Protection file

Nigeria’s consumer protection agency must go beyond service level agreements to build tech stacks on bank payment failures

The Federal Competition and Consumer Protection Commission (FCCPC) has urged depository banks to establish a service level agreement with other service providers to reduce the financial technology challenges faced by clients.

How your bank configures its ATM systems can help you model the trust factor in the country. In Nigeria, the bank debits you before the ATM dispenses money. If, in the seconds between debiting and dispensing the money, a technical problem occurs, you will go home with no money even if you have been “paid” according to the bank’s ledger. So you have to go back to the bank lobby to clear it. This happens in POS terminals: the payment fails with the merchant only to find out later that you have indeed been charged. In Nigeria, it’s Debit then Pay.

In the US they “lock” your money and then pay before debiting you, ensuring that under no circumstances will you be debited without dispensing money. But they have something that works for them: they have access to your credit report, which means that even if they paid and you don’t have cash, you can’t run away; they will ruin your credit.

Yet, technically, there’s no way to pay you when you’re out of cash, because the systems that check balances and release the cash are tied together. And 99.99% of the time, the technology does not fail due to many layers of storage and built-in redundancies.

Thus, as the consumer protection agency of Nigeria grow for service level agreements between banks and solution providers, the overhaul must go beyond the signing of documents. They need to move higher to the tech stacks if they want to avoid that nightmarish experience where after customers have eaten at a restaurant, and try to pay through POS, and are told that payments have failed, only later to get alerts successful debits after they left the restaurant (after replacing the cash payment), on the same failed POS payments.

In the US, they lock in the value and credit the restaurant (merchant), then debit the customer from the bank. In other words, it is impossible for you to have a failed payment for a transaction that was successfully charged. Once they have paid the merchant, they will debit the blocked value later. This means that a technological problem will not affect the sequence of events and at the end of the whole process, a superior service is provided.

He said, “Personally, I have a problem with banks that literally leave everything up to customers to see when something goes wrong. We are working and this is part of the guidance documents that we will be working on.

“Someone wants to pay for something, maybe a plane ticket and the ticket is not issued because they say you haven’t made the payment, you have lost the ticket and the fare. In reality, the person did everything to pay and it turned out that the man paid but the money was not returned.

“Another example is where DStv says you haven’t paid but your account says you have paid. Consumers do not choose the payment system they want. They go to their bank and the service provider chooses where they want their payment.

“In this ecosystem, they need to have their service level agreement on how they do their reconciliations. That’s the service level agreement that we believe needs to exist within the ecosystem.”

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