Alex Nnamdi is a clothes seller in Nigerian capital city, Abuja. Nnamdi, like most retailers, uses several banks mobile apps to receive and send money to his customers and co-traders.
Four months ago, Nnamdi’s N10,000 was debited on his mobile bank app but never got to the destination bank.
After several visits to the bank customer care service office in Garki Area 10, Abuja, filling of complaint forms and promises of reversal by bank officials, Nnamdi has given up as the money never came.
It is a common sight in banks to have Nigerians line up at the customer services, complaining about unsuccessful but debited transactions.
Being debited for a failed transaction in Nigeria means someone who is to receive the money is not receiving it and the money fails to revert to the sender.
It is also a feature of customers trying to withdraw money but then getting debited without receiving actual cash; sometimes it’s a case of double debit.
As it relates to the Nigerian Interbank payment system, many people experience these challenges using the bank mobile apps and sometimes the USSD.
The Nigeria Inter-Bank Settlement System Plc (NIBSS) Instant Payment (NIP) platform is a digital public infrastructure which is owned by all licensed banks including the Central Bank of Nigeria (CBN).
The NIBSS said on its website that it “has put in place modern world-class infrastructures for handling inter-bank payments in order to remove potential bottlenecks associated with inter-bank funds transfer and settlement.”
The Board of Nigeria Inter-Bank Settlement System Plc (NIBSS) is composed of the Deputy Governor, Financial System Stability of the Central Bank of Nigeria as the Chairman, representatives of Banks as Directors, Executive Directors and the Managing Director/CEO, who heads Executive Management group of the organisation.
The Nigeria Inter-Bank Settlement System Plc (NIBSS) at some time put the failure rate of transactions at POS points at between 13% to 15%.
The Nigeria Inter-Bank Settlement Systems (NIBSS) in its most recent report also revealed that Nigerians spent a total of N89.5 trillion over electronic channels in July 2024.
According to the latest e-payment data, the July record came as the all-time high monthly transaction value on the NIBSS Instant Payment (NIP) platform.
This represents an 89% increase year on year when compared with the N47.4 trillion recorded in the same period of last year.
There are only 4800 commercial bank branches in Nigeria per data from statista. Data from Trading Economics show that there are 4.3 banks per 100,000 persons in the country, showing a poor ratio of banks availability in the country.
The Bureau Newspaper spoke to some users of different banks who narrated how they had to go through hard processes before getting back their money debited from their accounts; some did not get back their money after receiving debts.
A bank user told The Bureau Newspaper that he transferred sum of N100,000 to himself from another of his accounts but never received the money.
“In 2020, I made a transfer of N100,000 on my phone in Enugu, Enugu State. The bank debited me but never credited my other account.
“After 24 hours and I did not receive the money, I called them but they asked me to contact the recipient. I told them I’m also the recipient but with another account.”
“They sluggishly told me they would rectify it but never did anything about it. Three days after, I called them again but they answered me rudely. I called my account officer and blasted her, threatening to sue them, after asking them to check my transaction history if they were ignoring me because they were not seeing millions of naira in the account.”
“After the threat to sue them, less than five hours later, they credited me.”
Another bank user told SaharaReporters that he was deducted N10,000 but never got back his money till date, this is despite visiting the bank on multiple occasions.
“The money I have spent on transportation is even more than the amount they debited from my account” the bank customer told SaharaReporters.
Already in 2023, it was stated that 40% of failed transactions in the country were unresolved.
Nigeria’s banking situation is more challenging given that the average bank density is estimated at one outlet to 32,700 inhabitants, in rural areas the density according to the world bank is estimated at 57,000 inhabitants.
Experts suggest ways out of Interbank system glitches
Speaking with The Bureau Newspaper, banking experts agree that one of the ways to recover funds which are debited wrongly is to lay out complaints on the online channels of the bank.
This may however mean that persons in the rural areas may not be able to explore this option largely due to unstable network.
For instance data from GSMA shows that as of 2022, 61% of persons in rural areas are unconnected to the internet.
Seeking refund through online chanels means you need to have access to smartphones, a GSMA report noted that 68% of Nigerians in rural areas lack access to smartphones as of 2022.
Only 58% of persons in Urban areas own smartphones, technically only 45% of Nigerians have access to smartphones.
Nevertheless some respondents confirmed that complaining on online channels hastened the refund of their monies.
Another way banking experts believe that another way to strengthen the interbank system is to have stronger regulations on the commercial banks which make seamless communication and financial flow possible.
Further review by The Bureau Newspaper shows that while the Central Bank of Nigeria has a list of guidelines for its banking sector, it has been unable to ensure that these guidelines are strictly adhered to and help customers whose monies are still stuck till today.
A lawyer, Awosusi Kehinde blamed the weak regulations and non-functionality of the law on the laxcity of the regulatory agencies.
“The CBN is not ready to enforce its own policies. It’s a failure of its supervisory role,” he noted.
He argued that the CBN law is ready for review.
“The CBN law is ready for review, even by technology, these issues should be reviewed. The banks because they know the legislations are weak; they do what pleases them,” he noted.
This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa (MFWA) and Co-Develop.