E-payment threatened by rising transaction failures

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The electronic payment (e-payment) which has gained wide acceptance in the last five years is threatened by transaction failures in key channels, especially Point of Sale (PoS), The Nation has learnt.

PoS transaction failure hit all time high yesterday, with a leading commercial bank recording 30,000 failure  on its platform. The bank, which asked not to be named, disclosed that transaction failure on PoS had deteriorated since October last year, after the Nigeria Inter-Bank Settlement System (NIBSS), failed to upgrade its technology to accommodate the rising use of e-payment channels.

The PoS transaction failure, the lender said, is now at its peak, with estimated 40 per cent failure rate, even when customers’ accounts are funded.

The bank alleged that  NIBSS’s technology is no longer sufficient to handle the volume of transactions in the country.

The NIBSS operates Nigeria Central Switch, handles inter-bank payments and settlements as well as Nigeria Automated Clearing System (NACS). The NACS facilitates the electronic clearing of cheques and other paper-based instruments, electronic funds transfer, Automated Direct Credits and Automated Direct Debits.

Banking sources said NIBSS, which previously denied being part of the problem, is yet to upgrade its technology to tackle the challenge.

Head Corporate Communications at NIBSS, Lilian Phido, did not respond to text message sent to her on the matter, as well as phone calls.

But findings showed that banks are now hiring more hands to resolve the cases of PoS transaction failure within eight working days as stipulated by the Central Bank of Nigeria (CBN).

The lender also told The Nation that it has been engaging NIBSS on the matter, but not getting desired feedback adding that unless NIBSS upgrades its technology, the situation might get worse.

According to the bank source: “Our customers keep complaining about failed transactions. But these customers will not want to understand that the challenge of failed transaction has nothing to do with our bank. It is purely NIBSS that is responsible for transaction settlement and when that does not happen, the transaction fails. We want to let all our customers to know that the transaction failure is not within our control”.

The bank source said: ” Aside NIBSS, some banks also need to improve on their technology. We also believe that regulators needed to reduce the number of parties involved in the transaction chain. We are also calling for a bank-to-merchant plan, but regulation as at today, says NIBSS has to be involved”.

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