Financial institutions are connecting the dots across Africa and have made headway in recent years in efforts to reduce the region’s reliance on cash transactions and the total amount of physical money exchanging hands (and accounts). In early 2012, the Central Bank of Nigeria (CBN) began a program called the “Cash-Less Lagos” initiative, which, among other things, began adding a transaction fee to daily cash deposits and withdrawals above a certain limit.
The reasons cited for this program, which will be expanded regionally started in early 2013, include:
- Safety – less loss due to theft or fires
- Convenience – with the growing adoption of mobile banking in the region, this initiative capitalizes on users’ ability to move money around electronically
- Less expensive for banks and governments – there is a tangible cost to printing, transporting, storing and tracking cash that is significant. This initiative will help reduce those costs by reducing large cash transaction
To expand the program, further development of the region’s electronic point of sale systems is needed. Only by having easy access to secure and convenient card acceptance devices will consumers be able to move to electronic transactions.
The CBN’s cash-less initiative has spurred orders for 80,000 VX 520 payment devices to-date as banks and merchants seek to meet the requirements of the program. The orders represent more than half of the 150,000 total devices that are expected to be deployed by the end of this year to comply with the mandate.
Likely, this is just the beginning of a real effort to not just modernize, but truly lead global efforts towards reduced-cash or cashless economies and we expect some of the early adopters to include other countries in Africa such as Kenya, Ghana and Ethiopia.
In general we are seeing increased demand for payment systems in banking, retail, petroleum and other vertical markets in Sub-Saharan Africa and the Indian Ocean islands. VeriFone’s distinctive approach to serving regional market requirements provides customers with the best combination of global strength coupled with customized local solutions.