With the advancement of e-payments technology, there have been new and easier ways of doing off-site banking operations from the comfort of your homes, offices and on vacation on-line real-time. The emerging and more convenient electronic inventions and modern technology had presented more convenient ways of making payments. Moving away from the era of queuing or using tally numbers in the banking halls to the internet on-line real-time era and much more to the era of mobile payments services such as buying air time and payment of bills.
Mobile Payment System therefore refers to all forms of electronic payment services operated under financial regulation and through a mobile device. It is a convenient, secured and affordable way to transfer and receive money or pay for goods and services using mobile phones or other electronic devices. Mobile phone has suddenly transformed from a mere talking machine to a more comprehensive and convenient communication devise. It has also become an attractive way of promoting financial inclusion for the majority of the unbanked population at a very reasonable cost. Mobile phones can also serve as a virtual banking tool, point of sale terminal (POS), automated teller machine (ATM) or internet banking terminal which can be secured with a hardware or software token device.
As contained in the framework for its establishment by the Nigeria Deposit Insurance Corporation (NDIC), the pass-through deposit insurance system is specifically introduced to engender public confidence in the banking system for the benefit of subscribers to the services of mobile money operators in Nigeria. The key players in the pass-through deposit insurance system (PTDIS) are: the Deposit Insurer which is the NDIC, the Mobile Money Operators (MMOs) who are the licensed organizations that provide mobile payment services to the subscribers who are signed-on to their schemes, the mobile money agents that are appointed by the MMOs to receive or pay monies at various locations on their behalf, the Subscribers who are the direct beneficiaries of the PTDIS and the financial or banking institutions in which the Trust (Pool) accounts are maintained and operated by the MMOs on behalf of the subscribers.
In line with global trend, the revolution introduced in mobile payment system began with the mobile banking model in Kenya which had reportedly gained currency in many countries of East Africa such as Uganda, Tanzania and Rwanda. However, only Kenya and Nigeria have been able to introduce the extension of pass-through deposit insurance system (PTDIS) to the subscribers of the mobile banking and this has gone a long way to enhance financial inclusion in these countries.
The Central Bank of Nigeria (CBN) had in 2010 given approval in principle to 16 Mobile Payment Companies to operate and drive the adoption of mobile money in Nigeria. By 2011, the CBN increased the number to 19 and as at 2015 there were 24 licensed mobile operators. It is worthy to note that the highest monthly transaction on the mobile payments was N6.50bn as at March 2016 which was an increase of 51% from the transaction of N4.30bn between January and March, 2016
However, there are challenges currently facing the Mobile Payment System in the country. These include infrastructural deficits, poor network facilities and very low public awareness. However, it is instructive that the various regulatory agencies involved in the various sectors of the economy are working assiduously to improve the system for effective and efficient service delivery.
A critical concern for potential mobile banking subscribers is the protection of their funds from the imagined losses arising from failure of the banks in which their MMOs operate pool accounts. This is important if the interest of the unbanked small savers must be cultivated and sustained. This is where the role of NDIC becomes very relevant as a deposit insurer and financial safety-net player.
It is at this juncture that the NDIC’s PTDIS comes in to guarantee the safety of mobile banking subscribers’ funds and to ensure their prompt reimbursement in case of failure of any of the banks where their MMO operates a pool account. Since the establishment of the NDIC in the Nigerian banking landscape in 1989, the Corporation had been charged with the responsibility of providing a layer of protection to depositors of banking institutions licensed by the CBN. Other mandates of the NDIC include effective banking supervision of the banks where the MMOs pool accounts are domiciled, failure resolution and bank liquidation. These mandates are not only with a primary objective of engendering confidence and financial system stability but also protecting the interest of the large number of small and unsophisticated depositors and majority of the subscribers of Mobile Money Operators (MMOs) who fall under this category. The Pass-Through deposit Insurance system in a nutshell is also a strategy aimed at promoting financial inclusion.
With the advent of mobile money, it became equally important for the NDIC to extend similar protection to mobile money subscribers since their funds with the MMOs are kept in pool accounts with various deposit money banks (DMBs). In the unlikely event of failure of any of the banks, the mobile money subscribers are entitled to similar protection applicable to other depositors of the licensed banks to the insurable limit of N500,000.00 per subscriber per DMB even though they are not direct depositors of the banks.
The conditions for eligibility for pass-through deposit insurance coverage include the records of the trust (Pool) account holders with the insured institutions shall clearly indicate that the account holder is an Agent or Custodian and not the actual owner of the funds, the identities and interests of the actual owners of the funds in trust (pool) accounts shall be disclosed in the records maintained by the insured institutions, MMOs or their Agents and subscribers shall be duly informed of which insured institution their trust (Pool) account is domiciled.
The PTDIS not only ensures the safety and stability of the Mobile Payment System (MPS), it also promotes financial inclusion by engendering confidence in the mobile money services; thereby reducing the percentage of the unbanked which is expected from 45% adults in 2010 to 20% in 2020. Like every new technology, change is difficult to adapt but with intensive public awareness campaigns, members of the public would come to embrace the mobile payment system.
Chinenye Chimezie-Amadi
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