10 November 2016

Hafiz Adewuyi

Is NIBSS mCash the solution to Nigeria's change problem?

One afternoon back in 2013 or 2014, I was in a danfo bus on Ikorodu road, Lagos when I had a lightbulb moment. The bus fare collector (conductor) did not have enough small notes to make change for me immediately, so I had to wait till he was able to find some. Being in this waiting situation is something that most Lagosians will eagerly avoid because of the following reasons:

  • you're scared the conductor has intentions of making away with your change, so he probably won't remind you before you step off if you forget to ask. This happened to me once in 2008 when I had just got into University and I could be described as a novice Lagos commuter. Before then, mummy used to haul me everywhere
  • when you ask for your change, the conductor will be rude to you because he has no concept of customer service; yes, his own is just to make sure everyone pays, even if he has to lay down his life fighting the difficult customers
  • when push comes to shove and the conductor cannot find change at the end of the journey, he will creatively lump you up with other passengers, transferring the task of splitting the bulk sum up to your 'haplessnesses'

So now, I believe you can understand the circumstances out of which my lightbulb moment arose: an idea of how to resolve the ubiquitous change problem in Lagos (I hate that most times, I have to restrict to Lagos for accuracy reasons, because I've not lived in any other part of Nigeria and I am too lazy to do research). 

Now, I would like to thank Microsoft for OneNote. Thanks to it, it took me just 10 seconds to find my documentation of this idea. I summarise below but you can find the full details here.

My idea

I called it CHANGE FOR NAIJA :) and below is an excerpt from the detailed idea spec:
"This is a technology solution that aims to alleviate the problem of scarcity of denominations in business. It aims to do this by providing a platform through which any participating merchant can issue change to customers and then, customers can subsequently redeem their change at any other participating merchant’s business"
I wrote that in March 2014. It's amazing to note that almost three years have passed already. I'll digress a bit to scold myself for having ideas and doing zilch towards actualization once the initial excitement wears off and the scope of work comes into full view. At the moment, I can tell you I have at least, five ideas of services to provide but not doing anything tangible to move towards fulfilment. Things will get better, I promise. I won't always be like this #thinkingOutLoud

The obstacles of my idea

This excerpt from the detailed spec highlights my biggest concern:
"I have conceived that on success, mock apps may spring up, which send keys to customers, making them believe they have real value while the value is actually not redeemable anywhere. This came into mind when I imagined how this solution could revolutionize quality of service in the public transportation sector"
To clarify, for a merchant to issue change to a customer on the system, they would supply the customer's phone number and change value to the system via an app. The system would then generate a key and send it to the customer via SMS. This key could then be exchanged for value from any participating merchant at a future date. So, my worry was that since anyone could forge an SMS, there was no way for the customer to ensure that the key in the SMS was worth anything. Hence, that was a major threat to customers gaining confidence in the system.

I also don't think that my solution for merchants to access their money from the system was good enough: prepaid card.


NIBSS microCash (mCASH) is a USSD payment gateway that leverages on NIBSS's NIP infrastructure which essentially connects Nigerian bank accounts across banks. As the term 'micro' suggests, the focus of the solution is on small-value transactions that occur in brick-and-mortar businesses. Petty traders, artisans and small business owners for whom having a POS is impractical can now receive account-to-account payments from their customers. As a customer, you can see it as a regular interbank transfer to the merchant's account, except that in this case, you send to a merchant code (not account number), and you pay 20 Naira instead of 100 Naira for the transfer.

I think the solution is amazing for the merchant because they get to completely escape the MSC (Merchant Service Charge) which comes with every transaction done on a POS. At least, as long as the transaction value is below 10000 Naira, which is high enough to encompass a majority of the targeted transactions. 

Will mCash work?

It is very likely that it will (and I want it to). Transactions over USSD are the in-thing in Nigeria these days and any service of true value provided over USSD is almost likely to be a hit, because everyone has a phone and SIM card which is all you need to access USSD services.

The degree to which it will be successful though literally lies in the hands of the low-income consumers who form the major percentage of the patrons of target businesses. 20 naira could be the difference between a yay and a nay in a situation where your danfo fare is just 50 naira, but using mCash means you would be parting with 70 Naira overall. I am sure NIBSS thought about this, but then, they must've thought: "come on, it's just 20 Naira". Though I hope that arriving at a 20 naira surcharge was backed by some market research.

I cannot wait for the day when the passenger conductor battles over change will be eliminated by technology. Lagos will be the happier for it. Will mCash be the angel of peace? Only time will tell.

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29 November 2016 at 13:30 delete

I like this idea. But in practical terms, a lot of training and information campaigns must be done to convince merchants to adopt it like mPesa in Kenya. For small businesses, it might be a hit, but for public transport operators I'm not so sure. As nice and promising as it sounds, I have difficulty picturing the average Lagos conductor whipping out his phone and typing some codes to just pay me my change when he can easily shout his way around it. They're usually perpetually impatient, stoned or very angry. But hey, I'd love to be wrong on this.

1 December 2016 at 07:19 delete

Haha. I'm with you on this. It's not going to be easy. But nothing good comes easy anyway. I think finding a way to incentivize the conductors for comporting themselves enough to manage digitized collections is a worthy line of thought.