Nigeria Content Online

A recent report has
shown that many Nigerians still do not know that their debit (Automated
Teller Machine, ATM) cards can be used for more than just withdrawing
cash from bank ATMs.

Over 74 per cent of
the respondents surveyed by ThinQThanQ, a research and database unit of
financial technology, a financial services technology publication that
circulates in 16 countries, said they have used their ATM cards for
only cash withdrawals.

The report also
shows that only 14 per cent of the respondents use their cards to make
purchases on the web or topped up airtime on the web, or at point of
sale (PoS) terminals or ATMs.

The publication
said data for the customer usage pattern for the ATM in 2010 were
collected from surveys conducted through random questionnaires applied
to 600 debit card holders across Nigeria. These were administered to
the survey population in Lagos, Abuja, and Port Harcourt, three leading
commercial cities in the country.

Lack of understanding

Temilayo Ojo, a finance consultant, said she was not aware that her card could perform various transactions.

“I just thought
that the options I had for the card were the ones at the ATM machines,
checking balances, topping up my airtime, and all that,” she said.

Key findings from
the survey are that the migration of the payment cards from the
magnetic stripe to chip and PIN EMV platform has been smooth and hugely
successful in Nigeria. Also, efforts of the CBN, banks, card schemes,
and other stakeholders have yielded positive results.

Sola Fanawopo,
editor-in-chief, Financial Technology Africa, said the drive towards a
cashless payment system in the country has yielded very poor results,
as very few bank customers use their ATM cards for end to end payment
transactions. Majority of the card holders said they only use their
cards to withdraw cash.

“No wonder most respondents referred to debit cards as “ATM cards”.

“Most card holders
in the country are unaware that they can use their ATM cards for
payment transactions on other channels from ATM withdrawals. Some of
the card schemes are also culpable as their cards are not acceptable on
some of the channels,” he said.

Seven per cent also
use their cards for funds transfer from one bank account to another.
However, only four per cent of the survey’s respondents used their
cards to make bill payment on touch points.

Network challenges

ATM downtime and
fear of fraudulent activities have been cited as major factors
inhibiting the frequent use of debit cards for payment transactions by
bank customers.

More than 52 per
cent of bank customers surveyed said ATM downtime was the major reason
that prevented them from using their cards more frequently for payment
transactions. Similarly, about 43 per cent of the respondents affirmed
that concerns about fraud posed another hindrance for using their cards
more regularly.

Only 52 per cent of
bank customers surveyed have actually used their debit cards for any
form of payment transactions, while 48 per cent have refused to do so.

To deepen the
culture of card usage, banks and card schemes need to focus on
marketing strategies that will encourage card holders to activate and
use their cards as frequently as the need arises for all relevant
transactions.

73 per cent of the
respondents actually feel more secure using the new chip and PIN EMV
cards. Incidence of payment card fraud was on the increase before the
change over to the PIN EMV platform. 19 per cent of the people surveyed
have actually experienced fraudulent activities with the use of their
debit cards for financial transactions.

Mr. Fanawopo said
awareness of the availability of loyalty and rewards schemes from usage
of payment cards is low. He, however, said that the assurance that Chip
and PIN EMV payment cards are not fraud-prone like the magnetic stripe
cards is gradually restoring the cardholders’ confidence over fraud
concerns.

A banker at Zenith
Bank, however, said a good number of customers are actually enlightened
about the various uses of their cards.

“Many of them
utilise their cards to an encouraging capacity, especially during
public holidays. In fact, we receive calls for directives as regards
internet banking and online transactions from customers. I can say out
of about 100 customers, about 20 or 30 of them actually know about the
other functions their cards can perform, like the payment of their
utility bills, DSTV, and all of that and more,” she said.

The Central Bank
has on several occasions stated its efforts to address card fraud. At a
recent event in Lagos, Emmanuel Obaigbona, who represented the
director, banking and payments, said apart from a migration directive
of card types, the apex bank has also mandated all banks to set up
effective help desks for handling card-related complaints.

He also said that
the regulatory body also ordered the issuance of relevant rules and
regulations in order to provide a level playing ground for all
concerned parties in the retail payment industry, which include the
electronic banking guidelines, guidelines on transactions switching,
stored value card and prepaid card operations, and others for the
operations of credit bureau.

“These guidelines are aimed at fostering consensus and cooperation
amongst a broad spectrum of payments service providers and increase
public confidence in the system, among others,” Mr. Obaigbona said.