Inside the CBN and NIBSS’s national domestic card scheme

The Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement Systems (NIBSS) will launch Nigeria's national domestic card scheme in January 2023.

Inside the CBN and NIBSS’s national domestic card scheme
Some of the CBN's functions | Credit: Benjamindada.com

In 2021, the annual value of card transactions in the Nigeria cards and payments market was $18.2 billion. The market is expected to grow at a compound annual growth rate (CAGR) of more than 18% during the forecast period.

Currently, Visa, Mastercard, and Verve by Interswitch are the three card payment providers of financial institutions in Nigeria. The Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement Systems (NIBSS) Plc, in conjunction with the Bankers Committee and other financial ecosystem stakeholders, are set to launch the Nigerian national domestic card scheme in January 2023.

If launched, Nigeria will join a growing list of other countries—India, Turkey, China, and Brazil—who have successfully launched domestic card schemes and harnessed the transformative benefits to their payments and financial systems, particularly for the underbanked.

"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," CBN spokesperson, Osita Nwanisobi, said.

He added that domesticating the card scheme would further enhance data sovereignty, enabling the development of locally relevant products and services and reducing demands on foreign exchange.

Weighing the ups and downs of the proposed card scheme, Kabir Shittu, the COO of Sudo Africa—a Nigerian fintech that provides a card-issuing API for developers and businesses—told Benjamindada.com that "Interswitch is already doing what the [national] card is going to achieve with Verve. Adoption however will be easy as CBN might ask everyone to come on board as they did with eNaira."

Shittu added that the Nigerian cards market needs more competition. "Interswitch is like 'god' in the Nigeria card business and billing to financial institutions is ridiculous," he said.

With an aspiration to launch first Africa's first central bank-driven, domestic card scheme that combines a fully domestic infrastructure with international interoperability, the CBN is building a card system similar to India's RuPay which was launched in 2012 by the National Payments Corporation of India (NPCI).

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RuPay had 60% of the card market share in India as of 2020, up from 15% in 2017, according to the Reserve Bank of India.

RuPay has several variants including; debit, credit prepaid, platinum, contactless and virtual cards. More than 600 million of these cards have been issued by over 1100 banks in India. In 2019, the RuPay Select Card was launched in Dubai.  The NPCI also signed a memorandum of understanding (MoU) with UK-based PPRO Financial in November 2021 to expand the acceptance of RuPay into foreign markets, especially in China and the United States which accounts for half of all international transactions coming from India.

Per a report by John Chaplin, an American banker and author of National Payment Schemes: Drivers of Economic and Social Benefits?, existing international schemes—like Mastercard and Visa—pose a huge threat to domestic schemes in terms of global adoption. "Despite the overall sense of optimism, all of the domestic schemes find that running their businesses and remaining relevant is a difficult task," Chaplin said.