The cardinal objective of the cashless policy of the Central Bank of Nigeria (CBN) is to promote the use of electronic platforms for payment for goods and services, thereby reducing the cash in circulation.
However, since the CBN started implementing the policy nationwide from March 31, 2020, many traders are still finding it difficult to embrace e-payment platforms.
This has prompted experts to suggest that the apex bank needs to carry out more enlightenment to educate them in order to appreciate the benefits of the e-payment initiative.
Experts believe that if merchants and operators of small businesses are adequately educated, the chances of total acceptance of the cashless policy would be assured.
Anther factor making it difficult for merchants to embrace e-payment is transaction charges specified in Section 6: Electronic Banking and Section 6.8: Merchant Service Commission (MSC) of the CBN guide to charges by banks, other financial and non-bank financial institutions, 2020.
According to the guide, general merchants (including domestic, international travels and entertainment) shall pay 0.5 per cent of transaction value but not more than N1,000.
But this seems to be a hard bargain for the merchants.
For instance, Gladys Inighe, who operates a cosmetic shop at Ikotun Market, Alimosho Area, Lagos State, does not accept electronic payment/transfer because she does not want to be charged for such transactions.
“The reason I do not accept electronic transfers is because as my customer is being charged for transferring money to my account, my own bank is also deducting a fee from my account for receiving the money. It does not make sense.
“I rather collect cash from my customer. Why should I be selling and losing money when I am supposed to sell and make profit?” Inighe queried.
Mr Eyitayo Afeez, a wholesale dealer in Hair Extension/Attachment, spoke in the same vein.
“I do not accept transfers, I tell my customers to pay for goods bought in cash and not electronically because my bank normally charges me for every kobo I receive from a customer. I really do not understand why they do that.
“And sometimes, when a customer does this transfer, they usually see it as punishment when you ask them to wait for you to receive alert from your bank due to either poor network or bank delay to move the money.
“Besides, I have lost money through electronic transfer because those bad boys normally generate and present fake debit receipt to me that looks so real,” said Afeez.
Economists have suggested that the apex bank should intensify sensitisation for the traders so that the cashless economy policy would not be truncated.
Akpan Ekpo, a professor of Economics and Public Policy at the University of Uyo, Akwa Ibom, said most of the traders needed cash for immediate transaction, hence they considered e-payment as unnecessary delay.
However, he said continuous orientation would help: “What is needed is more education on the benefits of electronic payments. The informal sector is quite large so, acceptance has to be gradual.
“Some traders have bitter experiences using electronic transfers. For all kinds of reasons payments do not go through.”
Prof. Ndubisi Nwokoma, the Director, Centre for Economic Policy Analysis and Research (CEPAR) urged the government to encourage the use of POS among traders as this does not appear to suffer from this shortcoming.
“This is also a way in which the eNaira can be deployed to ease business transactions, particularly in the informal sector.
Nwokoma said traders were afraid of losing value if they received payment for goods and services through bank transfers because of the bank debits such as e-transfer charges.
He said, “For example, for goods worth N100, 000 paid for through the banking system, the amount left after the debits becomes less than the sales price. Hence payment in cash conserves this value while payment though the bank does not.
“These multiplicity of debits on deposits has now become a disincentive for the use of the cashless mode of transactions.
“While government is trying to enhance its revenue by imposing these duties on deposits, it is on the other hand reducing the tempo of economic activities or at best minimising the use of the banking system for payment for goods and services.
“It can also be inflationary because traders can jerk up their prices to account for these debits.”
Efforts to speak with key officials of banks and head of communications of the CBN on charges on electronic transactions proved abortive.
However, a source at the CBN, who declined to be mentioned because he is not authorised to speak on behalf of the bank.
“For anyone that has a POS or has been debited, there is what is called Merchant Service Charge (MSC) and it’s a fee that is charged for every transaction that is done using a POS.
“Using any card accepting device usually comes with a fee because for you to be able to have that technology at your convenience, there is a cost to enabling that technology come to you.
“There is someone that deploys that POS to you, there is someone that trains that person, there are connections that the POS is attached to,” he said.
He explained that for each transaction, there was need to compensate all the entities involved that made the transaction to happen.
“If you go to a local POS device and it is not your bank that owns that device, shouldn’t the bank that enabled you be compensated?
“So, all those costs are part of that MSC, and today that MSC is at 0.5 per cent of that transaction for a maximum of N1,000.
“Even if you do a transaction of N2 million they can’t charge you more than N1,000,” said the source.
On how to make the traders accept electronic transactions, he said the CBN had since been running targeted stakeholder engagement sessions for key groups.
He added that the apex bank was still carrying out communication campaigns through the media to educate market women and men and different associations on the enormous benefits of electronic transactions.