LAGOS PoS ADOPTION SURVEY for NIGERIA INTER-BANK SETTLEMENT SYSTEM (NIBSS) PLC. PROJECT REPORT Commissioned by: Conducted by: 1 December 04, 2012 Financial Derivatives Company Limited Outline Executive Summary Background Methodology Survey Findings Summary and Conclusion Recommendations and Next Steps 2 Executive Summary 3 Executive Summary NIBSS commissioned FDC in October 2012 to conduct a PoS adoption survey in Lagos (Project NIBSS) The project goal is to ascertain the level of adoption and/or inhibitions to the widespread adoption of PoS terminals in Lagos The project scope entails a market survey of both merchants and end-users (cardholders) of PoS terminals in Lagos Market survey conducted via administration of questionnaires in four categories of market areas across Lagos 4 PoS Adoption Rate In Context 350 Deductions from available data on total number of PoS terminals deployed and volume of transactions conducted indicates that PoS terminals deployed recorded an average of 46 transactions and a maximum of 56 transactions per PoS terminal monthly over the period under consideration 5 300 250 200 150 100 50 0 Jan-12 Feb-12 Vol. of PoS Transactions ('000) No. of PoS Terminals ('000) Source: NIBSS 2 31 25 51 Mar- Apr- MayAugOctJun-12 Jul-12 Sep-12 12 12 12 12 12 92 114 179 192 236 270 262 330 90 124 136 152 159 165 170 181 Research Objectives Active profiles Understand the profiles of merchants and end-users Service attractiveness Investigate the attractiveness of the PoS Terminals Compare with other means of payment Service weakness Identify perceived obstacles with the use of the PoS Terminals Identify solutions that will enhance the adoption, subscription and effective utilisation of the card payment system Geographical Dynamics Understanding the dynamics and challenges in the use of PoS Terminals, geographically 6 Results and Findings 7 Merchants with PoS 8 Merchants with PoS Terminals According to the survey results, of the 3,562 merchants with PoS terminals 47% are general merchants 22.4% operate supermarkets 10.9% are pharmaceutical stores/hospitals 7.3% are restaurants/eateries 12.4% are other forms of businesses These business types are mostly located in open markets (39.5%) Neighborhood shops constitute 29.5% 29.5% are in shopping malls 9 and 1.5% are kiosk locations Business Type 12.4% General Merchant(trader) Pharmaceutical Store/Hospitals 47.1% 22.4% Restaurants/Eatery Supermarket 7.3% Others 10.9% Business Location 1.5% Open Market 28.5% 39.5% Neighborhood Shops Shopping Malls Kiosks 29.5% Merchants with PoS Terminals In spite of having PoS Terminals, avenue to EFT and Cheques payment most Merchants still accept cash above PoS Accepted Payment Methods 100.0% 93.9% 90.0% Cash payment was selected as the most accepted mode of payment (93.9%) 73.2% of the merchants surveyed accepted card payments 61.7% of these respondents accepted cheques 25.5% accepted electronic fund transfers (EFT) for payment, and 0.9% accept other means of payment 80.0% 73.2% 70.0% 61.7% 60.0% 50.0% 40.0% Investigation on why they accept cash over card payment while they have the PoS Terminals show that: PoS deployment was involuntary as they were deployed by banks unsolicited PoS deployment is not PoS availability for usage as some keep it under their lockers Delays associated with access to funds after sales 10 from the PoS 30.0% 25.5% 20.0% 10.0% 0.9% 0.0% Cash Cheques Cards EFT others Merchants with PoS Terminals Preferred Payment Methods 2.5% 1.3% method of payment 9.1% rating for cheques 11.5% for cards 2.5% for EFTs 1.3% for other means of payments 9.1% 75.5% 11 Cheques By preference 75.5% of merchants prefer cash as the 11.5% Cash Accepted Payment Methods Cards EFT others Merchants with PoS Terminals For the non-cash options, 47% of merchants prefer the card payment scheme to other payment schemes. On the available card types 40.7% of merchants prefer the Master Card VISA is the next preferred card payment type with 31.9% of the responses followed by Verve with 27.4% of the responses. 50.0% 47.0% 45.0% 40.0% 37.2% 35.0% 30.0% 25.0% Series1 20.0% 15.0% 10.4% 10.0% 5.4% 5.0% 0.0% Cheques Verve VISA Master Card 12 Cards EFT 27.4% 31.9% 40.7% others Merchants with PoS Terminals A total of 24.4% of 13 Card Payment Success Rate merchants indicated that the success rate of cards is less than 25% 29.8% of merchants believe the success rate to be between 25% and 55%. 29.6% claimed that success rate was between 55% and 75% 35.0% 16.2% of the merchants 5.0% indicated that the success rate of card payment was above 75% 29.8% 30.0% 25.0% 29.6% 24.4% 20.0% 16.2% 15.0% 10.0% 0.0% Less than 25% Between 25% and 55%Between 55% and 75% Above 75% Recommendation – Merchants With PoS Terminals Based on the findings above, our recommendations are as follows: Periodic checks should be carried out by the Payments Terminal Service Providers (PTSPs) in order to ascertain the condition of the PoS Terminals and get feedback about the functionality of PoS Terminals The PTSPs’ technician contact number should be made available to merchants, so that they can receive quick/first hand technical assistance when they need it The role of the NIBSS certification laboratory/facility to certify/approve PoS Terminal models should be popularised and communicated to merchants to boost confidence in the system and regulate PoS Terminals in circulation PoS Terminal certifying agency should conduct periodic spot-checks of 14 PoS Terminals with merchants. Recommendation – Merchants With PoS Terminals There should be partnership among banks, mobile payments operators, all other existing payment schemes and other support service providers to foster high availability and adoption of PoS Terminals, with the goals of: Mitigating current network connectivity problems Delays in accessing proceed of sales A fair transaction charge should be agreed upon among banks, which should be communicated to the merchants, as: Some merchants in certain locations are price-sensitive 15 Merchants Without PoS 16 Merchants Without PoS Business Type From the surveyed 1,627 merchants without PoS 57.5% of them are general merchants 16.4% operate supermarkets 8.2% run restaurants/ eateries. 17.9% General Merchants Operate Supermarkets 8.2% Restaurants and Eateries 57.5% 16.4% In terms of location, 49% are in open markets 1.9 21.3 26.9% are in neighborhood shops 21.1% are in shopping malls 1.8% are kiosks. 17 Other Business Type Open Market 49.6 Neighborhood Shops Shopping Nalls Kioks 27.2 Merchants Without PoS Accepted Payment Methods Cash payment was selected as the most accepted mode of payment (65.8%) 24.3% accept cheques 7.9% accept EFTs 2.0% accept other means of 2.0% 7.9% payments such as bank deposits This establishes the expectation of 24.3% 65.8% Cash 18 Cheques EFT Others high preference for cash by merchants without PoS terminals. To engender the imperative of the Cash-Less Lagos project, this should not be accepted as a do nothing case. Bankers to these merchants need to introduce PoS Terminals to them and adopt more friendly criteria for PoS Terminal deployments Merchants Without PoS Reasons for not having PoS Reasons alluded for not having PoS Terminals in descending order are: 30.2% 27.7% 26.6% Fear of default and fraud - 30.2% Easy access to cash – 27.7% Bank refusal to deploy – 26.6% Customer’s insistence to use cash – 25.7% Technical malfunctioning – 21.6% PoS Deployment/Transaction fee – 20.0% Connectivity – 18.1% 19 23.7% 21.6% 20.0% 18.1% Merchants Without PoS 70.0% of the merchants expressed willingness to accept PoS Terminal mode of payments. Interest in Accepting PoS Terminals for Payment 30.00% 70.00% 20 Recommendation – Merchants Without PoS Terminals We make the following suggestions based on our finding above: Banks need to revise the criteria for PoS Terminal deployment in 21 such a way as to encourage Merchants without PoS Terminals A massive awareness program should be undertaken to publicize the purpose and benefits of the PoS system and allay fears of default/fraud in the following ways: Publicity through radio and direct contact Focus on high and medium density areas (e.g. Oke-Arin, Nnamdi Azikiwe markets) because less sophisticated merchants are located in this areas. Publicity in more sophisticated areas (e.g. Ikoyi, Victoria Island) should emphasize direct contact with the merchants and/or formal letters of introduction. Other publicity means to be explored like bill boards, fliers, social Recommendation – Merchants Without PoS Terminals PTSPs to be encouraged to accept frontal roles in PoS deployment in line with approved guidelines Training on the usage of PoS Terminals immediately after deployments PTSPs should check on the merchants after a few days of training in order to ensure that merchants understand how to use the PoS Terminals and are using them appropriately The same procedures mentioned under the ‘merchants with PoS’ section should be followed in order to ensure network problems and technical faults are addressed promptly The fear of frauds would be resolved once the PoS Terminals are functioning properly because trust in the PoS system would have been built 22 Consumers/End-Users 23 Consumers/End-Users Consumers With Cards Of the 1,587 consumers/end-users surveyed, Current and savings account holders constituted 31.5% and 32.2% of responses from high-density (HD) areas 34% and 34.5% from medium-density (MD) areas 34.6% and 33.3% from low-density (LD) areas respectively Card holders constitute 82.4% of total responses while 17.6% do not own cards Despite the high ownership of cards, cash was still highlighted as the most used means of payment across the density areas (88.5% - HD, 93.9% -MD, 87.7% - LD) 82.4% The reasons highlighted by the consumers for 24 their continuous use of cash include connection and network difficulties of the PoS Terminals delay in transaction time fear of fraud amongst others 17.6% Card Holders Non Card Holders Consumers/End-Users Comfortable Payment Locations We also identified the closeness of banks and ATMs’ to both merchants and consumers as a major inhibition to PoS Terminal adoption Despite the inhibitors, the respondents indicated that they feel most comfortable using the PoS and card payment systems where available and secure. This explains comfort to use cards in supermarkets than in the open markets 17.8% 15.0% 17.0% 24.8% 11.5% 13.9% General Merchants Restaurants / eatery Malls Supermarket Pharmaceutical store / Hospitals Others Supermarkets (24.8%), malls (17.0%), general merchants’ stores (15.0%), pharmaceutical stores and hospitals (11.5%), others (17.8%) 73% of consumers indicated they 25 would encourage others to use the PoS and card payment systems based on their experience with the payment systems so far Encouraging Others based on Experience 73.00% 27.00% Encourage Others Indifferent/Would not encourage others Recommendations – Consumers/End-Users Based on our findings above, our suggestions are as follows: A massive awareness program to publicize the purpose and benefits of the PoS system (similar to that recommended for merchants without PoS) Publicity through radio, bill boards, fliers, social media and TV adverts Town storms and road shows are recommended to fast track end-users adoption Ensure transparency in the PoS system process All transaction costs and other issues associated with PoS Terminal usage should be made known to consumers during the publicity program Necessary steps to ensure that the PoS Terminals are working as expected should be publicized to build trust 26 Recommendations – CONSUMERS/END-USERS Carrying cash by consumers should be made less attractive through policy formulation The cash withdrawal limit by individuals should be revised downward with more stringent charges for withdrawals above specified limits The cash deposit limits for corporate account holders should be reduced and the penalty for large deposits should be increased 27 Conclusion The potential for growth of the usage of PoS Terminal in Lagos metropolis remains strong. With a population of over 16 million people, there are presently approximately 8 million card holders in Lagos State Based on the aggregated data from the 6,776 survey sample, the study found out the following: Challenges / Perceived Obstacles to usage of PoS Terminals Two out of the three categories of respondents (i.e. Merchants with PoS and Merchants without PoS Terminals) identify basically the same challenges and perceived obstacles to the smooth operation of the PoS Terminals 28 Conclusion The obstacles in order of priority are as follows: Connectivity and network challenges Transaction charges/charges to bank account Consumers/merchants insistence to pay cash Rejected transactions Card reading/technical difficulties Consumers/merchant lack of card/pos Access to after sales funds Others Poor awareness of the PoS payment systems and benefits Long transaction time/late transaction notification 29 24.5% 18.9% 12.7% 11.8% 11.3% 10.1% 6.6% 4.3% Conclusion Challenges that deter consumers from making use of the pos terminals According to priority, factors that inhibit consumers’ usage of the card payment system include: Connection and network difficulties with the terminals Non-Availability of PoS Terminals at merchants’ points/stores Attributed to the poor rate of deployment as noticed by the Merchants with PoS Merchants demand for cash As a result of obstacles listed above 30 Conclusion Long/delayed transaction time Fear of fraud Some consumers gave personal experiences on being debited twice In some cases the terminals reject the transaction, however the consumer receives a debit alert some hours after the unsuccessful transaction 31 Next Steps 32 Next Steps We suggest a follow-up integration survey in Lagos State most importantly in the areas not covered by this survey This will help to further identify other cultural and fundamental barriers to the adoption of the PoS Terminals Popularisation of NIBSS role as PoS Terminal certification agency and regular spot checks of PoS Terminals in use at merchant points There is need for a pilot survey in other key cities where the Cashless policy will be introduced before implementation This will help to identify the necessary pre-implementation steps to be taken; identify the trend and compare results with the Lagos density areas This will help underscore the model to be adopted for each of the new locations 33 Background & Methodology 34 Background and Methodology The “Project NIBSS” entails a market survey of both merchants and end-users (cardholders) of PoS terminals in Lagos Market survey conducted via administration of questionnaires in four categories of market areas across Lagos Stratification of sample area (Lagos State) into Lagos Yaba Ikeja Badagry Further stratification into high, medium and low density areas 35 Background and Methodology Spot Check on enumerators during enumeration By both FDC and NIBSS team Project update presented during the course of the survey Feedback from update incorporated 36 Scope of Survey FIELDWORK SETUP High Density Areas Medium Density Areas LAGOS Yaba 37 Oke-Arin/Ereko/Idumota Balogun Nnamdi Azikiwe Yaba/Alagomeji/Sabo/ Ebutemeta IKEJA Ikeja/Computer Village/Alade/Opebi Ketu/Ikosi/Magodo BADAGRY Alaba Trade-Fair Low Density Areas Ajah/Ikota V.I./Ikoyi/Lekki Surulere/Bode Thomas/Lawanson, Mushin Ogba Gbagada Maryland Iponri Festac/Amuwo Odofin Satellite Town Apapa Badagry Egbeda Ilupeju Agege Scope of Survey Location Merchant With POS Target Actual Merchant Without POS End-Users Target Actual Target Actual High Density Areas 1,500 1,982 500 511 500 521 Medium Density Areas 1,000 836 500 413 500 511 Low Density Areas 1,000 744 500 703 500 555 Total 3,500 3,562 1,500 1,627 1,500 1,587 7, 000 questionnaires were administered 6776 were successfully filled and analysed Covering merchants with PoS, merchants without PoS and end-users ( Card and Non-card holders) 38 Drawbacks Drawbacks included Several duplication of addresses of merchants with PoS Incorrect addresses of merchants with PoS Difficulty in meeting owners and managers where sales personnel's/other staff insist they cannot fill the questionnaires Some questionnaires administered were not returned as a result of merchants insistence on enumerators picking them up later Respondents fear of confidentiality Angry respondents (basically as a result of their bad experiences with PoS terminal) 39 Survey Findings -Quantitative Merchants with PoS 40 Respondents Status in Relation to Business 41 50.0% 45.4% Respondents Status in Relation to Business 45.0% 40.5% 40.0% 32.4% 35.0% 27.9% 30.0% 25.0% 20.0% 15.0% 21.1% 20.0% 17.5% 20.8% 16.7% 15.7% 16.5% 21.0% 20.7% 17.8% 15.0% 14.7% 12.7% 11.6% 7.6% 10.0% 3.8% 5.0% 0.5% 0.0% 0.0% 0.0% 0.0% Owner Partner Manager Others Sales Representatives High Density Badagry Ikeja Lagos Yaba Responses from Survey shows More business owners (45.43% -Yaba) responded to the questionnaires 21.1% in Ikeja were by managers 20.7% were by secretaries and personal assistants in Badagry 40.5% were other staff and workers in the various outlets 42 20.8% - Ikeja, 16.5% in Badagry and 11.6% in Lagos Secretary/P.A Respondent Status in Relation to Business 38.5% 61.7% 35.1% 46.7% 25.0% 25.0% 25.0% 25.0% 30.0% 24.0% 12.8% 24.0% 6.8% 4.1% 0.0% 2.7% 0.0% Medium Density Badagry Ikeja Lagos Low Density Yaba Equal number (25%) of respondents from the Ikeja, Badagry and Lagos zones are Owners, Managers, Partners and Sales representatives However, a majority (38.5%) of the respondents in the Yaba medium density area 43 were Owners Badagry Ikeja Lagos Yaba A greater proportion of the respondents in Yaba (46.7%) and Ikeja (24.0%) are Owners Majority of the respondents in Badagry (24.0%) and Lagos (61.7%) zones are Managers Sales representatives were 30% in the Lagos area Nature of Business 44 35.6% Most of the respondents in the Lagos 28.4% 10.2% 17.5% 16.9% 13.0% 9.3% 5.8% 2.6% 2.6% 0.5% 3.6% 0.0% 0.0% Others Churches/Mosques Cinemas Barbershop/Hairdressing Salon Pharmaceutical Store/Hospitals Restaurants/Eatery Supermarket General Merchant(trader) High Density Ikeja Lagos In the Ikeja zone, 32.1% were owners of other kind of businesses 20% of respondents in the Badagry area were general merchants, own restaurants, supermarkets, pharmaceutical stores and hairdressing salons each 43.9% 32.1% 31.8% Yaba 1.5% 5.4% Others Yaba Churches/Mosques Medium Density Badagry Ikeja Lagos 19.7% Cinemas In the Badagry and Ikeja zones 20.2% and 20% own restaurants. Barbershop/Hairdressing Salon Pharmaceutical Store/Hospitals Most respondents in Lagos (37.7%) own supermarkets Restaurants/Eatery Supermarket 35.6% (the majority) of the respondents in the Yaba high density areas were General merchants (traders) 25.8% 23.6% 20.0% 20.0% 20.0% 20.0% 20.0% 12.7% 12.1% 12.6% 12.4% 9.1% 10.6% 8.1% 1.5% General Merchant(trader) 45 (31.8%) and Yaba (43.9%) medium density areas were general merchants 20.2% 18.7% 46.7% 35.0% 24.7% 21.7% 19.4% 19.7% 20.0% 19.6% 15.4% Badagry Ikeja Lagos Yaba 46.7% and 24.7% of respondents were general merchants and 46 supermarkets respectively in the Yaba area In the Ikeja zone,19.6% own barber shops/hairdressing salons 35% of Lagos respondents were mostly owners of other kind of businesses Others Churches/Mosques Cinemas Barbershop/Hairdressing Salon Pharmaceutical Store/Hospitals Restaurants/Eatery Supermarket General Merchant(trader) Low Density Nature of Business and Business Location 47 General merchant stores (18.1%), SM Others Kiosks Churches/Mosques NS Cinemas OM Others 48 Churches/Mosques Cinemas Barbershop/Hairdressing Salon Pharmaceutical Store/Hospitals Restaurants/Eatery Supermarket General Merchant(trader) High Density 1.3% Barbershop/Hairdressing Salon 1.8% Pharmaceutical Store/Hospitals 3.4% 2.4% Restaurants/Eatery 7.2% 3.7% 2.6% Supermarket 12.8% 10.9% 7.1% General Merchant(trader) supermarkets (7.2%), and restaurants (5.7%) were located in the open market, shopping malls, and kiosks respectively. However, a majority of pharmaceutical stores (3.4%) and hair dressing salons (2.4%) were located in neighborhood 18.1% shops. 14.4% 12.5% Medium Density OM NS Kiosks SM General merchant stores (14.4%) and pharmaceutical stores (2.6%) were located in the open market Supermarkets (7.1%), restaurants (3.7%) and hair dressing salons (1.3%) were located in kiosks, shopping malls and neighborhood shops respectively. Like other density 8.2% 6.2% 6.1% 5.9% 4.3% 2.2% 4.6% 4.1% 3.6% 2.7% 3.1% 2.4% 1.5% .6% .0% SM Others Kiosks Churches/Mosques NS Cinemas OM Barbershop/Hairdressing Salon Pharmaceutical Store/Hospitals Restaurants/Eatery Supermarket 49 10.8% General Merchant(trader) areas, a majority (13.5%) of general merchants were located in open markets Supermarkets (6.1%) and pharmaceutical stores (3.1%) were located in shopping malls Majority of restaurants (4.1%) and hair dressing salons (2.4%) were located in neighborhood shops. 13.5% Nature of Business and Proximity to Banks and ATMs 50 9.9% 8.7% 7.5% 39.1% of total responses are merchants between 9.0% 8.3% 8.1% 7.6% 7.8% 2 to 5 minutes from banks and ATMs’. 14.7% of them are located in shopping 6.3% 2.4% 2.1% .5% Very near(less than 2 minutes distance) malls 4.7% 4.6% 4.6% 4.1% Near(2 to 5 minutes distance) OM 27.3% of total respondents noted that their 2.5% .9% .4% .0% Distant(6 to Much Do not know 15 minutes distant(more distance) than 15 minutes) High Density NS Kiosks stores and outlet are between 6 to 15 minutes walking distance from banks and ATMs 11.5% of them are located in open markets 14.5% 14.7% 12.3% 11.1% SM 11.5% Most (9.9%) of merchants in open markets are 2 7.7% 7.1% and 5 minutes walk from banks and ATMs An average of 30% of the merchants take between 6 to 15 minutes to get to banks and ATMs 8.7% of total responses are merchants in shopping malls and are located less than 2 minutes away from banks and ATMs (24.9% 51less than 2 minutes) 3.1% 1.9% 1.7% Very near(less than 2 minutes distance) 3.9% 3.1% 2.4% 2.2% 1.0% 1.0% Near(2 to 5 minutes distance) Distant(6 to 15 minutes distance) Medium Density OM NS .2% .4% Much Do not know distant(more than 15 minutes) Kiosks SM 36.9% of the responses take between 6 to 15minutes, while 36.4% of merchants take 2 to 5 minutes to get to banks and ATMs 12.8% of those with 6 to 15minutes are located in Kiosk 12.% of those with 2 to 5minutes are located in open markets 18.7% noted that their stores and outlet are less than 2 minutes walking distance from banks and ATMs 6.2% of them are located in open markets 12.9% 12.8% 9.6% 9.1% 9.3% 8.2% 6.6% 6.2% 4.9% 4.8% 4.0% 3.6% 3.0% 2.1% 1.0% 1.1% .4% .1%.3% .0% Very near(less than 2 minutes distance) Near(2 to 5 minutes distance) Distant(6 to 15 minutes distance) Much distant(more than 15 minutes) LowDensity OM 52 NS Kiosks SM Do not know Accepted Means of Payment 53 40.75% 39.54% 37.52% 37.24% Accepted Means of Payment 40.05% 32.22% 30.32% 24.61% 22.78% 19.03% 24.37% 13.82% 13.36% 11.18% 7.21% 5.15% 0.31% 0.28% 0.23% 0.05% High Density Badagry Ikeja Lagos Yaba Majority of the respondents in the high density areas accept cash Lagos-39.54%, Ikeja-37.52% Badagry-37.24% and Yaba-40.75% Debit/credit cards was next to cash in the Ikeja-32.22% Badagry-30.32% and Yaba-40.05% Next to cash in Lagos was Cheque (24.61%) 54 40.28% Means of Payment Accepted 37.04% 40.28% 38.89% 33.19% 32.47% 30.95% 28.25% 25.18% 25.97% 22.22% 13.89% 12.01% 7.94% 4.48% 4.17% 1.39% 0.12% 1.30% Medium Density Badagry 55 Ikeja Lagos Yaba Respondents in the Lagos (38.89%) and Yaba (32.47%) medium density areas accept cash. In Ikeja (37.04%) preferred debit/credit cards Equal number (40.28%) of respondents in the Badagry area accept cash and debit/credit cards 38.06% 37.65% 35.31% Accepted Means of Payment 37.65% 35.32% 34.99% 30.81% 27.53% 24.24% 18.84% 18.79% 15.88% 17.17% 10.86% 8.82% 7.53% 0.30% 0.25% 0.00% 0.00% Low Density Badagry Ikeja Lagos Yaba In the low density areas, majority of the respondents accept cash (Ikeja-38.06%, Badagry- 35.31%, and Yaba- 30.81%) Equal number (37.65%) of respondents in the Lagos zone accept cash and debit/credit cards. 56 Frequency of Usage 57 High Density 95.4% 92.9% 90.0% 85.1% 59.9% 19.8% 14.7% 5.8% 3.8% 0.6% Cash Cheque 10.9% 7.2% 3.3% 17.4% 14.7% 11.1% 4.4% EFT 38.6% 35.8% 31.2% 29.7% 24.5% 19.8% 0.3% 0.3% 0.5% 0.5% Cards Cheque Many times per day In all the high density areas, cash is used many times a day Lagos- 85.1% Ikeja- 90% Badagry- 92.9% 58 Yaba- 95.4% EFT Never Badagry Ikeja Lagos 34.7% 12.9% 11.0% Cash 37.3% Yaba EFT was never used Lagos- 35.8% Ikeja- 38.6% Badagry- 31.2% Yaba - 59.9% Cards Medium Density 96.5% 89.7% 80.0% 80.0% 68.9% 65.2% 50.0% 34.8% 34.2% 31.9% 25.4% 21.1% 18.8% 1.2% Cash Cheque 4.3% 1.0% EFT Medium Density Many times per day 17.6% 14.1% 12.5% 12.0% 25.0% 3.3% 0.0% 0.0% Cards Cash Cheque EFT Cards Never Badagry Ikeja Like the high density areas, cash was used many times a day in the medium density areas Lagos- 65.2%, Ikeja-80% Badagry-89.7% 59 Yaba-96.5% Lagos Yaba Electronic funds transfer was never used Lagos- 34.8% Ikeja - 68.9% Badagry (80%) Yaba- 34.2% Low Density 96.9% 91.3%90.8% 60.4% 56.8% 45.3% 38.0% 36.2% 25.0% 12.3% 6.5% 5.8% Cash Cheque 28.0% 26.5% 16.9% 6.6% 2.7% 0.5% EFT 23.3% 17.7% 12.5% 4.6% 20.6% 13.8% 11.1% 0.7% Cards Cash Cheque Many times per day EFT Cards Never Badagry Ikeja Lagos Yaba In the low density areas, cash was used many Cheques were never used in Badagry (36.2%) times per day Lagos- 60.4% Ikeja-91.3%, Badagry-96.9% 60 Yaba-90.8% Electronic funds transfer was never used Ikeja -38% Yaba -56.8% Badagry -45.3% Preferred Card Scheme 61 42.9% 38.5% 38.9% 38.1% 36.7% 36.1% 30.6% 29.4% 32.0% 29.9% 31.7% 30.0% 23.7% 22.2% 23.6% 22.4% 20.9% 27.8% 18.4% 16.7% 17.1% 17.8% 17.7% 33.3% 33.3% 31.0% 26.9% 23.8% 20.4% 19.0% 30.4% AMEX 20.9% 19.4% 17.7% 17.6% 17.9% VISA eTRANSACT Loyalty Mastercard Verve Others 0.0% High Density 0.0% Low Density Medium Density Majority of the respondents in the Badagry (38.1%), Ikeja (30.6%) and Yaba (29.4%) high density areas preferred the MasterCard VISA card was preferred in Lagos (22.2%) The second choice in the Badagry (30%) and Ikeja (23.7%) zones was the VISA card 62 MasterCard and Verve were the second best in the Lagos (20.9%) and Yaba (17.8%) zones respectively Preferred Card Scheme A greater proportion of the respondents in the medium density areas preferred the MasterCard Lagos-38.5% Ikeja -36.7% Yaba-30.4% VISA and MasterCard are equally preferred by majority (33.3%) of the respondents in the Badagry area VISA card is the second best in Ikeja (26.9%), Lagos (17.9%) and Yaba (19.4%) Verve card was the second best in Badagry (31%) In the low density areas, the MasterCard was the preferred card scheme Badagry-36.1% Ikeja-42.9% Yaba-23.8% Verve card was the preferred card in Lagos constituting 38.9% The second best in the low density areas were as follows: Lagos- MasterCard (27.8%) Ikeja- VISA (31.7%) Badagry-verve (32%) Yaba- VISA (20.4%) 63 PoS Usage Motivation 64 16.06% 16.03% 14.23% 14.14% 14.17% 15.91% 14.25% 14.55% 15.73% 14.13% 14.47% 15.46% 14.59% 14.01% 15.38% 13.20% 14.37% 15.57% 14.84% 14.48% 14.44% 13.87% 14.12% 15.44% 13.02% 13.36% 14.14% 6.07% Additional Payment Method Simplicity of usage(vs. cash) High costs of cash management To avoid robberies and theft Image of the outlet Faster payment processing time Other High Density Badagry Ikeja Lagos Yaba Majority of the respondents in the Ikeja (16.06%) and Yaba (14.55%) zones acknowledged that the main motivation for adopting the PoS was the simplicity of its usage. Majority in the Lagos (15.46%) zone adopted the PoS due to high costs of cash 65 management Badagry (15.57%) zone adopted the PoS based on other reasons 15.1% 14.2% 13.4% 14.9% 14.8% 13.8% 15.7% 14.5% 14.7% 13.7% 13.6% 15.9% 15.5% 15.9% 16.1% 15.0% 14.5% 15.9% 11.2% 11.0% 10.6% Additional Payment Method Simplicity of usage(vs. cash) High costs of cash management To avoid robberies and theft Image of the outlet Faster payment processing time Other Medium Density Badagry Ikeja Lagos Yaba A greater proportion of the respondents in the medium density areas adopted the PoS due to faster payment processing time, image of the outlet, and high costs of cash management respectively Yaba (16.1%), Lagos (15.9%) and Ikeja (15.7%) 66 20.00% 20.00% 16.49% 15.49% 16.10% 14.39% 15.04% 20.00% 17.43% 16.64% 16.54% 15.51% 16.62% 14.25% 14.13% 11.23% 10.00% 14.50%14.16% 13.03% 10.00% 14.48% 14.17% 13.55% 10.00% 10.00% 8.63% 7.61% Additional Payment Method Simplicity of usage(vs. cash) Badagry High costs of cash management Ikeja To avoid robberies and theft Low Density Image of the outlet Lagos Faster payment processing time Other Yaba In the low density areas, the majority of the respondents in Badagry (17.43%), Ikeja 67 (16.62%) and Yaba (15.04%) zones acknowledged that the main motivation for adopting the PoS was low transaction time, high costs of cash management, and need for an additional payment method respectively An equal number (20%) of respondents in the Lagos low density area adopted the PoS due to high costs of cash management, faster processing time and to have an additional payment method Perceived Inhibitions to PoS Usage 68 High Density 37.9% Majority of the respondents in 34.4% 34.0% 33.0% 30.8% 26.5% 25.5% 25.4% 24.7% 20.9% 19.5% 14.6% 11.7% 9.6% 8.7% 6.7% 7.8% 5.9% 4.6% 4.3% 3.2% 2.8% 2.4% 2.2% 1.9% 1.1% 0.0% 0.0% Badagry Ikeja Lagos Yaba Access to funds Transaction Charges Technical/Terminal Faults Network/Connectivity Payment Ease Training on Usage Easy Deployment 69 the Badagry (33%), Ikeja (34.4%) and Lagos (30.8%) high density areas, believe that network/connectivity problems are the inhibitions to the usage of PoS terminals 37.9% in Yaba believe high transaction charges discourage people from using PoS The second highest perceived inhibition to PoS usage in Ikeja (25.5%) and Lagos (26.5%) was PoS technical faults Badagry (25.4%) and Yaba (34%) zones believe it was transaction charges and network problems respectively Medium Density Like the high density areas, 75% of the respondents Badagry, 30.6% in Lagos and 35.3% in Ikeja medium density areas believe that network/connectivity problems may prevent people from using the PoS 35.1% in Yaba believed that transaction charges was the main problem. The second highest perceived inhibition to PoS usage in Ikeja (27.7%) and Badagry (25%) is PoS technical faults In Yaba (18.6%), delay in access to 35.1% 27.7% 27.4% 25.0% 27.4% 26.9% 17.5% 14.4% 0.0% Yaba 0.0% Access to funds Lagos Transaction Charges Ikeja Technical/Terminal Faults Network/Connectivity Payment Ease Badagry 18.6% 9.7% 6.5% 7.2% 2.1% 5.2% 3.2% 1.6% 1.1% 1.9% 0.5% 0.0% 0.0% 0.0% 0.0% Training on Usage 70 35.3% 30.6% Easy Deployment funds is the second highest. An equal number (27.4%) of respondents in the Lagos believe that the second highest inhibition to PoS usage was the high transaction charges and technical faults 75.0% Low Density 66.7% In all the low density areas, network/connectivity problems discouraged their usage of PoS terminals 38.2% 35.6% Lagos-66.7%, Ikeja-29.9%, 29.9% 28.7% 28.2% 24.8% 25.0% 15.7% 13.4%13.0% 10.0% 8.3% 6.2% 4.5% 12.7% 10.8%10.2% 3.6%2.8% 3.3%4.0%2.5% 1.9% 0.0% 0.0% 0.0% Yaba Access to funds Lagos Transaction Charges Ikeja Technical/Terminal Faults Badagry 0.0% Network/Connectivity Payment Ease Training on Usage Easy Deployment 71 Badagry-38.2% and Yaba35.6% Technical faults are perceived to be the second highest inhibition to PoS usage in all the zones Lagos-25%, Ikeja-24.8%, Badagry-28.7% and Yaba28.2% Inhibitions to PoS Usage Based on Experience 72 22.9% 22.3% 19.9% 20.2% 20.0% 20.4% 15.8% 9.7% 11.3%11.6% 10.6% 6.1% 6.6% 19.6% 19.6% 15.3% 14.2% 11.9% 14.6% 9.5% 9.1% 8.3% 8.3% 7.2% 5.2% 0.0% High Density Customers' do not have cards Connectivity problems Card reading difficulties Low Density Transaction charges Easy access to cash Other 19.0% 16.9% 15.3% 15.6% 10.7% 9.1% 7.5% 6.9% 4.1% 1.8% Medium Density Customers insistence to pay by cash Transactions are often rejected Transaction charges were found to be the inhibitions to PoS usage by 20.2% of the respondents in Ikeja and 20% in Lagos high density area In Badagry (22.3%) and Yaba (20.4%), the majority of the respondents chose connectivity problems and ‘transactions are often rejected’ as the main inhibitions to PoS usage 73 A greater proportion of the respondents in the Ikeja (19.6%) and Lagos (16.9%) medium density areas chose transaction charges as the inhibition to PoS usage 19.7% in Yaba and 19.6% in Badagry zones chose ‘customers insist to pay by cash’ and ‘transactions are often rejected’ 74 In the Badagry (14.6%), Ikeja (22.9%) and Yaba (15.3%) low density areas, transaction charges were the main inhibitions to PoS usage Equal percentage (8.3%) of respondents in Lagos chose connectivity problems, customer’s insistence to pay by cash, and transaction charges respectively as obstacles to PoS usage Survey Findings -Quantitative Merchants without PoS 75 Respondents Status in Relation to Business 76 62.2% 60.5% 64.6% 75.0% 48.8% 58.6% 36.9% 45.0% 41.4% 31.7% 31.7% 36.2% 30.0% 25.5% 25.9% Badagry High Density Ikeja High Lagos High Yaba High Density Density Density Owner 14.9% 11.3% 8.5% 1.8% Ikeja Medium Density Manager Lagos Medium Density Yaba Medium Density Badagry Low Density Ikeja Low Density Lagos Low Density Yaba Low Density Others Majority of the respondents in the high density areas are owners of the merchant stores (Badagry- 60.5%, Ikeja-36.9%, Lagos-48.8% and Yaba-62.2%). In the medium density, 36.2% and 75% of respondents in Ikeja and Lagos respectively were owners, Most of the respondents in Badagry (45%) and Yaba (58.6%) medium density areas were sales representatives and managers respectively. Owners in the low density areas of Badagry and Ikeja were 48.4% and 64.6% respectively Lagos (31.7%) and Yaba (50.5%) were managers. 77 Partner Badagry Medium Density 26.3% 26.8% 25.0% 20.0% 5.0% 50.5% 47.3% 48.4% Business Nature and Location 78 Merchant Location Most 21% 2% 50% 27% Nature of Business 6.8 2.6 6.5 Supermarket 8.4 58.6 16.7 79 respondents (58.6%) were general merchants (traders) and they Open Market were located in the open market Neighbourho 16.7% of outlets business were od Shop supermarkets Kiosks Distribution of merchants’ location vary Shopping 50% were in Open markets Mall 27% in Neighborhood shops 21% in Shopping malls General 2% in Kiosk Merchant(trader) Restaurants/Eater y Pharmaceutical Store/Hospitals Barbershop/Haird ressing Salon Cinemas Proximity to Banks and ATMs 80 74.4% 44.7% 42.1% 41.8% 39.6% 70.0% 61.2% 55.0% 35.8% 33.0% 32.1% 54.7% 28.9% 43.1% 24.5% 40.0% 36.0% 32.5% 32.7% 26.6% 27.5% 22.5% 22.3% 20.0% 21.3% 21.3% 6.5% 14.6% 8.0% 9.8% 8.0%8.0% 7.9% 8.0% 6.0% 4.7% 1.2% Badagry High Density Ikeja High Lagos High Yaba High Density Density Density Very near(less than 2 minutes distance) Near(2 to 5 minutes distance) 12.2% 2.5% Badagry Medium Density 9.4% 9.1% 10.2% 6.1% 2.9% Ikeja Medium Density 13.2% 22.4% Lagos Medium Density Yaba Medium Density 5.0% Badagry Low Density Distant(6 to 15 minutes distance) Much distant(more than 15 minutes) 10.7% 4.8% 7.9% 5.3% 4.4% Ikeja Low Lagos Low Yaba Low Density Density Density Do not know In all the high density areas, majority of the merchants were located in places where banks/ATM were between 2 to 5 minutes away Badagry-43.1%, Ikeja-54.7%, Lagos-74.4% and Yaba-70% Similarly, a greater proportion of the respondents in the Badagry (55%), Ikeja (36%) and Lagos (40%) medium density areas were located in places where banks/ATM are between 2 to 5 minutes away 81 61.2% of the merchants in the Yaba zone take less than two minutes to get to banks/ATM 7.7% Accepted Means of Payment 82 100.0% 97.4% 94.7% 96.8% 98.7% 98.9% 96.5% 97.6% 98.0% 100.0% 100.0% 53.5% 50.9% 45.0% 42.4% 39.3% 35.3% 27.5% 24.0% 18.9% 31.7% 28.1% 9.9% 0.0% 2.6%2.0% .4% 0.0% Cash Cheques Badagry High Density Lagos High Density Electronic Funds Transfer Other Ikeja High Density Yaba High Density 25.4% 25.0% 10.0% 7.5% 4.9%4.0% .7%2.0% 0.0% 2.4% 1.1% Cash Cheques Badagry Low Density Badagry Medium Density Ikeja Medium Density Lagos Medium Density Majority of the respondents in The distribution of the medium density 11.1% Lagos Low Density 0.0% Electronic Other Funds Transfer Ikeja Low Density Yaba Low Density In the low density areas, cash is also the the high density areas accept cash areas was identical to the high density areas. favoured accepted means of payment Badagry-97.4%, IkejaMajority of the respondents accept (Badagry-96.5%, Ikeja-98.7%), Lagos-97.6% 94.7%, Lagos-97.6% and cash (Badagry-100%, Ikeja-96.8%), and Yaba-98.9%). Yaba-100% cheques were the second best in Lagos-100% and Yaba-98%) Cheques were the second only Badagry (50.9%), Ikeja (28.1%) Cheques were the second best best accepted means of and Lagos (31.7%). accepted means of payment. 83 payment. Why Merchants Discontinued Use of PoS 84 80.0% 73.1% 66.7% 70.0% 66.7% 61.5% 60.0% 33.3%35.4% 40.0% 30.0% 25.0% 10.0% 0.0% 47.9% 42.3% 33.3% 33.3% 33.3% 11.5% 0.0% 33.3% Badagry High Density 23.1% 16.7% 0.0% 54.2% 50.0% 50.0% 45.8% 50.0% 20.0% 66.7% 16.7% 7.7% 6.3% 0.0% 19.2% 16.7% 16.7% 0.0% 4.2% 16.7% 6.3% 3.8% 0.0% Ikeja High Density Lagos High Density Yaba High Density In the Yaba (66.7%), Badagry (54.2%) and Ikeja (73.1%) high density areas, the respondents discountinued use of the PoS due to; Perceived difficulty in easy access to cash after sales customer’s insistence to use cash and technical malfunction 85 Equal percentage (66.7%) of respondents in the Lagos zone claimed that telecommunications and customer’s insistence to use cash were the factors that prevent them from having the PoS terminals. Transaction fees and technical 50.0% 50.0% 40.0% 44.4% 44.4% 33.3% 33.3% malfunction were the reasons 30.0% 27.8%28.8% 22.2% 22.2% 20.0% most of the respondents 10.0% 0.0% discontinued the use of PoS 0.0% terminals in the Ikeja (33.3%) and Yaba (50%) medium density areas. In the low density areas of Ikeja Ikeja Medium Density Yaba Medium Density and Badagry, 76.7% and 56.1% 77.6% 76.7% of the without PoS merchants 80.0% 67.3% 65.3% 60.0% 56.7% 60.0% said technical malfunction was 48.8% 45.0% 43.9% 43.9% 41.5% 38.8% 40.0% the main impediment to the 14.3% 14.3% 20.0% adoption of PoS terminals 4.1% 0.0% 0.0% In Lagos and Yaba, 40% and 77.6% chose ‘fear of fraud’ and ‘transaction fees’. 86 Badagry Low Density Ikeja Low Density Lagos Low Density Yaba Low Density Cashless Policy Awareness and Perception on PoS Usage 87 66.7% Respondents that are aware of the cashless policy but don’t have the PoS rated the following excellent Deployment 18.2% in Badagry 10.9% in Ikeja 42.9% in Lagos 44.4% in Yaba Ease of Payment Excellent 42.9% in Badagry, Ikeja, Lagos and Yaba respectively Technical assistance – 63%, 70.7%, 50% and 42.9% of responses in Badagry, Ikeja, Lagos and Yaba respectively 88 NOTE:The same trend was noticed in the medium and low density areas 25.0% 18.2% 8.1% 2.9% 44.4% 28.6% 37.5% 28.6% 5.3% 10.9% 5.0% 4.7% 2.4% 2.1% Aware of Cashless Aware of Cashless Aware of Cashless Aware of Cashless Badagry High Density Ikeja High Density Lagos High Density Yaba High Density 66.7% in Lagos 28.6% in Yaba 8.1% in Badagry The following were rated poor connectivity – 68.7%,69%,100% and 42.9% 100.0% 100.0% Poor 68.7% 63.0% 52.9% 5.9% 70.7% 69.0% 50.0% 52.5% 50.0%50.0% 41.5% 50.0% 14.6% 42.9% 42.9% 42.9% 37.5% 14.3% Aware of Cashless Aware of Cashless Aware of Cashless Aware of Cashless Badagry High Density Ikeja High Density Lagos High Density Yaba High Density Deployment Ease of Payment Technical Assistance Usage Training Connectivity Transaction Charges Frequency of Usage 89 Frequency of Usage In all the high density area, cash was used many times a day Lagos - 94.3% Ikeja - 96% Badagry- 68.3% Yaba - 88% EFT was never used Cash was used many times a day in the medium density areas Lagos - 90.2% Ikeja - 96% Badagry - 91.3% Yaba - 97.8% Most respondents indicated that EFTs were never used by a large percentage Badagry - 65% Ikeja - 48.1% Lagos - 47.5% % Cheques were never used in the Yaba (54%) area Similar to the high density areas, cash was used many times per day in the low 90 density areas (Lagos- 60.4%, Ikeja-91.3%, Badagry-96.9%, and Yaba-90.8%) but electronic funds transfer was never used Survey Findings -Quantitative End-Users 91 Bank Proximity 92 48.8% 60.6% 57.6% 44.7% 47.2% 44.7% 24.6% 28.8% 18.4% Badagry High Density 52.3% 51.4% 35.2% 13.04%14.1% 8.7% 4.80% 75.0% 44.8% 24.9% 21.5% 20.7% 20.7% 24.2% 15.2% 11.76% 21.4% 20.2% 28.4% 24.6% 12.3% 12.2% 12.3% 1.89% Ikeja High Lagos High Yaba High Density Density Density Ikeja Medium Density Lagos Medium Density Yaba Medium Density Much distant(more than 15 minutes) Near(2 to 5 minutes distance) Do not know Distant(6 to 15 minutes distance) Badagry Low Density Ikeja Low Density 22.7% 16.7% 13.6% 8.3% Lagos Low Density Yaba Low Density Very near(less than 2 minutes distance) Majority of the responses in the high A greater proportion of the Similar to the high density areas, density area showed that banks were within 6 to 15 minutes distance from their place of work 57.6%, 35.2%, 47.7% and 60.6% in Badagry, Ikeja, Lagos 93 and Yaba respectively respondents in the Lagos (60.6%) and Yaba (38.25%) medium density areas take about 6 to 15 mins to get to banks/ATMs while those in the Ikeja area take less than 5 minutes In the Badagry it takes less than banks are 6 to 15 minutes close to the respondents in the Ikeja (44.7%), Lagos (44.7%) and Yaba (48.8%) low density areas 2 minutes to get to banks/ATMs Payment Frequency 94 44.9% Majority of the respondents in Badagry (38.6%), Ikeja (40.7%), and Lagos (43.8%) high density areas make several payments per week and have payment cards (Badagry-84.7%, Ikeja-85.9%, Lagos-84.2%) 40.1% 23.4% 37.9% 28.8% 26.1% 43.8% 40.7% 38.6% 29.0% 27.4% 19.2% Majority of the respondents in Yaba (44.9%) make payments only once a day, and have payment cards. A greater proportion of the respondents have payment cards Ikeja- 90.7%, Lagos- 91.8% and Yaba- 89.9% Several payments per week is made by the majority of the respondents in the Lagos (42.1%) and Yaba (51.6%) medium density areas while those in Ikeja (54.9%) make several payments per day 95 Several payments per day Once a day Several payments per week Badagry High Density Ikeja High Density Lagos High Density Yaba High Density 54.9% 51.6% 42.1% 37.1% 31.6% 26.3% 21.6% 23.6% 11.3% Several payments per day Ikeja Medium Density Once a day Several payments per week Lagos Medium Density Yaba Medium Density 51.3% 45.1% 47.0% 41.3% 35.0% 32.0% 25.4% 20.6% Several payments per day Badagry Low Density Once a day Ikeja Low Density 29.6% 28.2% 23.8% 21.0% Several payments per week Lagos Low Density Yaba Low Density In all the low density areas, most respondents make several payments per day Badagry- 45.1% Ikeja- 51.3% Lagos- 47% 96 Yaba- 41.3% Consumer with Payment Cards 97 89.9% 85.9% 84.2% 91.8% 71.0% 90.7% 79.5% 84.7% 71.0% 67.1% 68.4% Yes 29.0% 15.3% Badagry 14.1% Ikeja No 32.9% 29.0% 31.6% 20.5% 15.8% Lagos 9.3% Yaba Badagry High Density Ikeja Lagos Yaba Medium Density Ikeja 10.1% 8.2% Lagos Yaba Low Density Across all density area, most consumers as seen in the chart are card holders 98 Range of Cards Owned 99 3 4 3 3 4 High Density Badagry Medium Density Ikeja High Density Ikeja Medium Density Lagos High Density Lagos Medium Density Yaba High Density Yaba 100 3 3 5 2 4 Given the range of cards owned (above) by consumers Average range of cards owned In the high density area – 5 In medium density area – 3 In low density area – 3 4 Low Density Badagry Low Density Ikeja Low Density Lagos Low Density Yaba 3 3 High Density Low Density Medium Density 2 Average Number of Cards Owned 101 Average cards owned in High density area – 3 Average cards owned in medium density areas – 3 Average cards owned in low density areas - 2 Factors Likely to Encourage Consumers 102 28.16% 18.02% 13.18% 13.93% 8.64% 10.56% 6.40% 1.12% 2.90% 13.02% 17.84% 17.15% 19.82% 14.50% 12.13% 2.65% Oke-Arin, Balogun Lagos High Density Area Ikeja-Computer Village, Shoprite, Ojota Ikeja High Density In the Lagos high density areas (Oke- Arin and Balogun), 28.16% and 18.02% represents the highest percentages of the total number of respondents who acknowledged that security and awareness are the factors that encourages them to make use of card payment system, in that order In the Ikeja high density areas, majority (19.82%) of the respondents revealed that simplicity/easy payment was the factor that would encourage them to make use of the card payment system. This was followed closely by ‘availability’ accounting for 17.84% 103 4.48% 17.91% 18.66% 22.39% 17.16% 16.42% 2.99% 0.00% 8.26% 12.05% 20.34% 18.70% 22.28% 13.34% 3.97% 1.07% Yaba Alaba, Tradefair-BBA, Aspamda Yaba High Density Area Badagry High Density Area However in the Yaba high density areas, better transaction time was selected by a greater proportion (22.39%) of respondents, then availability accounts for 18.66%. The Badagry high density area has a similar distribution to that of the Ikeja high density areas. The top two factors that encourage the use of the card payment system are simplicity/easy payment (22.28%) and availability (20.34%) 104 18.69% 18.07% 20.57% 19.86% 21.51% 15.09% 17.71% 17.73% 17.02% 20.35% 19.77% 11.93% 18.02% 12.77% 8.69% 9.22% 5.15% 4.66% 9.30% 8.72% 2.33% 0.00% 2.13% 0.71% Surulere Ajah/Ikota Ogba, Gbagada, Maryland Lagos Medium Density Area Ikeja Medium Density Yaba Medium Density Area In the Lagos medium density areas, the factors with the primary will encourage the use of the card payment system are promotions/rewards (20.57%), security (19.86%) and awareness (17.73%). In the Ikeja areas, the distribution was as follows: security at 18.69%, and simplicity/easy payment at 18.07%. In the Yaba area, 21.51% identified availability as the factor primary factor followed by security 105 (20.35%), simplicity/ease of payment (19.77%) and better transaction time (18.02%). 40.86% 33.08% 19.46% 17.43% 4.23% 19.80% 24.65% 14.27% 14.38% 10.38% 15.71% 20.52% 10.04% 16.36% 17.20% 9.14%0.65% 5.25% 0.00% 5.84% 0.76%0.00% 0.00%0.00% VI/Ikoyi/Shoprite Ilupeju, Palmgrove, Agege, Egbeda, Ladipo Badagry, Apapa Lagos Low Density Area Ikeja Low Density Badagry Low Density Area In the Lagos medium density areas, the factors with the primary will encourage the use of the card payment system are promotions/rewards (20.57%), security (19.86%) and awareness (17.73%). In the Ikeja areas, the distribution was as follows: security at 18.69%, and simplicity/easy payment at 18.07%. In the Yaba area, 21.51% identified availability as the factor primary factor followed by security 106 (20.35%), simplicity/ease of payment (19.77%) and better transaction time (18.02%). Factors that Discourage Consumers 107 In all of the high density areas, majority of the respondents indicated that the non-connectivity of PoS terminals discourages them from using the terminals Lagos-19.39% Ikeja-23.59% Yaba-20.90% Badagry-24.22%. The second highest selected by the various areas include: Fear of fraud- Lagos Demand for cash- Ikeja Non-availability of PoS at merchant stores-Yaba PoS transaction charges-Badagry. 13.09% 5.68% 12.19% 19.39% 14.11% 5.89% 10.42% Oke-Arin, Balogun 108 19.24% Lagos High Density Area 0.00% In the medium density areas, ‘terminals not connecting’ also ranks highest as the factor that discourages consumers from making use of PoS terminals Lagos-25% Ikeja-21.19% Yaba-27.81) In the low density areas, respondents in the Lagos (25.04%) and Ikeja (22.22%) areas indicated ‘terminals not connecting’ as the factor that discourages them from using PoS terminals 38.81% of the respondents in the Badagry zone reveal that the fear of fraud was the factor that discourages consumers from using PoS terminals 109 Locations Consumer Feel Comfortable Using Cards 110 Lagos High Density Yaba High Density 26.7% 30.6% 20.0% 18.3% 14.4% 18.8% 13.1% 13.8% 10.0% 13.8% 8.1% 6.1% 2.2% 1.1% Ikeja High Density 18.3% 17.4% 14.3% 14.3% 10.9% 8.0% 111 8.3% 1.1% 6.9% 0.0% 1.9% 0.0% In all of the high density areas, the majority (Lagos-26.7%, Ikeja-17.4%,Yaba-30.6% and Badagry-27.7%) of respondents feel comfortable making payments with the PoS 1.6% terminals in a supermarket. Pharmaceutical stores (18.3%) and malls (20%) were preferred in the Lagos zone after supermarkets Badagry High Density 27.7% In the Ikeja area, malls (18.3%) and restaurants (14.3%) were preferred. In the Yaba high density area, general merchant stores (20%), restaurants (10.3%) and pharmaceutical stores (9.7%) were selected after supermarkets In the Badagry zone, general merchant (20%) and malls (17.7%) were chosen. 20.0% 17.7% 10.3% 9.7% Note: the trend was relatively the same in the medium and low density area 4.7% 3.0% 112 4.0% 3.0% Customer’s Insistence for Card Usage And Merchant’s Change of Position 113 Consumer Insist on Using Card 54.1% 45.9% Merchant changed Position Merchant Position unchanged The survey result shows that 54.1% of the respondents insisted on using the PoS terminals and the merchants agreed to their request 45.9% of the respondents who insisted on using the PoS terminals had their requests rejected by the merchants 114 Conclusion 115 Conclusion The potential for growth in the usage of PoS terminals in Lagos metropolis remains strong With a population of over 16 million people, there are approximately 8 million card holders in Lagos state Based on the aggregated data from the 6,776 survey sample, the study finds that: 116 Conclusion Profile of Merchants/End-Users Most of the merchants with PoS terminals are general merchants or traders located mainly in open markets and neighborhood shops. Over 60% of the stores and outlets are located less than 5 minutes walking distance from banks and ATMs Though merchants accept cards and have PoS terminals for payment, the majority still prefer the cash payment method to other forms of payments (i.e. Checks, Cards and EFTs) and cash payment remains the most frequently used payment system 117 Conclusion With regards to consumers, the majority were fully employed and self employed Average income is between N20, 000 and N100, 000 across the density areas (i.e. high, medium and low) Banks and ATMs proximity to the consumer by walking is an average of 6 to 15 minutes from their place of work Most consumers make several payments daily and weekly and prefer the cash payment option due to the challenges they often face when using PoS terminals 118 Conclusion Merchants without PoS terminals are also mostly general merchants/traders located in open markets and shopping malls that are within 2 to 5 minutes walking distance from banks and ATMs. As expected the most preferred method of payment is cash and in some cases checks or bank drafts Challenges / Perceived Obstacles to usage of PoS Terminals Two out of the three categories of respondents (i.e. Merchants with PoS and Merchants without PoS terminals) identify basically the same challenges and perceived obstacles to the smooth operation of the PoS terminals 119 Conclusion These obstacles are as follows according to priority: Connectivity and network challenges Transaction charges/charges to bank account Consumers/merchants insistence to pay cash Rejected transactions Card reading/technical difficulties Consumers/merchant lack of card/PoS Access to after sales funds Others Poor awareness of the PoS payment systems and benefits Long transaction time/late transaction notification 120 24.5% 18.9% 12.7% 11.8% 11.3% 10.1% 6.6% 4.3% Conclusion Challenges that deter consumers from making use of the pos 121 terminals According to priority, factors that inhibit consumers’ usage of the card payment system include: Connection and network difficulties with the terminals Non-Availability of PoS terminals at merchants’ points/stores Attributed to the poor rate of deployment as noticed by the merchants with PoS Merchants demand for cash As a result of obstacles listed above Long transaction time Fear of fraud Some consumers cited personal experiences of being debited twice In some cases the terminals would reject the transaction, however the consumer receives a debit alert some hours after the unsuccessful transaction Recommendations Awareness Increased awareness of consumers will accelerate the adoption of the PoS terminal and the card payment system including the new electronic money and mobile payments systems Collective efforts by all key stakeholders towards achieving greater awareness via: Initial Stakeholder Road show across various key regions Periodic summits, workshops, seminars to enlighten and keep targets informed Mass media coverage via: Print Media – billboards, newspapers, magazines, bulletins, publications Digital Media – television, documentaries Voice Media – radio advertising, jingles in various local languages Social Media – internet, web (facebook, twitter etc) Mobile/Vehicular Media – advertisements on mobile vehicles 122 Recommendations Centralized Provider of PoS Terminals and Equipment Maintaining a single or limited source of equipment manufacturers/type This will simplify the deployment of PoS terminals and equipment It will also facilitate easy education for the stakeholders (merchants, end-users and providers) 123 Recommendations Improve Connectivity Our findings show that there is a low level of coordination among banks, mobile operators, and existing payment networks Inter-operability across provider solutions (mobile, financial institutions, networks) will be necessary to drive mass market adoption. We suggest that NIBSS/CBN partner with mobile network operators Collaboration between the key regulators and mobile network operators will bring about efficiencies in processes quick identification and resolution to network and connectivity issues thus enhancing the merchants, end-users improved PoS experience resulting in increased PoS adoption 124 Recommendations Incentives In many new programs, incentives have played a major role in attracting customers Our findings show that merchants and end-users across the density areas are willing to adopt PoS usage irrespective of any incentive program Despite these findings, incentives are suitable at this stage in order to encourage people and impress upon them the seriousness of implementing the cashless policy We suggest that several promotions be put underway such as the ‘cash back’ promo as already adopted by GTBank Suggested incentives for merchants and end-users include: Cash-Back Promotions Reward Promotions Loyalty Rewards Raffle Promotions 125 Coupon/Discount Promotions Recommendations Pricing Strategy Stakeholders must develop a pricing strategy that promotes and encourages PoS adoption Charges on provision of an electronic payment system by a merchant should be similar and at a fair cost The policy objectives must factor in the affordability for merchant and end-user access and adoption Some merchants in certain locations are price-sensitive 126 Recommendations Safety and Security of Information Merchants and customers recognize the importance of safety and security of information There is need for secure transaction platforms and security of information cannot be compromised Cases of fraud or lapses in the system can have the potential to undermine confidence in the use of the system which will ultimately impact public perception. Safeguarding transactions and client information is an imperative as a high level of security is required Fraud prevention is required to encourage acceptance and adoption of the electronic payment systems 127 Recommendations Mobile Money is the Game Changer Mobile phone technology has reduced communication costs in Nigeria to very low levels This transformation has increased teledensity significantly However, telco's are not allowed to lead cashless policy implementations The high level of specification in roles and responsibilities will limit innovation by banks, telco's and payment companies Inter-operability across provider solutions (mobile, financial institutions, networks) will be necessary to drive mass market adoption 128 Next Steps 129 Next Steps We suggest a follow-up integration survey in Lagos State most importantly in the areas not covered by this survey This will help to further identify other cultural and fundamental barriers to the adoption of the PoS Terminals Popularisation of NIBSS role as PoS Terminal certification agency and regular spot checks of PoS Terminals in use at merchant points There is need for a pilot survey in other key cities where the Cashless policy will be introduced before implementation This will help to identify the necessary pre-implementation steps to be taken; identify the trend and compare results with the Lagos density areas This will help underscore the model to be adopted for each of the new locations 130 Thank You 131