The Financial Inclusion Game Changer

Today, MasterCard is launching a ground-breaking program in Nigeria with the cooperation of the Nigerian government. This program uniquely combines a national ID card with electronic payments. Daniel Monehin, MasterCard’s Division President for Sub-Saharan Africa, sat down with MPD CEO Karen Webster to discuss why today is a such significant day in payments for Nigeria and why this program has the potential to be the financial inclusion game changer everywhere in the world.

KW: Nigeria and MasterCard have been working together for several years on a program to provide financial inclusion for Nigerians. So, tell us what is happening today, and what makes it so significant?

DM: What’s happening today is the culmination of 7 years of developing a unique identification program for Nigerians, electronic in nature, that is secure and available for everyone ages 16 and above.

What makes this so unique is, amongst other functions, the prepaid functionality that is built into the card to enable the citizens to engage in electronic payments in the form of transferring, cash, digital payments, and more. This is a massive achievement on the part of the Nigerian government, which has been very cooperative with the support of the MasterCard technology and EMV Chip and Pin. We estimate that the cards will be delivered to over 100 million people. We are very excited to be part of this program.

KW: Nigeria is Africa’s largest economy – that really is exciting that 100 million people have this opportunity after seven years in development. Did you always think about combining payment with identity?

DM: MasterCard has had a lot of experience with specific programs that targeted certain parts of the populations in different countries, like in South Africa with social benefits of the government. MasterCard has experience working with identity and payment. But what’s happening in Nigeria on a larger scale, with males and females 16 years old and above, is that this idea came from the government of Nigeria itself – wanting to combine identity and payment. There was no technology roadmap to make that work until MasterCard got involved in 2011, four years into the seven-year program. MasterCard rolled out that technical roadmap for the program.

KW: How widely available is POS technology in Nigeria?

DM: In 2012, we had just about 22,000 devices in the country, but today there are about 150,000 deployed. Nigeria is on a steep curve when it comes to acceptance of POS technology, and open to democratizing acceptance – liberalizing it, and making it more functional and deployable. We will be seeing mPOS soon in the market, and that will reduce the cost of the POS devices which are $500-600 to about $50-100 depending on the device. But all of them will be EMV certified, and safe and secure. In addition, 500,000 additional locations that accept mobile payments have been added in the country, speeding up the payments acceptance process.

KW: Nigeria is a very entrepreneurial country with a lot of interesting things happening – that will clearly ignite payments acceptance. But let’s talk about the cashless policy that the country has implemented – something that establishes a surcharge for cash transactions over a certain amount. This seems to be working, with citizens increasing their use of digital payment. What is your thinking with respect to what you’re launching today, and this cashless policy that Nigeria is hoping to enforce?

DM: MasterCard has been in the business of electronic payments for 7 years, but we didn’t sell cashless programs to the government of Nigeria, which had been in line with MasterCard’s vision of a world without cash. This was their idea! And, naturally, MasterCard has been supportive of the program, alongside financial institutions and technology partners that we have worked with to help roll this out.

But we are at the very early stages when it comes to the cashless society – MasterCard Advisors did a study that showed the five stages of deploying electronic payments. The first stage is 100 percent cash without electronic payment. In May of this year, it was discovered that Nigeria has the highest usage of ATMs in the world. That’s the stage that Nigeria is in right now – but ATM transactions are not cashless!

But that’s in line with what we’ve seen in other markets. Nigerians have started their cashless journey – and we are very excited to see the market move through the next stages.

KW: You referenced mobile as an important attribute. How will you pivot this card program to mobile?

DM: The initial stage is issuing the card and getting the biometric data. There is also a mobile part of it – it may be the second stage, but we definitely intend to combine it with a link to a mobile wallet.

The strength of this program itself, especially when we talk about financial inclusion and the unbanked, isn’t necessarily just from mobile devices. A lot of people have mobile, but not everyone does. However, everyone will have an ID card – it is required by law, and with that comes a payment solution. You can offer financial services through these cards, and then mobile will be another channel that is part of it. We see this definitely taking place on the national ID scale.

In addition, Nigeria is the second largest market for transferring funds, over $20 billion a year, and the national ID card is a solution for that. You don’t have to use some secret number or stand in line to use it – it will come straight on to that card, you can use it without the hassle of collecting funds today. This will help further fulfill the Central Bank policies.

KW: Finally, where else are you taking this idea? Can you say?

DM: What I can confirm is since we announced this project, taking off in May of 2013 in South Africa, there have been many countries that have been excited about this, asking questions, and governments are very interested in it. It just makes sense. I was recently at a conference about financial inclusion, and the question was asked: What will be the game changer for financial inclusion? The answer that won by far was national identity cards, which lead into a payments instrument.

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