• CBN gives out seven new approval in principle
Daniel Obi & Ben Uzor Jr
Against the backdrop of plans by some telecommunications companies (telcos) to go into mobile payment services, analysts say the move is against Central Bank of Nigeria (CBN) regulations.The analysts cited regulatory framework for mobile payment services in Nigeria issued by the CBN in 2009 which identifies three acceptable models for the implementation of mobile payment services: bank-focused, bank-led, and third party-led.
According to the analysts, the decision was made because the CBN does not regulate telcos and if the telcos are allowed to lead mobile money, it will mean putting two major segments of Nigeria’s economy in the hands of a few companies. This, they believe, bears great risks for Nigeria. An informed source at the CBN told BusinessDay that the apex bank has issued additional seven approvals in principle (AiP) to prospective mobile payment service providers in the country.
This particular CBN M-Payment regime, which has been tagged the most rigorous, the costliest and the longest-lasting in the short history of the scheme, started about two years ago with the issuance of provisional license to MoneyBoxAfrica and the subsequent release of regulatory guidelines. The issuance of the seven new AiPs takes the number of approvals to 23. Some of the companies included in the latest bazaar are Zenith Bank,MoneyBoxAfrica and Zinternet. The names of the other companies were not available at press time yesterday. There are speculations that VTN and Hendomark made the list.
But the industry is awaiting the result of the just concluded verification of the readiness of 16 firms to start services after the initial four-month trial period. Assessing the development of telcos’ foray into m-payment, Abayomi Atoloye, former director, banking and payment systems department of the CBN, expressed the view that if telcos are allowed to drive the mobile payment scheme, it will create an unequal playing field for other mobile payment operators in the country. This may also give rise to a situation in which a telecommunications company limits its services to only its subscribers.
There should be room for competition, he said. Atoloye went further on to say that “the move is intended to prevent the larger networks from dominating the mobile payment system as they have access to the larger percentage of the population as well as the infrastructure for the deployment of the new payment system.” Head of operations at 3Line, Chinedu Eluchie, said it was not healthy that telcos lead the mobile payment services as this would give them access to the data base of account holders, which is the exclusive preserve of banks.
Rasaq Olaegbe, an electronic payment expert, told BusinessDay it was not ideal for telecoms operators to take the lead in a mobile payment scheme because they lack domain expertise in financial services. “They are not licensed to offer financial services. Telcos are licensed to offer telecoms services. That is why you see MTN partnering with GTBank to roll out mobile money in Nigeria.”
Another analyst, who pleaded anonymity, said: “In the bank-based model, customers have a direct contractual relationship with a prudentially licensed and supervised financial institution, even though the customer may deal exclusively with the staff of one or more retail agents hired to conduct transactions on the bank’s behalf; while in the MNO-based model, customers have no direct contractual relationship with a fully licensed and supervised financial institution. I think this is an area banks have problems with.”
According to the framework, the telcos are required to ensure that their subscribers are free to use a mobile payment system service of their choice. They are also required not to receive deposit from the public except in respect of the prepaid airtime billing of their subscribers; and they are not to allow the use of the prepaid airtime value loaded by their subscribers for purposes of payment or to transfer monetary value. The telcos stand to benefit significantly from the success of mobile money in Nigeria as most of the transactions will be going over their networks.
In November 2010, the CBN granted AiP licenses to 16 companies to operate mobile payment in Nigeria. These operators were required to run a 4- month pilot from December 2010 to March 2011 after which, upon review, full operational licenses were to be issued. The CBN has now concluded its audit of the 16 companies and is expected to issue full operational licenses this month to those it deems ready to launch. The 16 operators are: Stanbic IBTC Bank Plc; Ecobank Nigeria Plc; Fortis MFB; UBA/Afripay; GTBank Plc/MTN, and FirstBank of Nigeria Plc. Others are: Pagatech; Paycom; M-Kudi; Chams; Eartholeum; E-Tranzact; Parkway; Monitise; FET, and Corporeti.
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