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Perspectives on Innovative Opportunities to Hasten the Nigerian Economy via
Electronic Means
iuiio
Outline
1 Benefits
2 A Case of 2 Systems
3 How to Achieve the Adoption of E-Payment Technology - Government
4 How to Drive E-Payment Adoption – Financial Services
3
Little Leaks Sink Ships
A Case of 2 systems
The convenience of being able to access cash at an ATM or conduct a transaction at a POS terminal with a card clearly has an impact on economic growth.
The greater the volume of transactions, the lower the average cost per transaction.
Cash variable transaction
costs.
Cards
Cost
Cost
Txn. Vol.
Card Payments - Benefits -
FixedUpfront
costs.
Why Card Payments ?
A Typical Payment Process
A Card Payment Process
Iceland A Case Study:A majority of transactions in Iceland are made using payment cards, not cash.
Average cost of a cash txn = US $2.57Total cost of the cash system = US $18.5 million.
Average cost of a card txn = US $0.61The total cost of their card system = US $23.9 million.
Cash is 4 times higher than cash
Had Iceland used only cash it would have cost Iceland $100.69 million vs $23.9 million
An electronic payment system generally costs in the range of one-half to one-third of a paper-based system. This translates into a beneficial aggregate cost savings of at least 1% of GDP. (Source: Global Insights. Inc)An electronic payment system generally costs in the range of one-half to one-third of a paper-based system. This translates into a beneficial aggregate cost savings of at least 1% of GDP. (Source: Global Insights. Inc)
Card Payments - National Benefits -
Source: “The Costs of Cash and Cards Compared, The Cases of Iceland and Belgium,” De Grauwe, Paul, Erik Buyst, and Laura Rinaldi, University of Leuven, 2000.
An extra $ 76.79 million in SavingsHow much are we loosing ?
However there is a wide divergence in the rate of adoption of electronic payments. Customer Uptake is marginal
8
How can I drive
e-payment Adoption
(Government)
SmartGOV.IGR Features
Trends To Watch
o Convergence of products/ networks
o Elimination of regulatory boundaries (Universal Banking)
o Cross border opportunities
o Technology sophisticationo Anytime/ anywhere
expectationso Speed/cost value propositiono Privacy sensitivities
PaymentsBusiness
Regulatory/International
Trends
ConsumerCustomer
Trends
TechnologyTrends
ProductTrends
o Rapid evolution driving down costs enabling new products and forms of distribution
o Price/value sensitivityo Enhanced informationo Fraud/risk management
Commercial Customer
Trends
CompetitorTrends
o Continued bank consolidationo Continued growth of non-bank
processorso Convergence of value chains,
bringing disparate industries into competition
o Convergence of products/ networks
o Elimination of regulatory boundaries (Universal Banking)
o Cross border opportunities
o Technology sophisticationo Anytime/ anywhere
expectationso Speed/cost value propositiono Privacy sensitivities
PaymentsBusiness
Regulatory/International
Trends
ConsumerCustomer
Trends
TechnologyTrends
ProductTrends
o Rapid evolution driving down costs enabling new products and forms of distribution
o Price/value sensitivityo Enhanced informationo Fraud/risk management
Commercial Customer
Trends
CompetitorTrends
o Continued bank consolidationo Continued growth of non-bank
processorso Convergence of value chains,
bringing disparate industries into competition
Bus
Passenger information
Integrated e-ticketingA B C
Vision 2020
Framework for Delivery to State Governments
25% Off
A Virtuous Circle
electronic payments and economic growth build on each other to form an ongoing virtuous circle. One that can sustain long term economic development.
Card PaymentsVision 2020
Vision 2020
Nigeria to become one of 20 largest economies in the world by year 2020.
National Payment System ReformsContinuing to Strengthen Public
institutions for transparency
E- Payments are critical in facilitating the growth process.
It is in the economic interests of all countries that wish to participate in the global economy
to encourage the development of
more efficient systems.
14
How can I drive
e-payment Adoption ?
(Financial Sector)
Yet, despite millions in potential savings, post tax benefits etc
consumer uptake remains marginal. Why is this?
Poor Uptake
Web payments are grossly impersonal Often requesting intimate details such as the
individual's card number, address, telephone number
This sole action puts many people off.
The simple fact is that people trust people, not computers.
Money motivates crime, divorce proceedings, sibling rivalries, murder and even war. People's
money is not a thing to be trifled with.
For this, many want the assurance of dealing with a human being trained to assure that
everything goes correctly
Trust enablement and education are the keys to driving consumer adoption
Trust
How can banks, and financial transfer institutions cultivate a bond of personal trust needed to increase mainstream
consumer adoption of electronic payments?
Increase Trust
Reputation Systems
Feedback Forum: Remember the 5 stars ?
eBay, the predominant online auction house, •Buyer and seller have an opportunity to rate each other. •Rating can either comfort or alert a potential seller or buyer•The Forum enables usage and purchasing decisions
For Banks:Rate transactions on ATMS.Collect positive data start customer campaigns on the performance of your ATM servicesOffer 24hour arbitatrationStand outDevelop trust
Trust the interface Trust the Interface: Remember Mafia wars, Avatar, ok Spiderman, Superman ???
MIT Gestures and Narrative lab. are embarking on a study (1) • Verbal voice over do not necessarily engender more trust, but virtual people do. • Mimic human conversational techniques and non; verbal gaze, gestures to increase
trust and create a believable human interface - embodied conversational agents (ECAs).“
• Early results show that "in a myriad of subtle ways, users felt heard and as if the technology was adapting to them rather than the other way around." This mechanism can potentially be used to educate, advise and market to consumers.
Trust the Process PAINfully.
Privacy : Limits knowledge of a transaction's content to only those having a need to know.
Authentication: Authenticate all users in the value chain. In the real world, mutual trust is established through
a variety of familiar tokens and rituals (e.g., driver's licenses, familiar "face and place" settings, etc.), but the Internet offers card readers and one time only passwords use them.
Integrity: Ensure that the transaction has not been altered (except where specifically allowed) by thoseinvolved, by third-party attackers or by system errors 3 DES securtity, Site Verification etc. Non-repudiation: Prohibit disclaimers
Where Man Meets TechnologyIf consumers and businesses do not trust
or feel comfortable with exchanging or moving money over e-payment systems,
they won't do it. ]
To trust the process and the interface you need….
•Added security•Fault tolerant Hardware•Continuos Availability•Robust Operating systems•Databases that support high volume transactions•Value added Services
22
Everybody can’t change everything
But
Everybody can change something
What will you change ?
23
Thank You
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