By Dayo Oketola

Banks and electronic payment switch operators have refused to route their e-Payment transactions through the Nigerian Central Switch as directed by the Central Bank of Nigeria, thus making the N500m facility dormant.

Speaking in an exclusive interview with our correspondent in Lagos on Wednesday, the Managing Director, Nigeria Inter-Bank Settlement System, operator of the central switch, Mr. Paul Lawal, said the NCS was established to facilitate interconnectivity and interoperability of electronic financial transaction switching in Nigeria.

A switch is an electronic funds transfer and e-Payment transaction switching and processing system. The switching companies facilitate the exchange of value between financial service providers, card scheme operators, their customers and other stakeholders.

According to Lawal, the central switch is supposed to serve as the national gateway for payment services in the country.

To achieve this aim, he said that over N500m had been invested in the NCS by the NIBSS over the past four years

He added that the CBN directive was that each bank must be connected to the central switch and other switches of choice.

However, the NIBSS CEO lamented that, though all the banks and the payment switches in the country, such as Interswitch, were already connected to the central switch, they had yet to activate their lines.

This, according to him, means that the banks have subscribed to the central switch but have yet to make use of its services, thereby making it somewhat dormant.

Lawal said, “As at today, all banks are connected to the central switch. All switches are also connected to the central switch, but many of them have yet to go live. It is like when you buy a SIM card and you put it in your phone, you can’t start making calls until the network provider activates your card.

“This means that communication from that card will be routed through the network. As at now, they are all connected, they are all tested, they can all work tomorrow morning, but many have not activated those lines.”

He said that the apathy towards the central switch might be as a result of the fear of changes on the part of all stakeholders. He, however, argued that the central switch was an enabler and not an inhibitor.

“The vision of the central switch is to achieve greater financial inclusion through a cashless economy, where the consumer can get instant services at very low rates because the centralised system has reduced costs, minimises financial wastes and significantly improves efficiency of industry targeted e-Payment schemes,” he said.

Before the advent of the central switch, Interswitch, Chams Plc and others had dominated the electronic transaction switch business in Nigeria.

Lawal argued that the essence of the central switch was to give access to a more efficient, technology-driven payment system, with its attendant cost reduction, as well as lower transaction fees.

According to him, the central switch is also expected to prevent infrastructure duplication, while providing a single platform for a variety of payment needs, infrastructure and instruments.

However, if the stakeholders failed to route their transactions through the central switch, the benefits would not be accessed, he said.

Our correspondent, however, gathered that the major electronic transaction switches believed that the NCS management was trying to reap where it did not sow, since they were the ones who grew the industry to its current status.

A source told our correspondent that there was a serious issue between the privately-owned switches and the NCS.

However, Lawal said the matter would soon be resolved.

Source: Punch