BusinessDay 24 Aug 2018

Friday 24 August 2018
BUSINESS DAY
MoneyInsight
C002D5556
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High PoS transactions failures keep merchants’ cashless apathy alive
FRANK ELEANYA
Persistent rise in failed
transactions involving
Point of Sales (PoS)
has many merchants
on the wrong side of
the cashless project being championed
by the Central Bank of
Nigeria (CBN).
Data from the Nigeria Interbank
Settlement System (NIBSS)
found that PoS transactions carried
out by retailers in the country
recorded a high failure rate
of 11.41 per cent representing
about 278,966 failed electronic
payment transactions on Tuesday,
the first day of Eid-El-Kabir
celebrations. The numbers did
not change much on Wednesday,
the second of the celebrations
as failure rate dropped
slightly to 10.53 per cent as at
2:20pm.
PoS transaction failures also
hit 14.9 per cent in mid-December,
2017.
PoS should ordinarily be the
preferred payment channel for
many merchants in Nigeria. One
major advantage it has is that
unlike channels like ATM with
withdrawal limit set at N100, 000,
customers can pay more using
PoS. Unlike ATMs also, it is portable
and handy which means
it can easily be moved around.
NIBSS had noted in a report
in 2015 that PoS is the most popular
non-cash payment channel,
preferred among the non-cash
payment options by 93.6 per cent
of merchants, and 38.8 per cent
of consumers usage.
The CBN introduced the
Point of Sale system in 2012 to
drive home its cashless policy.
The volume of PoS transaction
has grown since then at a
compound annual growth rate
(CAGR) of 123 per cent between
2012 and 2016, according to
NIBSS. The PoS system was used
146 million times representing
a 130 per cent increase from 64
million prior to 2016.
It is believed that PoS transactions
peaked when small
businesses that already use
their PoS machines to accept
bank cards for payments of
goods and services began to use
it to debit customers’ account in
exchange for the equivalent cash
and a fee.
However, at a July 2018 fintech
conference in Lagos organised
by Epayment Plus, stakeholders
observed the speed
with which most merchants
were rejecting usage of point
of sales for their daily transactions.
The problem did not just
begin in 2018; in 2016, NIBSS
admitted that despite uptake in
the adoption, barely half of the
machines were in operation. Out
of a total 120,000 PoS machines
in Nigeria, only 62,000 were
active, while a total of 100,000
terminals were registered with
the company.
At the conference in July, top
on the list of complaints was the
high transaction failure rate,
high cost of operation and the
length of time it takes to effect
settlement with payment pro-
viders.
There are several factors that
could lead to a failed PoS transaction.
One of the major culprits
is poor network. Poor network
could be a result of a bank having
network issues, in which case the
transaction will fail, or a malfunction
on the NIBSS platform
which will mean the platform
will not function in all the banks.
A NIBSS representative said the
later part is very rare.
Transaction failures have
led some proactive commercial
banks such as the United Bank
for Africa (UBA) to take measures
aimed at reducing failure
rates. The bank in 2017 collaborated
with INETCO Insight
to monitor multi-protocol payments
and service transactions
originating from mobile banking,
online banking, ATM as well
as PoS channels, and proactively
identify transaction slowdowns
and failures before they impact
customers.
Nigeria’s 74m MSMEs can improve energy efficiency with renewable
STEPHEN ONYEKWELU
Renewable energy solutions,
such as the solar
hybrid inverter systems
for offices offer Nigeria’s startup
entrepreneurs a leeway to
overcome unreliable electricity
supply from the national
grid and rising cost of operating
generator sets.
The total number of Micro,
Small and Medium Enterprises
(MSME) is put conservatively
at 74 million businesses,
which constitute 84 percent of
the labour force, contribute 50
percent to GDP and 7 percent
to export, according a report
by the Central Bank of Nigeria
(CBN).
The CBN defines MSMEs in
terms of their asset base and
number of staff employed.
The criteria are an asset base
between N5 million and N500
million, and staff strength between
11 and 300 employees.
Small companies outnumber
large companies by a wide
margin in Nigeria and employ
a lot more people. While they
are the driver of innovation
and competition in many economic
sectors, they are also
the highest employer of labour
when aggregated.
However, the have chronic
energy-hunger that is met
with high energy costs and
chronic unavailability. Each
individual business is condemned
to generating its own
power and this can be done
sustainably and efficiently
with solar based renewable
energy solutions.
“To keep my operations
running requires huge energy
costs. It is really tough starting
and running a business in
Nigeria” Majiri Otobo, founder
and CEO of Kui Care, a Lagosbased
cosmetic medium-sized
business told BusinessDay in
an earlier interview.
This is changing though
with innovations in the deployment
of renewable energy
solutions. Recently in Osogbo,
Osun state, a team of renewable
energy experts installed a
4kw/48v solar hybrid inverter
system at an office facility. They
have also been engaged with
2.5kw/36v solar hybrid inverter
installations for an estate at
Mende, Maryland, Lagos.
Other installations included
the 2.5kw/36v solar hybrid
inverter installation for a residence
at Gbagada Phase 2,
Lagos, 2.5kw/24v solar hybrid
inverter installation at Obafemi
Awolowo University Staff Quarters,
Ile-Ife, Osun State.
In addition there were
6kw/48v solar hybrid inverter
system installations at a 2-floor
office in Lagos, off-grid solar
security lighting system for
an office at Surulere, Lagos
and 6kw/48v hybrid solar inverter
installation at an office
in Mowe.
“These are the few installations,
I can recall as recent
for now. Before these, we have
done quite a lot of installations
at different Small and
Medium offices to enhance
their business and support
their operations based on our
engagements” Mustapha Alabi,
head of systems operations,
BTS Renewables Ltd said in
TweetChats with the Gridless
Africa team on “Solar Office
Solutions for SMEs.”
MSMEs need to be cautious
in considering the deployment
of renewable energy solutions.
They need to be energy efficiency
conscious, they need to
consider the power consumption
of their tools like a printer,
fan, lighting device, and so on
before they purchase these
things.
“It is important, to minimise
their power consumption,
which in turn will reduce their
kWh. In short, they should
choose the right size systems
for their needs” Alabi said.
This means start-up entrepreneurs
need to engage the
services of a company with
track record of knowing and
doing a good job. It may appear
expensive, but far cheaper in
the long run. The companies
who know the job bring in experience
and the right design
for the business’ energy needs.
Nigeria, with a population
approaching 200 million people,
has been unable to provide
power to more than 90 million
of its people. Even those connected
to the national grid
are mostly undersupplied,
necessitating their recourse
to alternative means, which
include expensive fossil fuel
generating sets.
Manufacturers in the country
said in February that their
peak electricity demand had
gone up to 14,882 megawatts
(MW). But the national grid is
only able to generate and supply
about 4500MW at the most.
The manufacturers do not get
a good amount of the meagre
4500MW from the grid, so they
rely on self-generated electricity
to power their operations.
At the moment, the financial
value of Nigeria’s off-grid power
market, which is driven by
solar, is about $9.2 billion, according
to the Rural Electrification
Agency (REA). Operators
and investors are beginning
to change the initial negative
stories associated with solar
power in Nigeria with judicious
investments and sustainable
projects.