Foreign firms reject e-payment from Nigeria

Posted On January 24, 2006 | Written by Emmanuel Oluwatosin

Six months after it began, the electronic card-payment system issued by some Nigerian banks has been rejected by merchants in Europe and the United States (U.S.). Citing the prevalence of large-scale fraud, the merchants say the mastercards and other card-based instruments of payment from the country are “high risk.”

Many of such would-be transactions originated by Nigerians through these cards have resulted in still births. In many cases, the cold shoulders have not been because the card issuers cannot back them up with cash, but because “the card owners are located in Nigeria.”

The office of the Nigerian Cybercrime Working Group (NCWG) is currently inundated with letters from many merchants giving details of their reasons for rejecting e-commerce transactions with Nigeria-based persons and organisations: “Because you live in a high fraud area, we cannot process your order.”

The rejections, which cut across different business strata are also because the cards were issued by Nigerian banks in Nigeria.

The merchants alleged that even Nigerian correspondent banks abroad had also not helped matters. “Most of them have not been able to issue guarantee for these Nigerian-originated mastercards and other cards for the purpose of online payments to merchants abroad,” according to a European merchant.

If the trend continues, master-cards and other e-cards used as instrument for payments and commercial transactions may suffer a major setback. Most affected for now are telecommunications and technology-based customers. A major telecommunications company, which placed order for switches and base station transceivers may look for other means to actualise the transactions as its online merchant has repeatedly turned down its offer of payments through electronics means.

NCWG co-ordinator, Mr. Basil Udotai, confirmed at the weekend that the situation was very serious. Once the merchant sees the billing address of its potential customers as Nigeria, the transaction is aborted.

He added: “Some of these online merchants have actually programmed their processing systems with an alert on Nigeria and once they notice the billing address as Nigeria, the system automatically rejects the card and end the transaction immediately.

The Guardian also noted that even when the billing address is not Nigeria, transactions have been rejected on these cards when the shipping addresses indicate the country.

What this shows is that some smart Nigerians in anticipation that there might be problems with Nigerian billing addresses, opt for international addresses of friends or relations in their card applications.

“This has helped a lot of customers because so long as Nigeria is not included in any of the forms filed, the merchants would have no problems accepting the cards,” Udotai explained.

“But that is not all. If shipment address is Nigeria, some merchants also reject the transactions. “This is the dilemma now,” Udotai lamented.

The problems are not only those of the Nigerian Mastercard carriers but the banks too. Some of the issuing banks are said to be in a state of frenzy and have therefore opened dedicated units where their staff attend to such problems, to ameliorate the pains and frustrations of their customers.

One bank official at the weekend told The Guardian: “It is a serious issue and we are putting everything in place to cushion the pains of customers so that they do not cancel their cards in droves“.

Udotai equally confirmed that the NCWG and the banks had been holding series of consultations on the subject. He, however, said that while some banks thought that they could resolve the issue at once, others believed that it required more tactics and diligence.

Statistics of rejected cards are huge. “I don’t think this is something the banks need to be shy about because it is a matter that affects the entire Mastercard franchise in Nigeria and is not specific to any one bank. The problem is also not specific to Mastercard alone but other credit card franchises located in Nigeria,” Udotai explained.

Although Mastercard and other cards are rated highly at international market, their problems are that they were issued in Nigeria.

“This is also the problem of migrating services online, be it personal, government or business. I wonder why these banks expected merchants who have allegedly been cheated of their goods, monies and services in the past by Nigerians to simply shrug off those experiences and launch into processing Nigerian credit cards or ship goods to Nigeria based on credit cards issued in Nigeria,” he added.

The NCWG boss explained that the problem was not really with Mastercard as a company but the perception of Nigerians by the international community.

“The same thing would happen if the cards were issued by American Express Visa or Discovery,” one bank official explained.

NCWG was set up in 2004 by President Olusegun Obasanjo to create a legal and institutional framework for the security of compiler systems and networks in the country and the protection of critical information infrastructure.

Mastercard came into Nigeria through Cards Technology Limited (CTL) and currently being issued by First Bank, Zenith Bank, Diamond Bank, among others. Its commercial launch took place six months ago and it is used for both local and international transactions.

10 Responses

  1. Hav never believed in the success of the mastercard initiative. However I think Nigeria should setup a kind of a “middle man” service if they want this to happen. First Nigeria needs to set up a kind of a gateway service in the US or Europe to act as proxy for all our transaction. Let the people you want to transact with abroad “think” it is that proxy that is doing the transaction. If they can trust that proxy, then nigerian can develop a payment webservice to use that payment “proxy” for transactions. That proxy may be in form of an assosiation that seats in the UK or US and represents Nigeria and then wants to be responsible for all Nigerian transactions. They may Sign some credit cards in thier own name and then work out a policy that will make it safe for those who need to perform transactions from Nigeria to go via thier card numbers. Something like that is what i think is most appropriate for now otherwise getting international firms to do business with Nigeria directly via credit card is just a mere joke!

  2. Thanx Deji for the suggestion. There is really a great hurdle for us all to cross. I believe that Mastercard and VISA should work out a way soon to solve this problem. And this has to be pretty fast. The Nigerian government and all stakeholders need to do something in this line as fast as possible.

    I would have taken a Mastercard myself but was skeptical. Before now, there have been cases of people whose credit card transactions were not successful ‘cos the billing address is Nigerian even though the card details are correct. I fear being a victim of the same. Hence, my reason for not picking up the card till date. Well, I earnestly wait for the next line of action.

  3. What exactly are they afraid of? The cards are cash-backed to the tune of 125% of what can be spent on them. So what’s the problem with the merchants?

  4. It’s quite unfortunate that at this era of tech-driven economy, Nigeria is not yet up to the challenge. First, the fraud aided environment of Nigeria has been of no help to the working of e-card system. Banks requiring an ecard to be cashbacked to 125% is a shame,(if that’s true anyway). Cashbacking is not what matters, but the signals it sends to the international merchants. To be honest with you, these merchants don’t transacts business on cash, they do their business on trust, and that trust is ‘Credit’. If you are not a credit person, they are not ready to do anything with you. Why? because your bank can’t even trust you! if they can, why 125% cashback? your correspondence bank can’t even guarantee your transactions! so if anything goes wrong, what do you expect these helpless merchants to do?
    I believe banks in Nigeria still have a lot to do! Mastercard is a credit card, not cashcard or debit card, before issuing Mastercard, the banks should endeavour to go through the rigour of establishing the credit status of the applicants, if it’s only 100 customers that carry Mastercard in Nigeria,(am not talking of cashbacked card) and those customers ecard transactions are being honoured, I think it’s worth it. Mastercard has never been for everbody! not for all customers who have millions in their accounts.
    Until this is done, Mastercard in Nigeria will remain just a plastic that decorates all carriers wallet.

    Thank you.

  5. ill like to know more about this companies,if theres any job available both international and here in nigeria ill be posting my CV via mail if it is needed….. ill be greatful if ill be given the time to work with this company.
    Rose igboamalu

  6. It high time business organisations in our home country became serious about customer service. Of what use is a mastercard when its not regarded beyond the bothers of this country? Both the issuing banks and the switch in nigeria must take customer service beyond statements on papers and start acting proactively on behalf of their customers

    I am not too surprised about the atitude of correspondence banks abroad when the home bank itself is parasitic. nigerian banks have relegated themselves to cash warehouse(s), only interested in milking whoever come around. Soludo should have left them and in no time they’ll crash under their own roof.

    I guess they should forget all the grammer and over bothering ads of excellent service and starting building a genuine/sustainable relationship with the least of their clients. then everybody can trust them; home and abroad.

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