World Bank Fast Payments Toolkit - Case Study: Nigeria

This document presents a case study of Nigeria’s NIBSS Instant Payment (NIP) system. It is designed to provide insights into the structure, operation, and governance of a fast payment system in a developing economy. It can be used by policymakers, financial institutions, and technology providers interested in understanding the practical implementation of modern payment systems.

Key Insights

NIBSS Instant Payment (NIP) Overview

The NIBSS Instant Payment is a fast payment system in Nigeria launched in 2012, enabling customers to make cross-bank payments with immediate fund availability. The Express Elixir system operates on a 24x7 basis and supports payments in Nigerian Naira. The NIBSS Instant Payment system is “a fast payment system in Nigeria launched in 2012…with funds available to the recipient almost immediately” (World Bank, 2011).

Ownership and Operation

The NIBSS Instant Payment is owned and operated by the Nigeria Interbank Settlement System (NIBSS), which is a key financial infrastructure institution jointly owned by the Central Bank of Nigeria (CBN) and all licensed banks. NIBSS provides clearing and settlement services.

Participant Structure

NIP allows both banks and mobile money operators to participate directly, facilitating interoperability.

Access Channels

Users can make payments in NIP through internet, mobile banking platforms, PoS, Agents, USSD, ATM, and bank branches.

Key Features

• Real-time Payments: Payments are processed in real-time.
• Mobile Money Operator Support: Supports mobile money operators.
• Deferred Net Settlement: Uses deferred net settlement.
• Nigerian Naira Only: Supports only Nigerian Naira.
• IBAN Alias: Only IBAN is used as an alias

Payment Instruments

The payment system supports:

• Credit Transfer
• Direct Debit
• Mobile Wallets

Aliases

NIBSS Instant Payments uses bank account numbers for all types of transactions initiated on its platform.

Use Cases/Services

• eBillPay: NIBSS eBillPay is an account-number-based, online real-time Credit Transfer product that enables customers to make electronic bills payment services through payment channels which leverages the NIBSS Instant Payment (NIP) platform.
• mCash: In 2016, NIBSS collaborated with the Central bank of Nigeria, MNOs and commercial banks, to launch the mobile payments innovation mCash, which was designed with a financial inclusion focus, leveraging on NIP to make low-value instant payments to merchants.

Key Statistics & Data

• GDP (2019): $448 billion
• Income Category (2019): Lower Middle Income
• Population: 201 million
• Access to Mobile Phone (2017): 70.60%
• Access to Internet (2017): 27.50%
• Bank Account (2017): 39.6%
• Branches per 100,000 Adults (2017): 4.44
• Made or Received Digital Payment in Last Year (2017): 29.67%
• Received Government Wages or Transfer in Account (2017): 9.8%
• Mobile Channel accounted for 43% of all transactions by volume in 2019
• USSD channel accounted for 37% of all transactions by volume in 2019

Methodology

This report is based on secondary sources, including NIBSS website, CBN website, and CBN publications. The information needs to be validated from relevant authorities like the central bank and the operator.

Implications and Conclusions

The NIBSS Instant Payment system has contributed to the growth of electronic payments in Nigeria. It allows for 24/7 availability, promoting convenience and efficiency. The use of mobile and USSD channels contributes to greater financial inclusion. CBN’s regulatory oversight and risk management frameworks are critical for ensuring the safety and stability of the payment ecosystem. There are some limitations as much of the data is now over 5 years old.