On the 26th day of January 2023, the Central Bank of Nigeria (“CBN”) in collaboration with the Nigeria Inter-bank Settlement System Plc (“NIBSS”) launched the Nigerian National Domestic Card Scheme, known as AfriGo.
This was done to strengthen the national payment system and deepen the usage of electronic platforms in Nigeria. It is expected to provide more options for domestic consumers and promote the delivery of services in an innovative, cheaper and competitive manner.
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1. What is a card scheme?
A card scheme is a central payment network that provides infrastructure for users to conduct transactions using their debit or credit cards. For example, if a person intends to withdraw money from an ATM or PoS agent, that transaction is made possible by technology provided by a card scheme. Currently in Nigeria there are three major card schemes–Visa, Mastercard and Verve. AfriGo is expected to be the fourth once it becomes operational.
2. What is a National Domestic Card Scheme?
This is a card scheme fully owned and controlled by the government of a country. Other countries such as China, Russia, Turkey and India also have a National Card Scheme.
3. What impact will it have on the banking system?
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NIBSS has listed the following as the expected impact of the National Card Scheme:
- Reduced operating cost for financial institutions: Payment of operating cost of card schemes such as Mastercard and Visa card are made in dollars which makes the cost susceptible to dollar fluctuation. Charges on AfriGo card will be paid in Naira and its operating cost may be lesser as compared to other card schemes. This is expected to reduce the operating cost of cards in the country.
- Data Autonomy: Valuable data are generated when financial institutions process financial transactions. Two of the largest players in the card space, Mastercard and Visa are owned by foreign organisations. While this may not be considered a security threat, it is a source of concern and in an age where data has assumed great significance, the CBN desires to have increased data sovereignty.
- Financial Inclusion: The CBN has stated that the introduction of AfriGo will help drive financial inclusion in the country by addressing local peculiarities of the Nigerian market and provide the option of cheaper card services.
- Reduced usage of Foreign Reserve: According to NIBSS, charges for card schemes such as Mastercard and Visa are paid in dollars which takes a toll on Nigeria’s Foreign Reserve. The CBN intends to reduce this through the issuance and usage of AfriGo, as payments will be done in Naira instead of Dollars.
- Increased competition: Unlike Visa and Mastercard, Verve is owned by a Nigerian company called Interswitch. Nevertheless, CBN intends to spur competition by creating an alternative option.
4. Is it compulsory I use AfriGo?
According to the CBN, it is currently not compulsory for Nigerians to use the AfriGo card as other card schemes will still continue to function.
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5. Can I make international transactions with AfriGo?
National Card Scheme usually work within a country, with only a few working outside the country. The AfriGo card will be used for all online and offline transactions within Nigeria. It is, however, most likely that Nigerians will not be able to pay for transactions conducted outside the country as CBN has currently restricted the usage of Naira debit cards for international transactions.
6. How secure is AfriGo?
The security of one’s personal data is very important especially in the current age of cybersecurity attacks. The CBN has stated that the new card scheme complies with global security standards, including EMVCo.
7. How can I get AfriGo?
Just like other card schemes, anyone with a bank account in Nigeria should be able to request for the AfriGo card at their Bank. There is no available information on how much the AfriGo card will cost. It is, however , expected that it will cost less.
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The CBN has stated that the Afrigo card will soon be available to Nigerians as banks are currently working on its adoption. Nonetheless, CBN has announced that a deadline will be given to banks in the coming weeks. This is expected to spur the banks into issuing the card faster.