Steps are being taken by the Central Bank of Nigeria (CBN) to ensure fraud in e-payment transactions is reduced to the barest minimum.
CBN Director (Banking and Payments System), Dipo Fatokun, reiterated at the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) in Lagos that the Payments System Vision 2020 launched in 2013 is meant to re-organise the National Payments Governance Structure and encourage more people to embrace e-payment.
The project focuses on agriculture, smart cities, health, transportation, hotels, entertainment, government flow, education, consumer bill payment as well as direct debit.
Fatokun, represented by his Deputy Director, Musa Jimoh, explained that the absence of a unique identifier in the banking industry has negative consequences on the growth of e-payments.
He said the need to resolve the challenge prompted the CBN, in collaboration with the Bankers’ Committee, to launch the Bank Verification Number (BVN) project and help build confidence in e-payment channels and enhance the integrity of transactions.
“The BVN initiative is aimed at protecting bank customers and further strengthening the Nigerian banking system by uniquely identifying all bank customers and acting as a stop-gap, prior to the full implementation of the National Identity Card system,” he added.
The CBN mandated all banks, switches, and processors to comply with the Payment Card Industry Data Security Standards (PCIDSS) and it conducted an oversight on compliance which showed that most banks have been certified.
The certification lasted one year and banks are currently at various levels of re-certification.
PCIDSS is a global compliance standard for any entity that stores, transmits or processes card payment data.
The CBN directed banks to set up systems that will enable automatic refund of automated teller machine (ATM) dispense errors to customers.
It also issued guidelines for card issuance and usage to provide minimum standards and requirements.
“Its implementation enables issuing banks, other financial institutions, processors and card scheme upgrade and to maintain card operations to ensure optimum security, efficiency, cost effectiveness, and customer friendliness,” Fatokun said.
The platform also serves as a tool for banks and other financial institutions to assess card issuance portfolio and ensures that consumers with cards issued in Nigeria operate within acceptable standards.
“From a regulatory perspective, the CBN acknowledges that less than optimal, inefficient or poorly designed systems will ultimately have a negative impact on systemic stability, economic development and growth.
“It has therefore consciously pursued the growth of a payment system that is safe, efficient, cost effective and reliable.”
Fatokun said payment systems have moved from the backroom to the boardroom of organisations given their strategic importance in a globalised world.
A well-functioning payment system plays significant role in supporting the economy, he added, which prompted the CBN to promote a system where the underserved and non-served are integrated into the formal financial services sector.