The Central Bank of Nigeria (CBN) launched a domestic card scheme on Thursday, January 26, 2023, in collaboration with the Nigeria Inter-Bank Settlement System Plc (NIBSS). The AfriGo card is the first of its kind in Africa, joining RuPay, UnionPay, Elo card scheme, and JCB card schemes as national government-launched card schemes.
The CBN’s decision to launch a card scheme has perplexed some and raised several questions. Some of these questions are addressed in this article.
What Is A Card Scheme?
Card schemes provide the infrastructure for users to use their debit, credit, or prepaid cards to conduct transactions. For example, if you want to withdraw money from an ATM or PoS agent, that transaction is made possible by Card Scheme Technology.
In Nigeria, there are three major card schemes: Mastercard, Visa, and Verve. We can expect a fourth major player with the addition of Africa.
Why Is The Central Bank Of Nigeria Launching A Card Scheme?
This is possibly the most important question for most Nigerians, and the CBN has provided some answers.
- Financial inclusion: This is for the majority of the last decade, the Central Bank has been on a financial inclusion drive. According to the Governor of the Central Bank of Nigeria, AfriGo would assist increase financial inclusion in the country.
- Free up forex reserves: Almost every Nigerian who reads the news regularly is aware of the problems experienced while attempting to get foreign exchange for transactions outside the nation.
There is scarce dollar for those who need it, from students who need to pay their fees to businesses that need to pay for goods and services, and the CBN plans to free up some of that through AfriGo. For example, if you used a bank-issued card at your local grocery, the transaction costs were previously paid for in dollars. That would no longer be the case with AfriGo.
- Reduce financial institutions’ operating expenses: According to the CBN, AfriGo would lower the operational costs of cards in the country. Charges on the cards, for example, will be paid in naira and will not be affected by currency changes.
- Data sovereignty: By processing financial transactions, financial organizations produce valuable data. Two of the main participants in Nigeria’s card sector are controlled by foreign organizations, and in an age where data is increasingly important, the CBN wants data sovereignty.
Why Not Try Verve?
Verve is a popular card scheme in Nigeria that is controlled by Interswitch, a Nigerian firm, unlike Mastercard and Visa.
So, Why Is The CBN Constructing A Replacement?
One may argue that the CBN is hoping to increase competition in the market, especially given that the CBN Governor pointed to Nigeria’s poor card penetration rates while introducing AfriGo.
When Will I Be Able To Obtain The Card?
The card will not be available for a few weeks since banks are not yet ready to begin routing payments through the card mechanism. The CBN Governor, on the other hand, stated that a cut-off date will be published in the coming weeks, therefore banks should begin distributing the cards soon after.
Will My VISA And Mastercard Continue To Function?
Yes. According to the CBN Governor, all existing cards would continue to function normally, and you may not need to obtain an AfriGo card.
How Will The Card Function?
The AfriGo card will function similarly to your Visa, Mastercard, and Verve cards. You’ll be able to use it for transactions across the country, subject to your bank’s unique restrictions.
Who May Make An AfriGo Request?
Anyone in Nigeria with a bank account can apply for the AfriGo card.
What is the procedure for obtaining the card, and how much will it cost?
What Is The Procedure For Obtaining The Card, And How Much Will It Cost?
Obtaining an AfriGo card will function in the same manner as current cards. Users must request the cards from their financial institutions. Because the AfriGo card is not currently in circulation, no pricing information is provided. However, considering that the CBN believes the card system will be a cheaper alternative to existing cards in the nation, it is reasonable to presume that the card will cost less than 1,000, which is what it costs to obtain a debit card in most Nigerian commercial banks.
Can I Use The Card To Make Foreign Purchases?
The AfriGo card will be used for all in-country online and offline transactions. Domestic card schemes typically operate within a country, with a few exceptions operating outside of the country. However, Nigerians are unlikely to be able to pay for transactions made outside the nation just yet.
Is The AfriGo Card Secure?
As cybersecurity assaults become more common throughout the world, security is a vital consideration when selecting a card scheme. The new card mechanism, according to the CBN, complies with worldwide security standards such as EMVCo.