NIBSS’s mCash is not only a game-changer but also a disruption from within.
Recently, the Nigerian inter-Bank settlement system (NIBSS) launched a new mobile payment product named mCash, (Microcash). mCash described by the MD of NIBSS, Ade Shonubi as a game-changer, will be used for low-value retail transactions not exceeding N50000. One of the incredible things about mCash is that it brings together all major players in the Nigerian Banking and telecom industries in a ‘mutually beneficial’ collaboration. This overdue collaboration enables the product to take advantage of a growing telecom market and emerging financial infrastructure like biometrics verification Number (BVN).
Users irrespective of their banks and telecom providers will be able to carry out transactions with mCash using a short code: 402. Similarly, merchants will have to obtain a unique 8-digit code with which to receive payments from consumers. These codes just like POS machines will be available (displayed) at merchant locations. All that a consumer needs to do is follow a 5-step-process, and dialling: 402*Sellerstcode*amount#.
Here’re why this is awesome. Everyone buying or selling can use mCash! Paying services like Bus and Airline tickets become only a dial away. In addition, you will probably no longer have to fight a Bus attendant (conductor) for “change” if he has mCash’s Sellerscode. An Uber Driver told me today as we interacted during a ride, that ‘Change’ is one of their greatest problems in Lagos, where Uber accepts payments in Cash due to local market condtions.
Another reason mCash is awesome is that anyone with smart phone can now make payment. I arrived in Nigeria on the 1st of November and quickly observed that virtually everyone I ran into was clutching a smart phone. Official statistics currently put this number at 15.5 million and it’s expected to reach 23.3 Million in 2019. This number becomes even more bigger, when you include the number of people with ordinary mobile phones. But mCash will not benefit everyone equally.
So who are the winners & losers?
The winners are the consumers and the e-commerce firms. mCash will effectively close a longstanding gap in the Nigeria payment market and also forster financial inclusion. The Central Bank of Nigeria (CBN) reckons that mCash is a vital infrastructure towards their goal of achieving 80% financial inclusion by 2020.
For the banks, it’s a disruption from within. Consider this, -mCash has a transaction limit of N50000 for which NIBBS charges N70 per transaction -end-users pay N20, while merchants pay N50. This is not only a coup but also disruption at its best. When you consider that transaction costs at the Banks average at about N105 plus other monthly charges.
Anyone that has an account with Nigerian Banks knows how annoying those debit SMS and emails (like the one here ) could be...:) Thanks to this awesome collaboration (already in place in many countries), the end of this reckless and sometimes, dismissively explained transaction costs might just be in insight. We now have a choice between being ‘exploited’ or paying less with mCash.
Another set of winners are the ecommerce businesses; Jumia, Konga, and in fact anyone that sells online! Have you ever wondered why we have JumiaPay and KongaPay? Aren’t these firms ‘supposed’ to be running ecommerce businesses? Why payment businesses? In Nigeria, there’s a significant gap in collecting payments from the consumers especially when you have to rely on commercial banks with outrageous transaction costs. My thesis is that we might see these ecommerce firms spin off or sell their payment businesses if mCash as we expect it, proves to be a cheaper alternative or offers greater conversion than their inhouse payment businesses.
If you think only the banks are affected by this coup, please hold on. Another group of casaulties are Point-of-Sales (POS) vendors! They know themselves…:) Having started my career in this market, I can see why a merchant will prefer an mCash account to a POS machine. Apart from the fact that mCash will offer clear cost advantage over POS machines, merchants wouldn’t have to worry about battery life of POS machines (serious problem given our near hopeless power situation), or the connectivity problems that come with POS. No one needs to be told how annoying it feels when you hear such phrases as “our POS no dey work”, especially when you have no cash on you. With mCash, the only device you will have to worry about are your mobile phones. This is enough problem already in country where carrying where multiple mobile phones are common. So mCash is a big deal and certainly deserves greater attention and enthusiasm than it’s currently getting.
