Category: Payments

Nobody can correlate anything around here – I mean Nigeria. For example we still can’t wrap our heads around the idea that 170 million Wazobians crammed into Nigeria is a joke.

Someone pointed to the number of GSM lines but wait, can’t he see that everyone has at least 2 lines? Now that the networks are a bit better and guys are dumping the other SIMs – invariably for the first time ever, the number of active lines in Nigeria declined. Maybe people are dying off but I doubt it, in fact almost all my friends are popping twins while slowmos like me are doing it one at a time.

What’s the rant?

We simply don’t understand data. We don’t know what it means to have complete and accurate data about anyone. Check any bank’s database, what you see there is poultry carpet. Phone numbers are wrong; addresses point to a dung yard. In fact many names are not spelled correctly and sometimes some customers are born in the future. But the most important things – customer balance and transactions are always OK. Interesting!

The Telcos amassed a Mount Everest size data during the last government enforced registration but what are they doing with it? Probably the silly admin is using it to find the age of his girlfriend’s sister and deciding if hitting on her could be term pedophilic.

Meanwhile NIMC is running around to look for the same data about everyone. FRSC is doing same. The Police are also on the racket. Yet that data is there, right under our noses. Why can’t they start from there? Why can’t banks and others who want to verify identity (like the dude stepping up to my younger sis) connect via some open standard web API to check things out. Why can’t your mobile phone number be your ID number? Basic rule, telcos can never recycle numbers again. If you have gazillion number of SIMs then they are also your identity. Most people I know have many names; even married girls dump their fathers’ names and yet never lose their identity, per se.

Back to my insurance company – they sent me text message wishing me a happy birthday 5 months after I did it all because some nincompoop mistyped my birthday. If they think data is serious, someone should have cross-checked that. After all, they never advanced me a free year insurance by mistake. Can you spot their priorities?

Ok. Rant over. Time to hit the sack. Good night boys.

Sometimes I find it humorous seeing banks wring their hands at the disastrous investments made in POS. As the CBN was hell-bent on dragging each off us across the generational divide of cash versus electronic payment, it found willing allies in banks.

Don’t get me wrong, I’m all for electronic payments or commerce. It is faster, cheaper and more difficult to hide or do frauds. Frauds do exists, like it does even at your church parish, but it is way easier to trace although someone also said it is also easier to lose the shirt on your back.
That’s that for the digression.

What riles me is the apparent lack of thought on how these POS would work. The emphasis on POS, just another means of payment, was unhealthy. Unlike ATMs whose utility can be easily seen, POS can much dodgier.

And they don’t come cheap. Even after rebates, extensive bidding war and all that, a single box can settle you back as high as N70K. Since these are physical electronics items, the bean counter always insist to depreciate them fully over four years which comes to about N1,458 a month.

These tiny little beauties need more care and attention than an over pampered prima-donna. You could expect at least N2,000 spent on visitation, network connectivity and paper roll in a month. So for a single POS to breakeven, it must make income of N3,458 every single 30 days.  Or is it? Not at all!

You see, in the POS business, like the proverbial Hong Kong Triad Mafia Warlord Jinja, almost everyone takes a slice of the commission made to be surrendered by the hapless merchants or mama oloja. But then only the bank that deploys the POS is made to pony up the investment upfront. But they only get to see 57.5% of the commission if and only if the acquirer is also the terminal owner. That is not most of the case but for the sake of argument, let’s imagine it’s so. So for our dear bank to make money, it must find a way to ferret out at least N6,014 worth of revenue from the transactions. So how much actually transactions would the POS do to make the merchant part with this? As commissions are fixed at 1.25% of value, that POS must grace N481,113 worth of successful transactions.

That sounds easy until you consider how treacherous the networks have been. That little POS darling sitting on the table must constantly dial home over GSM or internet. GSM is very common but dubious while the internet is expensive. You wouldn’t even smell any of that for N1,000 a month. So most often than not, the POS doesn’t work, cardholders are frustrated and many a merchants have used POS as a basketball or even squashed a roach with one.

The industry today has about 110,000 POS deployed across town with only about 14,000 seeing active duty. The rest are simply having fun and sipping Piña colada in some random warehouse. The active ones were able to push out about N11B (March 2013 – verify the number, I could have made it up) in total but the average income across the whole POS portfolio is just a little north of N1,200. There goes the POS investment.

So is there hope for POS? Yes but not the way we currently run it. Even then there seems to be another channel doing way better than POS.

Right now, I need to lay off ranting a bit. I will discuss the sexiness of web in another post soon.