By Bassey Udo
Nigerians like carrying their cash. No matter the transaction, the payment is made with wads of cash. The average trader in the market wants to see the physical cash he or she has realized at the end of every business day. Despite all the digital payment platforms available as a result of technology, they prefer to see and count their cash.
Indulging in cash transactions is one practice that has become so difficult to do away with by some Nigerians. Perhaps, that is the reason the financial sector regulatory authority, the Central Bank of Nigeria (CBN) has invested so much in the promotion of a cashless economy, by discouraging the use of cash in business and other forms of transactions.
In October 2021, when President Muhammadu Buhari unveiled the e-Naira, Nigeria’s Central Bank digital currency, it was another effort by the financial system regulator to deepen the cashless economy policy in an attempt to continue to discourage the use of cash in transactions throughout the country.
One of the many reasons the CBN gave during the unveiling for its introduction of the e-Naira was to advance the boundaries of payments system in the country, to make financial transactions easier, convenient and more secure.
The launch of the digital currency was acknowledged as a landmark step forward in the evolution of money as a medium of exchange in the country.
The e-Naira is not just another Central Bank digital currency, but a platform to leverage technology to connect individuals and businesses for easy trading and financial inclusion, improved local and Diaspora payment efficiency, revenue and tax collections as well as enable direct welfare disbursements by the government to Nigerian citizens.
Despite all the benefits the CBN said e-Naira has, including its advantage of being a fast, cheap, reliable and readily available payment channel across all strata of the economy, Nigerians are still slow to embrace the new payment system. They cite a few reasons for their lethargy, which financial experts have traced to some misconceptions they say appear unfounded.
Apart from their fear about possible risks associated with losses they might suffer as a result of cyber-attacks and IT systems glitches capable of compromising the privacy of users, most people say they are afraid the value of their e-Naira would not be the same as the physical Naira in the face of the spiraling inflation in the economy.
But the CBN has consistently maintained that these fears have no basis, as adequate proactive steps have been taken prior to the unveiling of the new payment platform to ensure it is not only safe and secure, but also easy to use.
The CBN says the e-Naira is secured with advanced cryptographic techniques against counterfeiting, cloning and other forms of breaches by cyber criminals, while the e-Naira wallets operate an open system accessible to all users based on a tiered know-your-customer (KYC) structure of the banking system.
Besides, the CBN has ensured that data protection and privacy was made the core of the e-Naira system design, to allow users determine how their data is used, shared and processed.
On e-Naira value, the CBN says if there is any difference from the Naira note, it is in their forms. The e-Naira, the CBN, explains is the digital or purely electronic form of the existing physical Naira note. Otherwise, the financial system regulatory authority says both are acceptable means of payment it issued and regulated, backed with the appropriate legal instruments by the government for use in conducting transactions throughout the country.
The e-Naira, which carries a non-interest Central bank digital currency status, is a legal tender for all transactions conducted throughout the country just like physical Naira notes.
The e-Naira is not a replacement of the physical Naira. It is circulating alongside cash as a more efficient, safe, and cost-saving payment option pegged to the Naira so that the value of both currencies would remain the same and stable at all times, regardless of the prevailing inflationary trend in the economy.
What this means is that the person that a N100 is transferred to will receive exactly the value of N100 that was sent to him, as if it was cash paid to him, without any deductions in he form of service charge or commission.
Although the e-Naira is created independently of the customer’s existing bank accounts, an e-Naira wallet created through an application product interface (API) by the licensed financial institutions for the customer has a unique customer identification as well as transaction and value-based transaction limits.
The beauty of the e-Naira is that anyone can have it to conduct financial transactions whether one is a bank customer with a bank account or not.
As a bank customer with a bank account, all what is required to qualify to use the e-Naira to conduct transactions from any part of the country is to have an e-Naira wallet created independently of your existing bank accounts, by downloading the e-Naira application by your financial institution, with your unique customer identification through an application product interface.
If the customer wants to connect his or her e-Naira wallet to existing bank accounts, he or she would be required to establish a link between the e-Naira wallet and his or her Bank Verification Numbers (BVN).
Even if a user does not have an account with a bank, he or she can still be able to use the e-Naira to conduct transactions. But in creating their e-Naira wallet, they would be required to provide their National Identity Number (NIN), a passport photograph, full name, date of birth, phone number and home or residential address for authentication of their identity.
Person-to-person transactions are possible by people who have enabled e-Naira wallets that allow them to store, send and receive the e-Naira without ‘middle men’ or third-party intermediaries, such as financial institutions.
With e-Naira, customers can move money from their bank account in any part of the country to their e-Naira wallet with ease. Also, customers can make in-store or contactless payments with e-Naira by scanning a QR code, or monitor their e-Naira wallet for payments, check their balances and review transaction history.
Apart from the fact that e-Naira does not need to be backed with physical cash before transactions are conducted, transfers and withdrawals involving e-Naira do not attract any service charge, just as in cash transactions, unlike other digital payment platforms. Also, e-Naira is a non-interest payment platform.
A bank customer can fund his or her e-Naira wallet through the regular bank application from his or her bank account, or with cash through an e-Naira verification agent, over the counter at designated bank branch or Shared Agent Network Expansion Facilities.
Therefore, e-Naira makes transactions easy, as it does not only aid financial inclusion in the financial system, but also promotes the CBN’s cashless economy policy.
The e-Naira is a legal tender by the customer, as it carries a non-interest Central bank digital currency status for the entire length and breadth of the country.
The e-Naira is different from existing electronic money by the central bank, which can only be used by commercial banks and selected financial institutions to settle transactions among from reserve accounts domiciled with the central bank.
Unlike the existing digital retail payment platforms from customer deposit accounts in commercial banks, which are based on money that is the direct liability of the bank in which the account is domiciled, the e-Naira is a direct liability of the central bank, which is available as legal tenders to everyone, including households and businesses that have access to the e-Naira wallet.
With the e-Naira wallet, a market woman, businessman or anybody can carry out transactions, by accepting and storing on his or her phone payments for goods and services with any customer. With the e-Naira, one does not need to move about with loads of Naira notes to conduct transactions.
To eliminate the fear of cyber-attacks that might result in losses of money to cyber criminals, the e-Naira system is subjected to regular comprehensive security checks, as all customer data and personal identification information (PII) are not be stored on the ledger.
Rather than continue to indulge in the risky practice of dealing with cash to conduct transactions, the e-Naira presents a fast, affordable, secure, and reliable payment option to support the digital economy and aid financial inclusion in Nigeria.
Overall, the e-Naira will foster economic growth, provide secure and cheaper means for diaspora remittances, promote domestic and international trades as well as provide communities at the grassroots without enough banking services access to financial services.