PoS: CBN to cut merchant service charge to 0.75%

The Central Bank of Nigeria (CBN), in collaboration with the Nigeria Interbank Settlement System (NIBSS), will soon begin the implementation of an initiative aimed at reducing the Merchant Service Charge (MSC) rates on the use of Point of Sales (PoS) terminals from 1.25 per cent to 0.75 per cent, New Telegraph has learnt. The move is part of industrywide incentive scheme approved by the apex bank in September 2014 to push further adoption of electronic payment channels by rewarding consumers, merchants and sales persons who use them. Though the incentives are yet to be implemented, it was gathered that it was initially scheduled to have taken effect by January 1, 2015. It was gathered that the initiative was also aimed at encouraging the adoption of PoS by businesses both big and Small and Medium Enterprises (SMEs) in the country.

In particular, the move would motivate the over 17 million SMEs in the country to key into the cashless transactions in the country. “The Merchant Service Charge rate will be reduced from 1.25 per cent or N2,000, to 0.75 per cent or a maximum of N1,200 per transaction,” a report obtained from NIBSS revealed. Other such incentives, according to NIBSS, include Commission on Turnover Exemption (CoT); Mystery Shopper and Recognition and Purchase with Cash Back. “On CoT, we want to ensure that all electronic inflows from electronic channels into the accounts of merchants will be exempted from CoT calculations at the end of each month. Also, NIBSS aims to administer rewards and through a mystery shopper and recognition campaign,” said Chief Executive Officer of NIBSS, Mr. Adebisi Shonubi, had told New Telegraph. “For purchase with cash back, NIBSS, in collaboration with Deposit Money Banks (DMBs) facilitates functionalities that allow merchants to offer cash-back services to their customers.” Shonubi explained that the CBN is also working to encourage consumers and sales persons through pointbased rewards system, which he said, had been adopted to reward cardholders, based on points accrued through frequency of card usage.

Others include cash refund, which is based on card usage, merchant promotional campaign, where merchants may leverage an incentive scheme to offer promotional gift items to their customers based on the usage of electronic payments for transactions. “We are also looking at rewarding sales persons by encouraging them to support electronic payments by being enrolled on the tipping points scheme, through which they will earn points accrued over a period, redeemable as gift or cash,” he said.

The apex bank and NIBSS are also working with network operators to ensure that technical and connectivity challenges being faced by merchants are reduced to the barest minimum to drive adoption. This follows a recent report by NIBSS on the use of PoS in Lagos State, which showed that the most significant challenge to adoption and usage from the perspective of merchants is technical or connection issues. According to the report, from the perspective of merchants, technical difficulty appears to be the single largest challenge to use of PoS as a payment method. Also, 79.5 per cent cite connection issues as the most significant challenge with their PoS terminals.