The Central Bank of Nigeria’s cashless policy commenced on January 1, 2012 in a phased approach that featured Lagos as the pilot state because of its “financial sophistication, the presence of an enabling infrastructure, volume of cash transactions and exposure of residents to alternative payment channels.” Phase two followed on July 1, 2013 in the Federal Capital Territory, Abia, Anambra, Kano, Ogun and Rivers states. On July 1, 2014, the policy was extended nationwide.
The policy places daily limits on cash withdrawals; for individuals, a charge of two per cent of the excess amount withdrawn over N500,000; and for corporate bodies, a charge of five per cent upon exceeding the daily withdrawal limit of N3m. Charges will take effect in the 30 states with effect from July 1, 2015. It is expected that this will give enough time for the deployment of the infrastructure needed to support the policy and accelerate the process of migrating towards electronic cards and mobile payments. It will also allow for time to further sensitise the public and change attitudes in a society that has a prevailing cash culture.
All over the world, the trend has been for governments and financial institutions to pursue policies to reduce the volume of cash in the system. In some developed countries, one can do almost entirely without the use of hard cash, and electronic means of payments far outstrip cash transactions in much of the industrialised world today; indeed, one is regarded with consternation should you wish to make a purchase with large amounts of cash. Nigeria cannot afford to be left behind in this trend.
As we inch closer towards cashless Nigeria where digital or electronic money will eventually take precedence over physical money, how prepared are you? How would you feel if you were told that you would no longer be able to use paper money and would have to rely on electronic technology for all your transactions? We all like the speed and convenience of e-commerce, but we also like the look and feel of our hard cash in our wallets. It is tangible and feels real, and it gives one a sense of really possessing something.
Technology has changed so much in our lives, the greatest impact being the actual way that transactions take place. The world of banking and finance has been one of the greatest beneficiaries of technological innovations and advancements in global payment systems.
There are many benefits from doing away with “old fashioned cash.” It is a means of curbing corruption, money laundering and other cash-related financial crimes, global terrorism and cross-border crimes. It also helps to address the enormous security challenges and the exorbitant cost of cash management to the banking industry. Businesses will embrace it as a means of receiving instant payments, cutting their expenses and institutionalising operational efficiency, thereby increasing their revenues. The rest of us should embrace electronic, Internet and mobile banking for the speed, convenience, security and the efficiency that they provide.
The Internet has revolutionised banking and personal financial management in many ways. Nowadays, we are all so busy in our work lives that there often isn’t the time to visit the bank. If you have not yet embraced your banks’ Internet banking service, there are some compelling reasons to do so. With Internet connectivity, you have unlimited access to your bank accounts and can carry out most of your routine banking transactions at your convenience; you can check your account balances, pay bills, make transfers, and manage your various accounts with a few simple clicks from your laptop or computer, iPad, or cell phone.
Do you use your bank’s electronic banking services, which automate processes relating to your financial transactions for convenience and efficiency? The most common forms of electronic payments are telephone banking, Internet banking and plastic cards such as credit cards, debit cards and Automatic Teller Machine cards, instead of currency.
Debit and credit cards have transformed our financial lives; one can effect a host of transactions without ever having to visit a bank. Whether it is from a Point of Sale portal at your nearest grocery shop, an increasing number of merchants, including shops, restaurants, clubs, hotels etc will accept your card.
Most of the ATM cards issued by Nigerian banks are usually from one of these three companies, Interswitch’s Verve, Visa and MasterCard. The naira Visa and MasterCard debit cards allow you to access foreign exchange from your naira account while abroad, and local currency while in Nigeria. Denominated in naira, they can be used at ATMs or Point of Sale terminals globally where the Visa or MasterCard signs are displayed to either pay for goods and services or access foreign exchange. Linked to your current or savings account, all transactions reflect instantly.
How prepared are you for change? It is important to begin to become familiar with the alternative electronic payment channels available to you and decide which will best suit your personal financial habits and circumstances. Don’t get left behind; embrace technology and reduce your dependence on cash, according to The Punch.
