Implementation of the cashless policy by the Central Bank of Nigeria (CBN) has taken off in six states – Lagos, Ogun, Anambra, Abia, Rivers, Kano – and Abuja.
By the end of June, bank customers without Bank Verification Numbers (BVNs) will be sanctioned. From July 1, the CBN will extend full implementation to other states.
CBN Principal Manager (Banking and Payments), Emmanuel Udoh, recently provided more insight on the policies and what sanctions await defaulters on a radio programme, On the Mobile Payment Show.
Assistant Business Editor, KELECHI MGBOJI, who monitored the programme, brings excerpts.
One major sanction is the denial of access to account holders who fail to enroll for BVN, meaning that they will not be able to withdraw money.
The CBN launched BVN in February 2014 to revolutionise banking and payment systems in the country and check the incidence of fraud.
BVN requires the registration of bank customers using biometric technology, which involves recording a person’s fingerprints and facial features.
The data is used across the banking industry to accurately identify customers.
The CBN mandated banks from November 3 last year to stop giving out new loans to borrowers who did not have BVN as it became a condition for draw down.
Flag off
Banks in Lagos State kicked off biometric registration of customers on June 16, 2014. They were required to visit any branch of their banks for the exercise.
All deposit money banks (DMBs) were required to enroll at least 40 per cent of their customers by December 31, 2014, and 70 per cent by March 30, 2015.
Benefits of BVN
BVN, a unique identity that can be verified across the Nigerian banking industry,
• Protects bank accounts from unauthorised access.
• Strengthens the financial system.
• Increases the efficiency of banks as it reduces incidence of fraudulent/duplicate bank accounts, and highlights blacklisted customers.
• Provides standardised efficiency of banking operations.
This means that all banking operations will be verified using the same method, reducing cases of human error or inconsistency.
Full implementation means transaction authentication without the use of cards.
How it works
Bank customers are expected to go to their bank and get their personal details captured. Details are identified in the bank where you have an account. After identification, you are verified and the identity (ID) generated is linked to your account.
You are required to produce this ID for cross checking when you transact business in your bank. That is verification before transaction.
Does a customer need any other form of identification when cashing a cheque over the counter?
There are other internal processes of banks. Apart from your unique identifying number from BVN, the bank can still ask for other identification. It depends on the bank.
This isto enhance the existing know-your-customer (KYC) requirements. You cannot totally do away with the KYC requirement approved by the Bankers Committee of the CBN.
Verification of Nigerians abroad
The Bankers Committee plans to see how banks work with the embassies out there to get customers captured. We are still looking at the issues and the logistics involved before it can come to fruitful exercise.
Can they make transactions without registration?
What we are saying is that by June 1, 2015 Nigerians who have not registered may not be able to do any banking transactions.
We still encourage those outside Nigeria that whenever they come back to the country, they should get their data captured by their banks.
The exercise is an ongoing process, even for new customers.
Can customers do banking transactions if they fail to register by June 1?
They may not be able to. And there is nothing like allowing concessions.
We only hope that by June 1, everybody would have registered to avoid the sanctions that may come with full implementation.
How BVN affects mobile money KYC requirements
BVN does not really affect mobile money payments and the three tiers of its operation – tier 1 which has a maximum of N30,000; tier 2 which has up to N100,000 and tier 3 which has N1 million.
It does not really affect them. This is just to enhance the existing KYC requirements. BVN does not affect the KYC requirements of mobile money operations in Nigeria.
Role of telecommunication companies as mobile money agents
Let me correct one impression about telcos [telecommunication companies]. Telcos are not really agents of mobile money operation and business in Nigeria. They are seen as partners. They are at the background of it all.
They are not allowed to be involved directly with mobile money payments. Mind you, the CBN is a financial institution and it does not have powers to regulate the telcos. You do not give what you don’t have.
So, telcos are at the background supporting mobile money payments. They are not to be involved directly with mobile money payments.
What about the savings account telcos and banks offer together?
It boils down to the same explanation. Telcos are working behind the scenes with banks. Banks are the lead operators. Mobile money operation is either bank-led or non bank-led.
In any case, the telcos can come in to work with the operators, but not that they are in the forefront of the business. They are behind the scenes. That’s all their role in mobile money business operations.
Update on Cashless Nigeria
Currently, there is a waiver on deposit limits but withdrawal limits are still intact. The withdrawal limits of N3 million for corporates and N500,000 for individuals are still effective.
Withdrawal for individuals includes all the POS, ATM and cash transactions. All must not exceed N500,000 daily.
But by July 1, 2015 the policy will be implemented nationwide. Now, it is fully implemented in six states – Lagos, Ogun, Anambra, Abia, Rivers, and Kano, and Abuja.
By July 1, it is expected to go nationwide.
Sanctions for those who exceed withdrawal limits
They will pay penalty charges. The charges for individuals withdrawing above the limit is 3 per cent of the amount overdrawn. That’s 3 per cent of the money drawn in excess of the limits.
That of corporate entities is 5 per cent.
Having to use another ATM when one fails to dispense cash
This is a case of infrastructure problem. It is not something that can be fixed in a day. There are a lot of parties involved in ATM operations – the acquirers, network provider, system maintenance experts. If there is any issue with any of them, the ATM will not be operational.
The CBN has been conducting an oversight function on ATMs. We have been going round to check the functionality of ATMs. Those that we discover not performing according to the guidelines, we get the banks involved to tell us the reasons why they are underperforming.
