Mixed reactions have trailed the CBN’s announcement last week on the appointment of UPSL as the
2nd Payment Terminal Services Aggregator (PTSA) in Nigeria, to join NIBSS which effectively held a
monopoly of the play for many years.
Whilst some stakeholders acknowledge the progress this move portends, from the perspective that
it’s opened up a previously closed, mono-player control of what is ordinarily a very strategic gateway
for payment transactions in an economy that is arguably the largest in Africa, many of the
stakeholders whose opinions we sought queried the rationale of moving from a monopoly to a
duopoly, with sentiments expressed that there are equally qualified players who could have been
saddled with the responsibility, in the interest of the wider industry, especially considering the
serious constraints and bottlenecks the operation of a single PTSA created in the 1st quarter of 2023
during the politically-induced cash-crunch crises.
An industry stakeholder (preferring to comment anonymously) opined “There are fundamental and
legitimate concerns about what this could portend for the industry. Moving from a monopoly to
what is effectively now a duopoly? Is that progress, why are a few more equally qualified entities not
selected, given this is a capability-based selection, and the existence of more PTSAs creates more
throughput capacity for the industry collectively? Given the extent of the challenges the entire
industry, indeed the whole country; businesses, consumers, you and I grappled with around March
2023, the logic of democratizing this capability by enabling a few more equally qualified players to
manage the throughput of transactions is not far-fetched…”.
The commentator equally highlighted the need for industry stakeholders and associations to rally
together to engage the regulators constructively with their concerns.
According to another e-payments professional within the banking sector, who also opted to weigh in
on the debate strictly on the condition of anonymity, “The CBN governor announced a well-meaning
ambition to build a $1 trillion economy. Why not use the entire capacity of all licensed
switches/payment processors to achieve this audacious aspiration? He further asserted that “In
March 2023 during the cashless policy implementation, all banks and payment services providers put
together could not carry the capacity of the industry. Transactions were failing and systems crashed.
Is it only 2 entities that will do it? Even from the perspective of fostering industry innovation through
healthy competition which is necessary to achieve a $1 trillion economy, a duopoly does not appear
to be the way to go.”
Interestingly, on interviewing industry participants, another sentiment that was expressed in
different quarters was that UPSL who already has a switching license, a Payment service provider
license, a merchant acquiring license and owns a payment service bank may be poised to become
unduly advantaged over every other player, and as a result, a common theme running through the
concerns of respondents is that more than ever before, there is a need for the CBN as industry
regulator to ensure that they painstakingly introduce checks and controls to ensure an even
‘balance-of-power’ within the sphere of payment transaction processing which is the lifeblood of
commerce in any economy.
“With this move by the CBN, UPSL may become even more powerful than NIBSS who only had a
PTSA license. That potential needs to be clearly acknowledged and actively controlled in the interest
of the collective”, opines another respondent. She further reiterated the need to ensure that no
industry player or gatekeeper should be inadvertently empowered to use their dominant position,
by omission or commission, to push other players out of the market and gain unfair advantage.
These are interesting times. In view of recent dynamics such as this, and with the wave of
sentiments sweeping across the industry, will the Central Bank be able to put in place regulation that
will mitigate any manifestations of anti-competitive practices and assertion of dominance by
industry players? Even if the regulator documents the right guidelines in view of addressing such
concerns, will they be able to go all the way in actually enforcing these? As transactions
progressively surge in Africa’s largest consumer economy, will the 2 PTSAs empowered with such a
sensitive and defining responsibility be able to rise up to the occasion?
Time will tell. May we live in interesting times!
