The Central Bank of Nigeria (CBN) under Sections 2(d), 33 (1) (b) and 47(2) of the CBN Act 2007 issued the regulation for Bill Payments in Nigeria, 2017 to promote sound financial system.
The guidelines are primarily to facilitate the development of an efficient and effective payments system in Nigeria.
The CBN have established and defined key players in bill payment policy to help achieve her objectives. The following are the stakeholders:
Payer – the individual or corporate entity making a bill payment.
Biller – a registered entity/merchant that receives funds from the payer as consideration for the provision of service or product.
Payer’s Bank – the bank where the payer maintains the account that is debited to make the bill payment.
Biller’s Bank – the bank where the Biller maintains the account designated to receive proceeds of payment made by the payer.
Payments Service Provider (PSP) – a person licensed by the Central Bank of Nigeria to provide services involving direct interactions with the payment, settlement and clearing systems and payment system arrangements, as the Bank may authorize from time to time and may include a bank, Mobile Money Operators or Other Financial Institution that is connected directly to a Biller without any service intermediary.
The Bill Payment regulation has opened up the digital space in Nigeria. Before now, typical payment for services like electricity, water, airtime, cable TV are often done physically. Individuals would visit physical outlets of the service providers to make payment.
The CBN regulation have opened up opportunities to all the players in the industry:
Pros
- Efficient Collection by Service Providers. For example, The Nigerian Electricity Regulatory Commission (NERC) revealed collection of Power Distribution Companies (Discos) in Nigeria for 2022.
“The total revenue collected by all Discos in 2022/Q2 was N188.29 billion out of N265.68 billion billed to customers. This corresponds to a collection efficiency of 70.87 per cent which represents 1.53 pp increase compared to 2022/Q1 where the average collection efficiency was 69.34 per cent,” the report stated.Collection efficiency is an indicator of the proportion of the amount that has been collected from customers relative to the amount billed to them by the Discos” - Seamless Mode of Payment. It has become easier and faster for Payer to make payments for services. Fintech companies,Banks and even the Telcos have good platforms on PC’s or mobile devices where bill payments are being made.
- Cheaper Mode of Payment. Due to the competitive business environment created by the CBN, Payers can now access incentives for bill payments. For example, Servpay.ng offers very competitive bonuses for every transaction Payers carry out on their platforms. They also offer Reffer and Win promo. These and many more are the benefits from the CBN regulation.
- Employment Opportunities. This regulation have created millions of employment for Nigeria youths. It has created bigger players in the industry which in turn have employed professionals to join their team.
Cons
A. Network Availability. Unstable payment network poses a major concern in the industry. The service providers or the Billers must continually increase their capacities to handle high traffic as Payers engagement increases.
B. Cyber Crime Vulnerability. In Africa, the cybercrimes has recorded a massive rise in the first six months of 2022, “with phishing and scams hitting 438 per cent and 174 per cent in Kenya and Nigeria, respectively”, the Guardian Newspapers. reported on August 3, 2022.
According to the Economic and Financial Crimes Commission, ” over 2,800 persons convicted of cybercrime in 2022″
Overall, the financial sector in Nigeria is fast developing with lots of prospects for investors