An Overview of the 2020 CBN Revised Timelines for Dispense Errors
The Central Bank of Nigeria has revised its timelines for resolving failed Transactions and disputes in the Nigerian Payments Ecosystem. See a summary of the new information below:
We will recall that the delayed resolution of the disputes amongst other things, led to crowds of customers thronging the Banking halls after the Covid-19 Lock down was partially lifted in Lagos.
These revisions should highlight the frequently discussed need to digitise the Payments Back-Office Infrastructure. For a long time, the Banking ‘disruption’ has focused on the Front end; the intuitive apps, self-onboarding websites and even fancy-looking ATM interfaces. As a result, digital banks were born, Super apps were launched and Chat bots were christened.
However, the ‘twin’ in the background remained untouched and has continued to remain a bottle neck. It is a well-known fact that a Payment transaction is not complete until the Back-office processes are done.
What are the Implications of the Revised Guidelines?
- Stakeholders concerned are Card Issuers, Acquirers, Payment Switches and Gateways and Merchants.
- There is a reduction in the average response time by about 40 percent across the mentioned channels.
- This means the back-office workforce has to be almost tripled to meet up OR the back-end systems & Processes have to be automated to meet the demand.
- A couple of systems are involved in making a transaction successful. These systems are also involved in recovery and maintaining transaction integrity when there is a failure.
- If timelines are reduced, then these systems need to supply information faster; ATM journals and Camera images need to be retrieved and parsed faster, settlement/charge back from Card schemes need to be done faster etc.
- Specifically, some Core Banking Platforms are known not to reverse transactions immediately. This happens even when the conditions for an immediate reversal have been verified. This needs to be fixed by the OEMs /resellers responsible.
Omissions:
The Revised guidelines omitted these scenarios and they form a growing chunk of payment transactions:
- Only ATM , POS and Web Channels have been included. What happens to disputes resulting from transactions initiated at Mobile & USSD channels ?
- Only the transactions for Card tokens on the ATM channel were specified. What happens to disputes from Cardless transactions on the ATM?
- The document is silent on sanctions to be applied if there is a default. We’ll assume there is a window to negotiate the timelines, if the banks determine that they are unable to meet them with their current infrastructure.
Things to Watch out for:
1. The formation of an Integrated Dispute Resolution Platform by ‘Key Service Providers’.
2. Enhancement of payment infrastructure and processes to reduce incidences of transaction failure.
In summary, the efforts of the CBN are laudable as they continue to enhance the consumer experience in this space. The baton is now in the hands of the Banks, their service providers, Fintechs and the other players in the Payment space to deliver impeccable service to the consumers.
