On July 9, 2012 ? In Finance

By Babajide Komolafe, Chinedu Ibeabuchi and Ahmed Ibrahim

Incessant network failure has grounded e-payment transactions through PoS terminals in merchant outlets thus impeding the success of the cashless policy in Lagos. For example, in the newly opened Ikeja City Mall, investigation shows that though there are PoS terminals in the merchant outlets, they are rarely used to accept payment from customers due to network failure.

?We experience network failure frequently. There are occasions when bad network causes double debiting on customers account, which in most cases causes quarrel between us and the customer. We had experienced cases where customers who had earlier used their cards on PoS but could not successfully confirm payment due to bad network, came back to lodge complain that their accounts were debited. And in many cases, it takes long for the banks to correct this.? says Michael, a senior staff in a sport outfit store at the mall.

He however commended the cashlite policy saying it is a means of preventing fraud and reduction in cost of handling cash.

One of the key strategies of implementing the cashless policy introduced by the Central Bank of Nigeria (CBN) last year to discourage the use of cash for payment, is massive deployment of PoS terminals across Lagos state. Presently, the banks have deployed about 100,000 terminals to merchant stores in various locations.  To complement this, they have streamlined the procedure for issuing payment cards, such that customers can get a card within an hour. Banks have also stepped up publicity campaign on the various electronic payment channels that can be used as alternative to cash for payment and to transfer money.

Vanguard investigation however revealed that these efforts are being undermined by poor network services.

Transactions via PoS termianls are mostly affected by this inept network. The PoS are linked to the banks through the network of GSM service providers namely MTN, Globacom. Investigation however reveals that that though these companies are supposed to provide dedicated lines for PoS transactions, the connection via these lines are most weak or doesnt exist.  Consequently, most of the PoS terminals have become very unreliable for payment.

CSS Bookshop on Broad Street, Lagos Island has three terminals but almost 95 per cent of payments are done in cash, due to failure of the terminals to connect.

Also most of the customers spotted at Shoprite in Ikeja City mail paid with cash while only few requested to pay through PoS. A customer, who spoke in confidence, said she had to opt for cash as the PoS network failed instantly the moment she wanted to pay for her goods.

Also, commenting on this, Tochukwu, a dealer in one of the electronic stores at the Mall said at least 50 percent of customers are always eager to use the PoS to pay for items bought but the challenge still lies on poor network connection. He however noted that the cashless policy has boosted the confidence of doing business.

?It has been beneficial because it has reduced the high cost of carrying cash. So it gives confidence to doing business. I have discovered that at least fifty to sixty per cent of our customers that come here use it. But the challenge is the network. If the network is good, then there is nothing stopping them using the PoS. Most of the time, customers like paying with their card, but when the network is bad, they find it difficult to do that.  Customers want an effective service. I think the CBN should be able to look into the infrastructure surrounding the cashless policy in other to be more effective.?

Similarly, Kingsley, a bookshop salesman said, ?Infrastructure should be put on ground if the CBN wants the policy to run smoothly. If you rely on it, it fails often and this could be frustrating sometimes.?

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