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Customers fret over banks’ lingering network challenges

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Customers fret over banks’ lingering network challenges

The two public holidays declared by the Federal Government, last week, again turned out to be a difficult period for many bank customers who tried to use electronic payment channels, as they had to contend with poor network challenges and long automated teller machine (ATM) queues. Tony Chukwunyem writes

 

Data obtained from the Central Bank of Nigeria (CBN) and the Nigeria Interbank Settlement System (NIBSS), clearly shows that Deposit Money Banks (DMBs) in the country have heavily invested in electronic payment channels over the last few years.

 

Surge in ATM, PoS terminals numbers

For instance, according to the electronic-payment fact sheet for Q1 2019 released by NIBSS, the total number of deployed ATMs in the country jumped by 201 per cent (37, 487) to 56,102, in the first three months of this year from 18,615 at the end of last year.

 

The data also shows that the total volume and value of ATM transactions during the period stood at 203 million and N1.5trillion respectively.

Similarly, latest figures released by NIBSS indicate that a total of 28,770 new Point of Sale (PoS) terminals were registered by lenders in the first four months of the year, bringing the total number of registered PoS terminals in the country to 287,213 as at April 2019.

 

A breakdown of the data shows that in January, 7,975 new terminals were registered by DMBs, in February, 5,854 terminals were listed, 2,161 PoS terminals were registered in March and a whopping 17,102 PoS terminals were listed in April.

 

Expectedly, the increasing number of terminals has also resulted in a significant growth in the value of PoS deals in recent years.

 

Thus, according to the NIBSS, last January, N217.457billion worth of transactions was carried out, which is 43 per cent higher than the N152.09billion recorded in the corresponding period of 2018.

 

Also, in February, the value of transactions grew by 34 per cent from N144.876billion in 2018 to N193.426billion.

 

Equally, the data shows that the value of transactions stood at N222.921billion in March 2019, which is 25 per cent higher than the N177.755 billion recorded in the same period in 2018.

 

In April 2019, the value of PoS deals recorded stood at N246.097billion compared with the N172.313billion for the same period last year.

 

 

Dissatisfied customers

However, while the increased deployment of ATMs and PoS terminals seems to point to a high level of acceptance of electronic payment channels in the country, findings by New Telegraph suggest a rising degree of dissatisfaction among bank customers who use such channels.

 

For instance, many customers across the country who tried to use electronic payment channels during the two-public holidays declared by the Federal Government last week had unpleasant tales to tell about their experiences as poor network and insufficient funds resulted in unsuccessful PoS and ATM transactions respectively.

For instance, the owner of a business centre in the Okota area of Lagos, Mr. Sunday Oguntoyinbo, said: “I noticed that anytime I tried to carry out a transaction for customers, my PoS terminal will not work. Even when I resorted to using my mobile phone to transfer money, it took a long time for transactions to be concluded.”

He expressed concern that more than seven years since the CBN launched its cashless policy to reducing cash usage through encouraging the use of e-payment channels, the banking industry is still struggling to get its act together on the issue.

Also, a Lagos-based businesswoman, Ms Chioma Okolo, told this newspaper’s correspondent that she recently started carrying cash around after she lost several opportunities to purchase products due to poor network on PoS terminals and her mobile phone.

The situation, in fact, led to several lenders sending apology emails to their customers. One of such emails seen by New Telegraph reads:

“Dear Esteemed customer, we sincerely apologize for the delay you many have experienced in processing transactions on our digital channels.

“This is due to a challenge with our national switching service platform designed for facilitating electronic payments.

 

“We are working to resolve this quickly.”

Commenting on the issue, a financial analyst, Mr. Charles Duru, attributed it to banks’ unpreparedness to handle the rising number of Nigerians that have embraced e-payment.

He said: “It is true that banks have invested heavily in e-payment channels so that they can provide efficient electronic banking services. But the fact is that what they have provided is inadequate for the number of customers now using such services. IT is capital intensive and many banks are cutting costs in these hard times.”

Corroborating Duru, the Head of IT at a Tier 1 lender, who did not want to be quoted, told this newspaper that while bank CEOs are eager to leverage IT to boost profits, they are usually reluctant to cough out the required funds.

The bank official said: “Ensuring that epayment channels can withstand the pressure of the increasing number of users goes beyond acquiring ATMs and PoS terminals. A lot of other critical infrastructure also has to be in place. It costs a lot of money to get the people with the skills to keep the system functioning for 24 hours.”

 

NIBSS confronts challenges

Indeed, at a press conference organised by NIBSS in March this year, the then Acting Chief Executive Officer at NIBSS, Mr. Niyi Ajao, attributed the surge in failed PoS transactions to a sharp increase in the number of customers who use the e-payment channel.

 

Pointing out that the 285 million transaction volume recorded for PoS terminals last year, was the highest ever for the e-payment platform, he revealed that as part of its efforts to cope with the sharp rise in the transactions, NIBSS embarked on an upgrade of its system, a move, he said, some key stakeholders were not adequately prepared for, thereby resulting in the increase in the number of failed PoS transactions.

 

According to him, following the record high volume of PoS transactions recorded last year, the company (NIBSS) decided to upgrade its system to be able to cope with a further rise in the transactions, given that it planned to double the growth recorded in 2018.

 

Ajao said: “In 2018, we had 285 million POS transactions and that was the highest ever recorded in the country. We are expecting that the figure will double in 2019 because 2018’s figure doubled the figure recorded in 2017 and that was why we embarked on an upgrade of our systems.

 

“A system glitch happened in course of trying to upgrade capacity and unfortunately for us, other players in value chain had issues around that period and that compounded the problem. We started noticing the issues around December. The failure rate, which was previously at 13 per cent climbed to around 16 per cent.”

He explained that a failed PoS transaction could arise as a result of total Turn-Around-Time (TAT) for a PoS transaction cycle from the time it was received to the time a response was sent back to the terminal.

“This TAT, such as when the timeout had been configured at 15 seconds in agreement with banks and processors. However, delayed responses from Issuers after this timeout in recent times could cause authorised debits not to return to the terminal before the set TAT,” he explained.

 

 

Remedial measures
Shedding light on remedial measures taken by NIBSS to reduce the failure rate, Ajao said there had been adjustment of timeout to 20 seconds from 15 seconds since March 14, while further adjustment to 45 seconds was done on March 19. He said that any issuer with delayed responses beyond 45 seconds would be disabled with immediate effect to isolate such a bank, adding that the process was ongoing.

 

 

Besides, he stated: “Implementation of an in-memory database system on the Nigeria Central Switch (NCS) platform on March 18, 2019, to ensure super-fast responses at the center. All systems have been load-balanced for non-stop performance. Processors have been advised to ensure redundancy in their network links for efficient fail-over whenever there is a service failure by any network provider as well as to scale up on infrastructure.”

 

Significantly, Ajao also said all service providers were expected to scale up on infrastructure because, according to him, the strength of the ecosystem would always be equal to the weakest one.

 

Clearly, however, the frustration felt by many bank customers who tried to use epayment channels last week, shows that the “remedial” measures introduced by NIBSS, have not solved the problem.

 

 

Last line

 

As a top official in the banking industry argued last weekend, it is the CBN’s responsibility to ensure that it steps up the Shared Services programme, which is aimed at ensuring a drastic reduction in costs for DMBs, especially in the area of critical infrastructure such as power and information technology.

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