On Monday, the 16th of January 2023, the Central Bank of Nigeria launched the National Domestic Card Scheme. The card scheme which was launched in partnership with the Nigeria Inter-Bank Settlement System (NIBSS) and the Bankers’ Committee was first announced in October 2022.
The scheme is expected to drive financial inclusion in Nigeria and to make payment services more affordable and accessible for Nigerians. Osita Nwanisobi when announcing the scheme in October said, “Nigeria is Africa’s largest and most vibrant economy, and the pace of digitisation and innovation, alongside the expansion of mobile penetration and the proactive policy initiatives of the CBN, has driven the accelerated adoption of digital financial services,”
“Considering the strength and breadth of its banking sector and the rapid growth and transformation of its payments system over the last decade, Nigeria is ideally positioned to successfully launch a national card scheme.” He added.
By launching this scheme, Nigeria becomes the first African country to launch a central bank-driven domestic card scheme. The card system is also expected to be similar to what is obtainable in India with RuPay which was launched in 2012 by the National Payments Corporation of India (NPCI).
“Why is CBN Issuing a Debit Card?”
The new scheme by the CBN has drawn reactions from Nigerians, with some praising or condemning the initiative, and others maintaining an indifferent stance.
For example, a financial expert and Twitter influencer tweeted “why is the CBN issuing debit cards?” This tweet prompted responses from Twitter users, including: “they literally want to control retail banking.” Some other responses attributed it to the CBN governor “forgetting” he’s no longer a commercial bank MD.
Essentially, it should be noted that the CBN is not issuing a debit card. The modalities of the new card have not yet been laid out to the public. However, if the scheme follows the pattern of India’s RuPay, it is expected that credit cards, contactless cards, prepaid cards, and even international cards should be covered by the scheme.
According to the CBN’s spokesman, Osita Nwanisobi, “The plan is to deliver Africa’s first central bank-driven, domestic card scheme that combines a fully domestic infrastructure with international interoperability. Our plans will enable us to pivot into the largest card scheme in Africa, and amongst the biggest globally.”
He also added, “Domesticating our card scheme also enhances data sovereignty, enabling the development of locally relevant products and services and reduces demands on foreign exchange.” The scheme is expected to become a competition for the major players in the Nigerian cards market, Visa, Mastercard, and Verve by Interswitch.
While regular Nigerians are not enthusiastic about the vision of a domestic card scheme, industry players are quite enthusiastic. In an interview, Kabir Shittu, the COO of Sudo Africa spoke on the fact that the Nigerian card market requires more competition. According to him, “Interswitch is like ‘god’ in the Nigeria card business and billing to financial institutions is ridiculous.”
In India, RuPay cards accounted for 60% of the card market share in 2020, up from 15% in 2017. If RuPay was successful in gaining widespread adoption in India, there is an expectation that the CBN’s domestic card scheme could gain widespread adoption in Nigeria. Especially considering the role of NIBSS and the Bankers’ Committee.