payments, get government/CB buy-in).

Raised (Implied):

• How to effectively scale awareness and education for digital payment adoption, especially among less digitally literate populations?
• What specific regulatory frameworks are needed to fully support open banking and layered ID/payment systems?
• How can network infrastructure challenges in rural areas be comprehensively addressed beyond offline solutions?

Stated or Implied Applications

• Lowering Business Costs: Shared infrastructure reduces costs for financial institutions [00:52, 01:40].
• SME Empowerment: Instant payments (NIP) and instant settlement (AfriGo) provide immediate value/credit crucial for SME operations [02:01, 04:48].
• Financial Inclusion: Reaching unbanked/underbanked populations in rural areas via agent networks (SANEF) [05:10] and offline/non-smartphone methods (AfriGo, QR codes) [06:51, 12:27].
• Government Service Delivery: Efficient G2P payments for social benefits and palliatives [06:05].
• Revenue Collection: Government agencies using e-BillsPay for collections [07:41].
• Everyday Transactions: P2P transfers, bill payments, POS purchases [06:24, 07:04, 04:38].
• Cross-Border Trade: Facilitating payments across African countries via PAPSS [10:58].
• Enhanced KYC/Security: Using BVN and layering payments on identity reduces fraud and improves transparency [01:33, 15:17].

Key Terminology Defined

• NIBSS: Nigeria Inter-Bank Settlement System PLC. The shared infrastructure provider for Nigeria’s financial system [00:45].
• BVN: Bank Verification Number. A functional ID for Nigeria’s financial sector, enabling identification and secure transactions [01:11].
• NIN: National Identification Number. Nigeria’s foundational identity system [01:21].
• NIP: NIBSS Instant Payment. Real-time payment rail enabling instant value transfer [02:11].
• AfriGo: Nigeria’s domestic card scheme, enabling instant settlement and offline payments [04:31, 11:58].
• SANEF: Shared Agent Network Expansion Facilities. Initiative using agents with POS devices to extend financial services, particularly to rural areas [05:06].
• G2P: Government to People payments [11:29].
• P2P: Peer to Peer payments [06:35].
• PAPSS: Pan African Payment and Settlement System. Facilitates cross-border payments in Africa [10:58].
• e-BillsPay: NIBSS platform for electronic bill payments [07:08].
• NIP Direct Debit: NIBSS service for automated direct debit instructions [07:13].
• KYC: Know Your Customer. Identity verification processes [11:20, 15:18].
• T+0 Settlement: Same-day (instant) settlement of funds for transactions [04:39].

Timestamped Outline / Chapters

• [00:00] Introduction & Logos
• [00:07] Digital Payment is the Way Forward
• [00:36] Introduction of Speaker & NIBSS Role
• [00:54] Tell us about the DPI enabled payment system in Nigeria.
• [01:00] NIBSS Centralization, BVN & NIN (Identity Layer)
• [01:49] NIBSS Instant Payment (NIP)
• [02:24] What is the future of payment systems in Nigeria?
• [02:31] Benefits of Digital Payments vs. Cash (Speed, Cost)
• [03:49] How did you design and implement the payments DPI? Please highlight some use cases.
• [03:55] Design Approach & Collaboration
• [04:15] QR Codes & AfriGo Card (Domestic Scheme)
• [05:02] SANEF (Agent Banking for Inclusion)
• [06:04] G2P Payments
• [06:23] P2P Payments
• [06:38] QR Code Payments (Inclusion)
• [07:03] e-BillsPay & NIP Direct Debit
• [07:50] What challenges did you face and how did you mitigate them?
• [07:55] Challenge: Trust
• [08:16] Challenge: Adoption
• [08:34] Challenge: Cybersecurity
• [09:05] Challenge: Network Availability
• [09:24] Mitigating Adoption/Trust: Awareness & Value Proposition
• [10:13] What is the future that you envision for Payments DPI in Nigeria? What other use cases will be enabled?
• [10:20] Future: Accelerate Adoption & Financial Inclusion
• [10:37] Future: Open Banking
• [10:51] Future: Cross-Border Interoperability (PAPSS)
• [11:06] Future: Layering Identity & Payment
• [11:56] Future: AfriGo Card (Instant Settlement, Offline Mode)
• [13:22] Based on your learnings, what is your key message for other countries looking to adopt DPI based payments systems?
• [13:28] Advice: Be Bold, Determined, Focused, Start with Willing Partners
• [14:03] Advice: Go Digital, Work with Partners (Telcos)
• [14:42] Advice: Get Government & Central Bank Buy-in
• [15:03] Advice: Layer Payment on Identity (Importance of KYC, Transparency, Fraud Reduction)
• [15:34] Advice: Include Rural Areas (Don’t Leave Behind)
• [16:17] Advice: Monitor Systems, Robust Teams, Engage Partners, Open APIs
• [16:45] Closing Logos

Related Resources Mentioned

• None explicitly mentioned in the video.