The Central Bank of Nigeria (CBN) has unveiled the country’s National Domestic Card Scheme, which is scheduled to be effective from January 16, 2023.
The Director of Corporate Communications of CBN, Osita Nwanisobi, disclosed this in a statement on Friday after a Bankers’ Committee meeting, emphasising that this development will promote an inclusive digital economy in Nigeria.
Nwanisobi highlighted that Nigeria, as Africa’s largest and most vibrant economy with an increased pace of digitisation and innovation, alongside the expansion of mobile penetration and the proactive policy initiatives of the CBN, facilitated the rising adoption of digital financial services.
According to him, “Nigeria joins a growing list of countries – India, Turkey, China, and Brazil as leading examples – which have launched domestic card schemes and harnessed the transformative benefits for their respective payments and financial systems, particularly for the underbanked.
“The CBN recognizes the significant benefits from delivering Africa’s first central bank-driven, domestic card scheme, which, when delivered at scale, has the potential to become the largest in Africa and one of the largest in the world,” he explained.
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He further stated that “Considering the strength and breadth of its banking sector and the rapid growth and transformation of its payments system over the last decade, Nigeria is ideally positioned to successfully launch a national card scheme.
“Building on this platform to accelerate financial inclusion requires infrastructure that can deliver lower-cost payments services that are more accessible and affordable for Nigerians,” he said.
The National Domestic Card Scheme, which is in furtherance of the apex bank’s mandate to foster stability, inclusion, and advancement in the financial and payment system, will be provided via the Nigeria Inter-Bank Settlement Systems (NIBSS) Plc, the country’s central switch. The provision will be in partnership with the Bankers Committee and other financial ecosystem stakeholders.
Benefits Of The National Domestic Card Scheme
The National Domestic Card Scheme portends several advantages for Nigeria locally and internationally, as it is expected to promote innovation within the Nigerian domestic market and enable banks and other institutions to offer a variety of solutions.
According to Nwanisobi, “Domesticating our card scheme also enhances data sovereignty, enabling the development of locally relevant products and services and reduces demands on foreign exchange,” he said.
CBN’s Communications Director also noted that the system could be harnessed for government-to-person transactions.
“The scheme can also be leveraged as a platform for the seamless dissemination of government-to-person payments and other social impact initiatives, enhancing financial access and supporting the growth of a robust and inclusive digital economy,” he noted.
On his part, The Chief Executive Officer of NIBSS, Mr Premier Oiwoh, said the scheme would create solutions to improve card ecosystem innovation in Nigeria.
Oiwoh underlined, “The domestic card scheme is a scheme that has been the brainwork of the CBN, and it is being deployed to improve the payments landscape across Nigeria.
“So, part of the proposition that this domestic card scheme will be creating is that it drives acceptance and efficiency, reduce operating costs of a card operation in the country and also the provision of unique, reliable services because other features or other products will be layered on this card. Uniquely this card will be configured to address the unique ecosystem issues that we have to help improve payments across the nation.
“We also expect the card to provide affordable pricing; the charges will certainly be lower because it is expected to be charged in naira as against foreign currency. We also expect more local contents; contents uniquely for the Nigerian landscape which will support micropayments and credits, e-government, identity management, transportation, the health sector and agriculture in terms of payments.
“We expect this to reduce the dependency on cash across the landscape and help promote the cashless initiative by the central bank.”
He added that the operational effectiveness of this card was expected to be robust and should drive a lot of innovation and validation, end-to-end visibility to improve fraud management, and a better dispute resolution process around the current card operating system.
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What Is A Card Scheme?
A card scheme is a central payment network that uses credit and debit cards to process payments. Its primary role is to manage payment transactions, including operations and clearing.
Card schemes enable a simplified and guaranteed exchange of money between merchants, customers and their banks by operating international networks and setting uniform standards.
Transactions are managed according to a set of procedures, rules, and arrangements that allow cardholders to use their cards with third parties. This means they define rules for the routing of payment authorizations and settlement requests in point-of-sale and e-commerce transactions between merchant acquirers and card issuers, as well as ATM withdrawals or purchases with cashback transactions.
Two of the world’s largest brands, Visa and MasterCard, offer credit and debit cards that have become synonymous with a payment type that is accepted around the world.; these two huge brands are known as card schemes. In 2018, consumers around the world spent USD$ 368.92 billion on transactions for goods and services using their Visa, Mastercard, American Express, and UnionPay cards; these are just some examples of card schemes, also known as “card brands.”