ATMs, PoS’ Collapse Looming On Worsening NIBSS’ Platform Failure
By CHUKWUMAH KELECHUKWU
Sophie Ajewole, a resident of Egbeda in Lagos woke up 9am, for an interview scheduled for 11am at the highbrow Lekki, also in Lagos state. She hurriedly booked a taxi cab, hoping to get some money from an Automated Teller Machine (ATM) on her way. She scampered out of the taxi cab as she sighted one. And after waiting in vain for 10 minutes, she sought another and after about trials at three others, she eventually entered the banking hall to collect N5,000 to pay the taxi man who was happy that the delay at the ATM centres prolonged the ride and generated more money.
Two days later, Abdulahi Sodje, planning a trip to lagos from Abuja was to pay with his debit card using a Point of Sale machine (PoS) at a Transport Company through which he decided to make the trip. He joined the queue of 50 people and on his turn, the PoS refused to work. He sought succor for cash from nearby ATMs but this came after visits to almost 10 ATM points. It took him about one hour to return to the terminus. But he was too late. The luxurious bus was filled up and had to wait for another which took several hours. He eventually left Abuja with a night bus, at a big risk to his life.
The experiences of these two best exemplified the frustration of Nigerians who have embraced e-payment transactions as alternative to the time wasting cashiers and tellers at the various banking halls.
In some cases, e-payment is a solution. But now, and more than before, ATMs and PoS, the most popular channels of e-payment have become a tale of woes across the nation.
Several cases abound of ATMs and PoS debiting customers without payment. While some reversals occur instantly or after 24 hours, some customers do bear brunt, making several phone calls or visiting the banks where the transaction originated before the error could be corrected.
Samuel Chukwu, a regular customer of Jumia, an online shopping mart had a frustrating moment recently. He had purchased a washing machine which payment was scheduled on delivery. The Jumia salesman came with the PoS, and after three trials, the transaction failed while the PoS debited Samuel without the ‘decline’ receipt. For many days, Samuel was at the receiving end, calling the bank without solution until he went physically.
While Nigerians lament the inefficient system that has debited them without payment at a time of dire needs, the mobile money operators now live with fear that the frequent and alarming transaction failure is a signal that the entire system is doomed.
Samuel’s experience with the Jumia salesman was a reminder of the 2017 clearance glitch during which the Nigerian Inter-Bank Settlement System (NIBSS) platform for image collapsed and threw the entire banking industry into confusion. During this period, the banking industry lost billions to fraudulent clients who took advantage of the failed platform to initiate transactions which inflows in their accounts could not carry.
There was a particular branch of the former Skye Bank (Now Polaris) in the South East which lost N8.1million to a fraudster who took advantage of the system failure to quickly withdraw the money. The loss was borne by the branch when every efforts to retrieve the money ended up in vain.
Interestingly, fraudulent people that capitalise on the NIBSS system failure are influential in the society, and this sometime, put the banks at their mercies. Banks are forced to wait for deposits into their accounts to retrieve the money at source.
The increasing alarming rate of transaction failures owing to system inefficiency prompted the CBN to issue licences to alternative Fin-Tech platforms to be telco-driven rather than bank-led.
The statistics on the failure of NIBSS are scary especially on weekends and during festivities. What this means is that NIBSS, the transaction processor platform that connects every other party to inter-switch to execute financial transactions is deficient and only marking time for its final collapse.
On December 24, 2018 the NIBSS suffered system collapse under the weight of a deluge of transactions in which about 25 percent of the transactions failed.
At the peak of Easter celebration between April 20 and 22, NIBSS’ system failure exceeded 30 percent on the back of a moderate increase in transaction volume, rendering the Christian festive period unceremonious for many.
Similar scenario played out during June Eid-El-Fitri celebration as bank customers all over Nigeria had a hectic time using the electronic channels for banking transactions due to usual glitches that always mar NIBSS’ technology platform any moment there is significant increase in transaction volumes.
Transaction failure rate, particularly on PoS and ATMs has been on a steady increase since last year. Transaction failure trend which increasingly deteriorated since January, 2019 has always worsened during festive periods.
Analysis of failed transactions obtained from NIBSS live feed during the period showed that as at 3:24pm local time on the first day of the Eid-El-Fitri celebration, the platform had recorded 21 percent failure rates in 357,065 total volume transactions for that day.
In other words, about 71, 960 out of 357, 065 transactions failed as of 3:24pm that day.
The POS Live feed monitored by our correspondent showed that in five minutes between 3:19pm and 3:24pm, a total of 667 transactions out of 3,208 transactions failed, representing 20.79 percentage failure rate on transactions that occurred on the PoS channel.
During this period, ATM channel was also marred by glitches as bank customers were seen stranded on long queues waiting to make banking transactions at banks monitored across Lagos, Ibadan, Kano, Aba, Onitsha and Abuja.
Agents of Mobile Money firms disclosed that on a typically bad day, failed transactions run into a staggering N1 billion, threatening operators’ earnings and future of the business.
One of the agents told InsideBusiness that flip-flop operations of NIBSS’ technology platform could shave as much as N5billion from earnings of industry operators on a typical day of failed transactions.
The frequent transaction failure reached a climax in March, prompting NIBSS to tender unreserved apology to acquirer banks of operators.
But NIBSS, the transaction processor company, whom agents alleged, has run out of capacity to midwife millions of mobile money transactions, told our correspondent that efforts were ongoing to enhance capacity as millions of people are now embracing the electronic payment system.
NIBSS, and its stakeholders’ move to prevent collapse have seen them increasing average processing time from 15 seconds to 20 in a seven-point capacity enhancement initiative to improve the situation.
A document, after an April meeting of all the stakeholders articulated measures to address the issue.
The document made available by NIBSS’ spokesperson Lilian Phido indicates that the payment system resources are being upgraded in line with its policy stipulating that system resources must be enhanced once the 65 percent threshold is reached.
It was also stated in the document that the infrastructure had been scaled up such that the system utilization is lower than 40 percent to prepare for expected higher volumes in the next few years.
NIBSS said that stakeholders had embarked on implementation of an in-memory database system on the NCS platform to ensure super-fast responses at the center, stressing that “all systems have been load-balanced for non-stop performance.”
It further stated that “processors have been advised to ensure redundancy-in of their network links for efficient fail-over whenever there is a service failure by any network provider as well as to scale up on infrastructure.
“We have advised Banks on the minimum system requirements for their front-end systems in order for them also to cope with higher volumes’
This in effect means that all service providers are expected to scale up on infrastructure because the strength of the ecosystem will always be equal to the weakest one,” NIBSS stated.
Phido, admitted that “We had issues where people tried to do PoS transactions and they failed. The customer is debited, and reversal which is supposed to be instant took a bit longer time than what it is supposed to be. These issues have been addressed.”
She attributed it to “industry system glitch”, which she said involved several stakeholders like Interswitch, Banks, payment service providers, and others.
“The mobile payment process goes through multiple entities, from one entity to another, and to the next one until it gets to the beneficiary. If, in the process of going from one entity to another and the time elapses, that transaction will break,” Phido explained.
“What the industry had to do was to extend the timeout period for a typical transaction. For instance, a typical transaction could take few (15) seconds before it times out. That timeout period has been extended to 20 seconds,” Phido said over telephone.
The issues
Technology expert, Engineer Olusola Teniola, blamed it on what he described as interoperability issue among banks which generates “device error” response even when communication is not established between the banks’ server and the device.
The President of the Association of Telecommunications Companies of Nigeria (ATCON) explained that interfaces and inconsistencies cause interoperability issues.
“That is why you get different responses. In trying to go cashless, we need better interoperability between the banks to ensure that irrespective of which channel you are using: internet banking, ATM, PoS or any other form of device, it should be consistent. That is the challenge we have right now,” says the telecommunications engineer.
Breaking it down, Olusola explained that there are various reasons for transaction failure: poor communication, server error or even device error which the terminal may indicate. But in Nigeria however, we conclude that it is network problem because it removes responsibility from the provider of the terminal.
He explained that in processing transactions within the time (20 seconds) alloted for it, an error response is generated after the time elapses, yet money is wrongfully deducted from the account holders even when communication was not established between network service provider’s device and the bank’s internet server.
“This is where the interoperability issue has happened. When the reason is known by the device and it happens to be that it is due to the device, there should be no transaction and no deduction from your Account. This is because it has not communicated, so how can it deduct when your account is not on the device but on the server which is on the banking system. That is why I am very specific about types of errors,” said the expert.
Real reason behind payment transaction failures
The real reason behind transaction failures and wrongful debit of customers’ account is network service failure blamed on telcos.
The mobile money initiative is a telecommunication project but is being driven by deposit money banks. The banks own the clients but they don’t own the mobile subscribers.
Besides, some bank clients do have one or multiple mobile devices while the suitability of the device for the mobile apps are not determined before the apps is released.
“The integrity of those mobile apps have not been tested on the various smart phones that exist, which are not regulated by another body. You are just a public listed entity that is now entering a space that you have no knowledge of, and absolve yourself of the fact that you have not fully tested the Mobile App and conclude it is a communication problem. But, you don’t understand which devices have been tested with the application,” ATCON boss stated.
In simple language, the mobile money payment network was not verified by any institution to set a standard before it was foisted on the financial system; it is a case of anything goes.
In Kenya where e-payment flourishes, Mpesa that is adopted by the country was tested in the Philippines and Singapore before it was adapted to the African environment.
In Nigeria however, mobile money introduction lacked background foundation and as such, has been an exercise in trial and error.
“Kenyans are able to adapt to Mpesa because Safaricom is a Mobile operator that knows the devices. It has the user- behaviour information at its disposal. So it was easier for them and more effective to fix the problems that were inherent in the system and to gain full trust and user acceptance because they owned the client base. The banks have to overcome that. Otherwise, it is virtually impossible,” Olusola concluded.
“In Nigeria there isn’t anybody that has been able to verify the systems that we adopt irrespective of whether there are laws that exist or not. There is no one as an institution that can verify the systems that we use. There are no standards and so you can do whatever you want”.
“Therein lies the problem. We wanted it to be bank-led but the banks do not own the mobile subscribers,” said Olusola.
The financial system regulator, Central Bank of Nigeria (CBN) had also, in addition to the April meeting of the stakeholders waded in on the infrastructure matter with active engagements of stakeholders and timelines to achieve same.
These measures, however are yet to record any positive impact as the flip-flops went on during the Moslem’s El-fitri celebration in June, during which 21 percent failure rates in 357,065 total volume transactions was recorded for that day.
It is also a frequent sight every weekend to see frustrated customers on a long queues at ATM centres, waiting for financial transaction that sometimes end up in
The frequent failure of the NIBSS platform, threatening security and confidence in Nigeria’s E-payment system has summed up the fear that the NIBSS is only marking time for its final collapse.
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