AfriGo: All You Need to Know About CBN’s Domestic Card Scheme.
In an effort to strengthen the national payments system, the Central Bank of Nigeria (CBN), in collaboration with the Nigeria Inter-bank Settlement System (NIBSS) has launched AfriGo, a new payment system.
The first domestic card scheme in Africa, the CBN Governor, Godwin Emefiele, formally unveiled AfriGo, which he claims will increase the use of electronic platforms in Nigeria.
Emefiele stated that the new card scheme would provide more options for domestic consumers while also encouraging the delivery of services in a more innovative, cost-effective, and competitive manner.
He also explained that AfriGo is critical to closing the economic gap left by the implementation of the cashless policy.
CBN and Nigerian banks own AfriGo. Nigeria joins China, Russia, India, and Turkey in launching a domestic card scheme.
What is a card scheme?
A card scheme is a payment network that manages payment transactions by accepting both debit and credit cards.
Both Mastercard and Visa are the two most widely used card schemes. We also have the Interswitch Verve card in Nigeria.
The main players in the card scheme process are the cardholder, issuing bank, merchant, and acquiring bank.
The card scheme sends card transaction data from the acquiring bank to the issuing bank (merchant to customer).
The payment is then returned to the acquirer for acceptance and confirmation.
Card penetration in Nigeria
KPMG Nigeria discovered in a 2021 survey titled ‘Nigeria Banking Industry Customer Experience Survey’ that Nigerians continue to use cash for transactions in their daily financial activities, despite having adopted the use of Automated Teller Machines (ATMs) channels for cash withdrawal purposes.
According to the survey, agency banking is rapidly gaining traction in the country’s retail banking industry. This is allowing for easy access to cash and other banking relationships, particularly in rural areas.
The survey found that retail customers ranked the success rate of transfers and bill payments among the top five most important measures in evaluating the service experience.
However, only slightly more than a third of customers are extremely satisfied with this metric, indicating that there is a mismatch between what retail customers expect and what they receive.
The report revealed that recurring issues encountered when completing payments or transfers include log-in issues on digital platforms. Transaction failures delayed reversals on unsuccessful payments, and downtime on digital channels are also some of the issues being faced by consumers.
It also shows that more than 70% of respondents use ATMs on a regular basis, with slight changes between 2020 and 2021, though the branch and POS agents are also dominant channels for cash transactions, with 46% and 41% of customers saying they do so, respectively.
The survey further showed that customers are increasingly using cards and digital wallets to make payments.
Another Statista report predicts that debit card penetration in Nigeria will increase by 10.4 percentage points between 2022 and 2028.
According to projections, by 2028, debit card penetration will have risen to 34% for the sixth year in a row.
What is the AfriGo Card?
Consider it the Nigerian equivalent of your Visa, Mastercard, or Verve debit cards.
The CBN created the AfriGo card as a national domestic card scheme to perform domestic transactions within Nigeria similar to existing debit cards.
The card allows the CBN to compete with international payment companies such as Visa and MasterCard.
The Nigerian cards and payments market is currently valued at $18.2 billion. AfriGo contributes a portion of that sum to the country.
International card services providers such as Mastercard, Visa, and Quickteller would not be barred from operating in Nigeria.
What distinguishes it from existing debit cards?
The new card is issued by the Central bank and has lower transaction fees.
It is only used for transactions within Nigeria’s borders.
Existing cards, such as the Naira debit and credit cards, perform domestic transactions while domiciliary cards perform international transactions.
All of these cards are produced by Visa and Mastercard through commercial banks.
According to Emmanuel Ogiefa, head of internal audit control in the banking and finance sector, the AfriGo card will reduce foreign operators’ dominance in the card payment industry in Nigeria through competition.
What are the advantages of AfriGo?
According to the CBN, the Afrigo card will function as a debit card and will be linked to your e-Naira,
The card is also expected to address fraud, improve transactional security, and reduce demand for foreign exchange.
It will also improve local card skills and increase financial inclusion.
The card scheme is expected to give the Nigerian economy more opportunities to integrate the informal segment and reduce shadow banking. It sets to bring more Nigerians into formal financial services.
Furthermore, the AfroGo card will give domestic consumers more options while also encouraging the delivery of services in a more innovative, cost-effective, and competitive manner.
AfriGo and a cashless society
The AfriGo card hopes to strengthen the cashless policy by reaching out to the unbanked and increasing financial inclusion through its promises of lower fees. Despite the fact that cash transactions are still prevalent in Nigeria.
According to the CBN Governor, the card will address the majority of Nigerians’ needs, which are micropayments, and the card is designed to capture the dynamics of such transactions.
When will AfriGo begin operations?
The CBN has yet to announce a start date but has stated that it will set a deadline for the country’s existing card schemes.
AfriGo is expected to be available in a few weeks because banks are not yet ready to begin routing payments through the card scheme.
The CBN Governor, on the other hand, stated that a cut-off date would be announced in the coming weeks, so banks should begin issuing the cards soon after.
They will no longer be eligible for domestic transactions once the deadline has passed.
Mr. Emefiele, Governor of the Central Bank of Nigeria, stated that once launched, “all domestic transactions that are going to be conducted in Nigeria will have to be conducted through the Nigerian domestic cards.”
The card scheme will give the country control over its data. This means that cardholder data will no longer be stored on foreign servers.
Cardholders will no longer pay dollars for the cards or the charges on the cards.
Aside from being less expensive, the card ensures that all card and online transactions will be routed through the Nigerian National Domestic system.
Will Visa and Mastercard still be accepted?
Yes. All existing cards will continue to function normally, and holders may not need to obtain the AfriGo card.
What else should you know about AfriGo?
Anyone in Nigeria with a bank account can apply for the AfriGo card.
The AfriGo card will function in the same way as existing cards. Users must request the cards from their banks.
There is no information available on how much the AfriGo card will cost.
The CBN, on the other hand, claims that the card scheme will be a cheaper alternative to existing cards in the country. It is safe to assume that the card will cost less than ₦ 1,000, which is what it costs to get a debit card in most commercial banks in Nigeria.
The AfriGo card will be used for all online and offline transactions in Nigeria.
Nigerians are unlikely to be able to use AfriGo to pay for transactions conducted outside of the country just yet.
According to the CBN, the new card scheme complies with global security standards, including EMVCo, which enables seamless and secure card-based payments for businesses and consumers worldwide.
The AfriGOpay Financial Services Ltd. (AFSL) is an affiliate of the Nigeria Inter-Bank Settlement System (NIBSS) and will be responsible for deploying and managing the National Domestic Card Scheme for Nigeria.