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Debit Cards: Still Driving Financial Inclusion

The last decade witnessed tremendous changes in the nation’s banking landscape. The number of bank customers have grown, agency banking has gained a foothold and cheques have given way to transfers, particularly through SMS banking and mobile apps. Debit cards, however, remained a constant feature during this period.

Debit cards are financial instruments issued by commercial banks to their customers to enable seamless transaction outside the banking halls. Debit cards have proven reliable in banking and other financial transactions. It is today acknowledged as a viable tool in the quest to drive financial inclusion in Nigeria.

Financial inclusion refers to a situation by which individuals and businesses can access appropriate, affordable and timely financial products and services. These products and services include savings, credit, insurance, equity and pension. The objective of financial inclusion is to capture the unbanked into the formal banking space and ensure the availability of more financial products to the underbanked. As the World Bank notes, access to a transactional account is the first step towards broader financial inclusion.

Several initiatives have been deployed by the Central Bank of Nigeria (CBN) to drive these financial inclusion objectives, especially payments. Debit cards have proven a critical tool in driving financial inclusion in emerging markets such as Nigeria.

While debit cards were at some points the exclusive preserve of a few, it is today almost ubiquitous. This is due largely to the pioneering efforts of  Interswitch Group to place debit cards in the hands of many Nigerians with the introduction of  Verve card. Verve card is not just a domestic card with lower transactional fees, it is highly secure and tailored to cater to the market nuances. It is not surprising therefore that Verve quickly captured an appreciable portion of the market.

Inevitably, as more Nigerians added debit cards to their wallets, information and knowledge about financial services, payment patterns and transaction history emerged. Infrastructure and technology to support the usage also expanded with the deployment of more payment channels across the nation. Interswitch ensured that the Verve card was compatible with a majority, if not all of the payment channels.

Today, with a debit card, cardholders do not have to travel to their banks’ branches to carry out most of their financial transactions. With a debit card, cardholders can make cashless payments for their purchases at the point of sale and small scale business owners can build transaction history with which they can access credit facilities and scale their businesses.

The debit card can be incorporated to underwrite insurance policies and provide various cover to the cardholder. Pensioners can use their debit cards to access their periodic pension payments after retirement. In some cases, the debit card is used as a form of electronic identity (eID). It can be used to access grants, and agricultural resources such as fertilizers, equipment lease, seedlings, etc.

Undoubtedly, debit cards are an effective force in driving financial inclusion.

As debit card payment transaction success increased, cardholders’ confidence grew. Subsequently, it became easier to convince others to come into the formal banking space to enjoy the convenience that the cards offered.

Verve’s intervention in the payment card space proved a game-changer. It became commonplace to see the blue-collar worker and the white-collared counterpart on the same queue to use the ATM. It was no longer strange to see the driver and his boss making payments using PoS at the stores. In the financial services space, debit cards are revolutionary.

Figures on digital payment from the National Bureau of Statistics and the CBN for Q3 2020 showed that digital payment figures for the period was N320 trillion, with ATM transactions accounting for a big chunk of the total transactions. This is not surprising with the significant increase in the use of PoS, USSD and card-based web payments.

The debit card is an enabler. Verve card is a leveler. While the debit card has empowered people to carry out financial transactions seamlessly, the Verve card has ensured that this easy, convenient and secured way service offering came within the reach of all Nigerians, who desired it.

Yes, there is more to be done. The regulatory is on the right path with policies aimed at strengthening and deepening the efficiency of the nation’s e-payment system. New players are emerging and there is an increase in the issuance of cards, both debit and credit. It is clear, agency banking is on the rise, the number of touchpoints are increasing and options are growing. The future of cards, at this time, appears secure and bright.

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