Mobile money services get a boost: Good news for telecommunication companies, good news for all?

Following a highly anticipated nod from the Central Bank of Nigeria (CBN), telecommunication companies and banks are set to fully embark on adopting the mobile money services plan on a fully cooperative scale. CBN loosened the restrictions earlier placed on the telecommunication companies and has stated that it is ready to include them as super-agents. This decision was made after a review of the mobile money guidelines.

In 2013, CBN decided to restrict the participation of telecommunications companies in regulating the mobile money sector due to a clash of interests between them and licenced banks. This came even after the institution recognised the strong potential that telecommunication companies had in using its numerous subscribers and wide network range to enable substantial penetration of the service. Banks, along with other financial and non-financial institutions, were naturally strong actors because of their resource capability for operating mobile money services.

This disagreement only served to bring about a slowdown in giving the mobile money services the boost that they required. However this ‘clash’ between the telecommunication companies and banks only grew in the event of the CBN’s restrictive policies. In January 2014, Mr. Taiwo Otiti, the General Manager of the International Business Machine Corporation Africa (IBM Africa) contended against giving telecommunication companies no control. According to him, the approach of the CBN and other key actors to the mobile money service was limiting its potential success.

Telecommunication companies did not relent in constantly advising Nigeria’s crown bank to grant them licence to use their infrastructure and technology to support the service, even though the results were always the same. Earlier this year, June 2015, the Chief Executive Officer of Airtel Nigeria, Mr. Segun Ogunsanya, again advised the CBN to lift the restrictions placed on the telecommunications companies. According to him, the mobile money sector was still slow because it was led by banks.

In August 2015, barely two months after the lecture, telecommunication companies are now super agents and mobile money services within Nigeria are poised for a significant boost. Starting from July 2016, all operators will be required to front a capital of N2 billion.

The CBN lift of restrictions placed on telecommunication companies could have immeasurable impact on Nigeria’s economy. But this good news does not come without a price. Cashless policy, e-banking, other computer-mediated networks, and mobile money services usually apply charges to any transactions that are made through them. First issued in 2004 and revised in 2013, The Guide to Bank Charges  outlines which charges apply in banking transactions in Nigeria.

In addition, electronic banking can cost between N70 to N3,000. These charges apply to payment of bills, interbank transfers, interest charges, SMS charges, to list a few. Mobile money services will largely engage the use of SMS in their operation. Charges paid might not be noticeable, but they cost individuals a tidy sum in the long run. They can also increase.

Fraud is one of the reasons the take-off for mobile money services in Nigeria has been slow. According to the Fraud Landscape statistics, the amount lost to fraudulent internet banking transactions was N3.2 billion in 2014. Telecommunication companies will also have to tackle network outages, which are also prevalent with electronic transactions.

The potential for mobile money services in Nigeria is vast, particularly if associated risks are addressed effectively. Mr. Musa Itokpa Jimoh, the Deputy Director of the Banking and Payment System Department in the CBN, has advised that individuals keep their ATM cards and pins safe to avoid falling victim to fraudsters.

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