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ICYMI - Why the new Nigerian Card Scheme has International Schemes back in Strategy Sessions
THE LOGUE : An African–focused Fintech Newsletter | Vol 8 | Jan 30th 2023
It's the 1st Friday of February. TGIF! 🎊
In case you missed it on Monday, we are resending our African-focused Fintech Newsletter. It's quite an insightful read. Please consider sharing within your network.
It's time to dive in .
Sawubona* Fintech Fans,
We are back with another insightful read updating you on African Fintech gist.
A lot happened on the streets of Nigeria. Apart from the Fuel queues, there was a scramble for the scarce new naira notes ahead of the deadline for the expiry of the old naira notes. This morning, we read with a lot of relief, that the Apex bank had extended the deadline to the 10th of February. Phew.. that was close.
Something else that is also a big deal is the birth of a new domestic card scheme in Nigeria. On the 26th of January, the CBN and NIBBS did a virtual launch of the AfriGO card. They also unveiled the AFSL Card Scheme. We will focus on this in the deep dive section.
Moving on to the south, it's collaboration and innovation galore. South Africa has begun testing its RPP system with identifiers like email and phone numbers. We can already predict Financial inclusion rates will drop massively when they fully go-live. Read more about the RPP system in the News highlight section.
The entropy levels in the Kenya Financial Tech ecosystem are still high. This time the Kenyan High Court has ruled for commercial banks in the country to resume bank accounts - MMO charges. This is happening not long after it ordered the suspension of the same charges. This might be temporary as the CBK needs to present its position on the matter. We imagine a dip in volumes as everyone awaits a final ruling. But what alternatives exist huh?
*In case you were wondering, Sawubona is 'Hello' in Zulu. Zulu has 11.5 million speakers and is understood by at least 50% of South Africans.
If what you've read so far is your Fintech-intel dream come true, and you are yet to subscribe, please click the subscribe button below. Also, share this with your colleagues and Fintech besties. The Deep dive is up next.
Deep Dive: AfriGo, the birth of an African-focused Card Scheme.
In this section, we review the details emerging from the announcement and virtual launch of the Nigerian Domestic Card Scheme.
About AFSL
The Afrigopay Financial Services Limited (AFSL) is the Card scheme licensed by the CBN and responsible for managing the National Domestic Card Scheme for Nigeria.
It joins the ranks of Payattitude, Verve, Visa, and Mastercard to offer Scheme-related services to Financial Institutions that are its members. The AFSL is an affiliate of NIBBS.
Reasons for AFSL and AfriGo
The name AfriGo was coined to signify that even though the card was birthed in Nigeria, it was designed with continental aspirations. Looking into more important details, 3 key reasons were cited for the need of a domestic card scheme.
Data Sovereignty: It will afford the regulator tighter control over the payment data of Nigerians.
Impact on FX : It has significant reduction on FX as billing is fully in naira.
Local use cases: It can be used to drive Government micropayments and social impact initiatives. This specific use case has proven to be quite useful in India, with these payments having zero fees.
Unique Features of the AfriGO Card
Instant Settlement
NQR code for micropayments.
EMV compliant card
Contactless Payment capabilities
Biometric and Offline capabilities.
Changes to the Card processing terrain in Nigeria
Routing : it was stated that all domestic card online transactions will be routed to the AFSL system. We've seen something similar when all POS transactions were rerouted to the CTMS at NIBBS. There was some initial challenges with transaction support and uptime. This should be proactively managed ahead of go-live.
Settlement of fees: It was also stated that all domestic transactions will be settled in dollars. This could be puzzling as it is assumed that naira transactions are settled in Naira, which is not the case. Apart from the interchange transactions, there are other fees like assessment fees, report settlement fees, fraud services etc. All these are settled in dollars. Yup, it's a whole tricky scenario.
Related to the 2nd point, only international transactions will be settled in dollars.
Revenue repatriation is a big deal for international companies that collect monies in local currency in Nigeria. This amongst other things like market share erosion will send the existing card schemes back to the drawing board.
Other Thoughts:
Whilst we laud the efforts of the CBN and NIBBS, as Fintech Consultants, we can't help but be more curious about the details.
The Keynote address made mention of a new system - The Nigerian National Domestic System. He mentioned that all card online transactions will go through this system, is the the NCS or another system that all Banks and FIs need to connect to?
Does AfriGo have its unique AID? it was not mentioned during the launch. Most card schemes like Rupay and Verve go to great lengths to test and certify their AIDs during the setup process. These details are listed in some of the ISO/IEC 7816-5 sites. If AfriGo does not have it's unique AID, is it truly within the control of the Nigerian Regulators?
AfriGo is an EMV card from the features, this implies that it needs an EMV-compliant card production system, data preparation, and certified personalization system. There are 2 mature systems in the Nigerian market, which took a while to implement and stabilize. Will the AFSL leverage these or require banks to integrate into a central system?
News Highlights across the African continent.
From the Agency Banking filled cities of Nigeria, to the Mobile Money provinces of Kenya and the e-commerce savvy governorates of Egypt, we bring you the African Fintech News Highlights of the week ending on the 29th of Jan 2023.
A few things are important to spotlight from our infographic. Take a look
A. South Africa has been testing its Rapid Payments Platform in collaboration with BankservAfrica. Rapid Payments is designed to be a viable alternative to cash payments with a core focus on designing compelling use cases for digital payments for South Africans.
Rapid Payments enables the nationwide use of digital payments for high-volume, retail payments that are currently paid in cash. It will be launched commercially under the name PayShap – South Africans will be able to transfer money instantly from their phones, even, once developed, from instant messaging apps like WhatsApp.
This removes the need for Bank accounts and automatically includes anyone who doesn't have a bank account but has a mobile number. Simple Financial Inclusion!
B. If you've been following our News highlights, we've been tracking the continued fall of the Egyptian Pound. Some really good news happened this week.
Russian Central Bank added the Egyptian pound to their Russian exchange rate list. Egypt previously imported from Russia using the US dollar. These are the advantages of this move:
This reduces demand for the US dollar in both countries.
It will also boost tourism in Egypt as there has been a reduction in visits from Russian tourists who have been struggling to get US dollars.
It also allows Egyptians who travel to Russia to exchange Egyptian pounds directly for Russian rubles.
Events, Courses and Community news.
It was informative, it was revealing and it was value-packed. I am talking about The Fintech Open House, Jan 2023 edition! If you made it to the session, you'll understand what we are talking about.
We discussed categories of Financial applications
We did a deep dive into the famous core banking system.
We discussed the different tests necessary before deployment happens and what post-deployment checks are important. so you don't do an unplanned giveaway :(.
I could go on, but you see what you missed right? Not to worry, if you couldn't make it, you can catch up on excerpts on our YouTube channel here. We dropped a nice pic below hoping you'll visit our Youtube page. Thanks in advance! :)
Samuel Omosuyi breaking down a concept at the FOH
The Payments360 Cohort 2 is Open for registration and spaces are filling up. If you will like to plan ahead and join the class in the next 2 months, visit the Selar course page to learn more. We hear installments are possible. If you'll like to explore that, send an email to [email protected].
If you work, build, or invest in the Fintech space, We have a couple of resources that will help you on your journey. See the infographic below.
Let's connect, network and learn together.
Want to catch up on the latest news in the ecosystem, this is your spot. Check out our learning materials at The PaymentLogue.
At The PaymentLogue, we are enabling a skilled Fintech ecosystem. If you'd like to make inquiries on our courses and events, reach out at [email protected].
Do you want your Fintech Products and platforms to reach an African Fintech Audience? Let us Partner. Chat with us on Whatsapp- 07025254596.
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