Managing Director, Unified Payment Services Limited, Mr Agada Apochi, speaks on the evolution of Nigeria’s payment system
How is the issue of cybercrime affecting people’s funds and their attitude to digital adoption?
The first point I want to make in response to that is that digital payments reduce fraud. So, we need to understand that it minimises the rate at which people lose their money. The question then is, how does that happen? If you accept cash payments, your risk starts right from the cash you hold. In that situation, you could lose your money in different ways. It could be through dishonest means by those handling the cash or those transporting your money to the bank for keeps. In a nutshell, there are different ways that people can lose their cash and there is a higher risk compared to digital payments or electronic money. When it comes to money in the bank, digital solution does not increase the risk of losing money. Yes, the risk exists, but somebody who does not have access to your signature will not take money from your account. Similarly, digital technology gives digital signature protection to your accounts.
Like you have criminals going physically to rob, we also have those who rob in the digital space. This is the aspect of cybercrime we are talking about, and the industry is doing a lot to reduce it. I can say with a sense of pride that Nigeria is doing very well. If you look at the rate of electronic and digital payments fraud, Nigeria will be one of those countries with the least fraud rate. I think kudos should be given to the Central Bank of Nigeria and the different operators who have put in measures to minimise such vices. I think we are doing very well compared with other markets. At Unified Payments, we provide services to different customers using digital technologies. We have built our platforms to include timeliness in blocking access to people’s funds, mainly when they complain that their digital signatures have been compromised.
In our group of companies, UP and its subsidiaries, we have moved a step higher by ensuring that we introduce a six-digit pin into the market. With our solutions, you can use a six-digit pin and phone number. Apart from that, we do not request personal identification number to be entered on the channels where transactions are done; you are to enter your pin on your personal device. If you go to an Automated Teller Machine, Points of Sale device or online, you can select Payattitude and enter your phone number as a means of payment. That would enable us to locate you on your device, and the transaction will be approved only if you enter your PIN on your device.
These are the investments and innovations that we have brought, and we would continue to get them to the market to minimise the risks of cybercrime and give confidence to customers that they can secure their transactions.
In simple terms, I can confidently say that going digital is safer. There is also the benefit of convenience, which you gain by going digital. As you know, when you go digital, you get paid instantly, which means that you exchange value now. It is better than giving a cheque that may bounce or lead to loss of funds.
You have been in the market for 25 years, which is quite long. How has the payment system evolved in the country in more than two decades?
As you are aware, we are the premier financial technology company in Nigeria. When we started 25 years ago, there was no company doing what we were doing. We have dealt with the evolution of payments for over two and a half decades of our existence. We started in the days when payments were done manually. It was when you were meant to go to a bank branch to do any payment service. During that time, payment was understood as payment with cash or cheque. As a company, we pioneered the idea of Nigerians paying with cards; it was then called ValuCard. At that time, you could get a card and use it at selected retail outlets to pay for goods and services. This was what we brought to Nigeria as far back as 25 years ago.
We were there, enabling Nigerians to pay electronically, which means that we were responsible for moving Nigeria from a point where payment meant going to your bank to get cash to pay for goods and services to a point where they could use their cards. We also witnessed the evolution to another stage where we have a proliferation of Automated Teller Machines.
Now, we have moved from that point to another level, where we have agents in different locations in Nigeria to enable people withdraw cash from their bank accounts. Overall, the most essential evolution is that people can now make payments without cash. With that alone, it means payments services can create more retail outlets than what we used to have when we pioneered electronic 25 years ago.
I must also state that payments have also moved from physical stores to online, thereby enhancing the growth of e-commerce in Nigeria and the rest of the world. It is not just making payments by Nigerians but also about Nigeria welcoming foreigners to make payments electronically. People who visit Nigeria do not have to come with significant cash before spending because they can spend with their cards issued by their banks in whatever country they come from. This means that Nigerian businesses can welcome foreign customers who wish to pay electronically for goods and services.
Additionally, Nigerians who travel out of Nigeria can obtain cards from Nigerian banks and use those cards outside Nigeria. They can also pay for goods and services outside Nigeria while sitting in the comfort of their abodes in Nigeria.
Most importantly, the evolution of payments has moved to an era of digital payments. We pioneered that through one of our subsidiaries called Payattitude. Here, you can use your phone number to make payments across any channel or make payments from person to person.
We have also seen the evolution of using mobile apps, USSD platforms, among others, as channels and technologies for making payments. UP is playing leading roles in these evolutions. With Payattitude, you can use a single app or USSD code that links your accounts with different banks.
We have also seen the evolution of payments, prompting the Central Bank of Nigeria to issue licenses for specialised banks called payment service banks. This type of bank allows financial technology companies, telecommunications companies and others to obtain permits and operate as banks with a strong focus on payments. This inclusiveness aims to provide financial services to Nigerians irrespective of their economic situation and physical location. As you are aware, our subsidiary, Hope PSBank, is the first payment service bank to be incorporated in Nigeria. It is a wholly digital bank.
Are payments service banks threats to commercial banks?
I will not say they are threats to commercial banks. This is because commercial banks offer more than payments. Of course, payments are also important to commercial banks, but the service banks are focused solely on payments. That is why they are called specialised banks. And when you consider the larger ecosystem, it will become more beneficial to our stakeholders. It must be noted that digital payments come with different orientations than what a traditional bank offers. To that extent, I don’t see it as a threat but rather complementary to building a larger ecosystem.
Now with payment service banks, many more Nigerians would be included. With payment service banks, customers of commercial banks can directly transact with non-customers of the commercial bank, thereby reducing the rate of exclusion.
Did COVID-19 lockdowns have any effect on digital payments in Nigeria?
Yes, it positively affected digital payments because it has helped people to cultivate a new beginning and new norms. People who never thought of embracing digital payments have now fully bought into it. It is possible for somebody to be included in the former financial services but digitally excluded.
The lockdowns associated with COVID-19 made people embrace a new way of life, a new way of transactions, a new way of making payments, new ways of enjoying financial services through digital channels. And when people try new things and see results, they will be encouraged to use them. Digital financial service is an innovation and like every innovation, adoption and diffusion by most people do not come easy.
Is there capacity challenge in the payments industry in Nigeria?
I think there is no challenge with human capacity. The only thing I can say is that there might be a challenge with the retention of employees. I say this because the innovation we see in the Nigerian payment service is ahead of most markets, including advanced countries. I can proudly say that the payments system in Nigeria is more advanced. This is because the kind of transactions we do here cannot be found or done in any developed market, whether Europe or America. With our platforms, you can easily connect to multiple bank accounts, using a single app, leveraging the USSD platform to deliver services to everybody, including those who do not have smartphones.
With USSD, we can leverage technology to bring everybody on board. We are ahead of the developed countries because we do not have the legacy challenges. The success of the developed countries limits their appetite for change.
I can say categorically that we are ahead of other markets when it comes to innovation of payments services, particularly as it relates to the technologies that we adopt.
Simply put, the challenge would be about training new people, especially when those who have the technical expertise leave Nigeria. It is also about dealing with issues of retention. We can also see it from a different perspective. If the talents we have developed in Nigeria are being attracted by other markets, particularly the countries that we consider to be more advanced, it means we have talents that are attractive. In the past, we have had situations where Nigerian businesses had to go and get expatriates to do certain things, but it is good that Nigerians are now exporting talents to these so-called developed countries. For me, it is something to be proud of as a Nigerian that advanced countries are finding our skills highly attractive.
What informed your interest in sponsoring ‘Who Wants To Be A Millionaire Game Show’?
The interest in sponsoring ‘Who Wants To Be A Millionaire’ is informed by the need to give back to Nigerians who have supported us in the last 25 years. And the question is, how do we give back to the people who have made it possible for us to continue in business for 25 years? We do not take for granted the support of our stakeholders. As you are aware, not many companies survive the first few years of existence. Having stayed for 25 years is not something we could have achieved without our stakeholders. That is the motivation.
What does the sponsorship deal entail?
The sponsorship deal entails Nigerians being empowered, educated, and entertained. These three things would translate into benefits for Nigerians who have supported us for the last 25 years of our business. As far as empowerment is concerned, every week, Nigerians would have a chance to win N20m. If someone wins that amount of money, you would agree that the person would be economically empowered. And it is not just N20m; people could win other cash prizes. If someone does not get to the level of winning N20m, the person may still win a different prize money.
When we talk of education, this is a show that is focused on improving the level of knowledge. If we take people back to learning, they will compete. So, it is not just about getting the money, but about the level of knowledge that people exhibit. It is about being educated on different topics through the questions that will be asked and answered to win N20m or different amounts.
As you know, the show is also entertaining and people like to be entertained. Though entertainment is considered universal, it differs from one group to another. But the world, as we know, is a stage, and a stage is full of entertainment. Families and friends should be able to sit together and enjoy the show, contributing to their bonding, social life and well-being. In a nutshell, the main objective is to achieve those three things the sponsorship deal entails – empowerment, education and entertainment.