The Central Bank of Nigeria recently announced the launch of the National Domestic Card Scheme (NDCS) which is scheduled to become effective today, 16 January 2023. The NDCS is a card-based payment system designed to facilitate electronic transactions within Nigeria with cross border interoperability. The card will be issued by the Central Bank of Nigeria and will be available in two different versions: a prepaid card and a debit card. Both cards are supported by Visa, Mastercard or UnionPay and can be used to make payments anywhere these payment networks are accepted. With the card, customers can make payments and receive funds through a secure card-based platform. The card can be used at Point of Sales (POS) terminals, ATMs and online merchant platforms in Nigeria. It can also be used to make payments to merchants outside Nigeria. The national domestic card scheme is a joint project of the Nigeria Inter-Bank Settlement Systems (NIBSS), Nigeria’s central switch, the Bankers Committee and other financial ecosystem stakeholders.
According to the Director of Corporate Communications of the CBN, the initiative will enable African and international interoperability, allowing banks and other institutions to offer a variety of payment solutions. In his view, domesticating the card scheme will enhance data sovereignty, enabling the development of locally relevant products and services and will reduce demand for foreign exchange. The CBN also noted that the scheme could also be leveraged as a platform for the seamless dissemination of government-to-person payments and other social impact initiatives. Cashless transactions in Nigeria rose by 41.75% to N318.66trn in the first 11 months of 2022 according to new industry statistics from the Nigeria Inter-Bank Settlement System. Total NIP transactions for the period was N311.81tn and PoS transactions amounted to N6.85tn.
Currently, Visa, Mastercard and Verve by Interswitch are the three card payment providers for financial institutions in Nigeria, with verve being the first and only indigenous player. With a successful launch, Nigeria becomes the first African country to develop a domestic card scheme. The other countries that have introduced a similar scheme are China (UnionPay), India (RuPay), Turkey (Troy) and Brazil (Pix). While some see the new card scheme as another commendable step towards a cashless economy, many believe it will create unhealthy competition for the existing card schemes. There have been concerns about a few policies of the CBN, geared towards a cashless economy and foreign exchange management, but have been harmful to the card payment industry. One of such is the directive by the government against making international payments with Naira cards above US$20. Again, the launch of a domestic card scheme implies the CBN will be playing in an industry it regulates and would, create an uneven playing field for the existing players.