Cash Crunch: Why electronic banking platforms, USSD, ATM, POS, collapse due to traffic surge

The Nigerian banking public continues to face hardship in accessing their funds as cash scarcity persists while alternative channels have remained problematic at best.

Some these platforms include internet banking, kiosks, mobile apps, Unstructured Supplementary Service Data (USSD), Point of Sale (POS) and Automated Teller Machines (ATMs).

Data from the Nigeria Inter-Bank Settlement Systems (NIBSS) suggest that transactions worth at least N30 trillion are performed monthly using electronic platforms.

And at a time when these electronic transactions are expected to surge due to the the Naira redesign and the shortage of physical cash, the platforms for these services are collapsing.

This as experts say the downtime experienced by many of the banking applications and alternative channels has shown the lack of adequate investment in technology by the operators in the Nigerian financial industry.

The woes of the banking public were further compounded by failure of banks’ USSD platforms to deliver for customers.

USSD banking is an SMS-based mobile banking service, where a USSD short code is used to access financial services like transfers, bill payments, and airtime recharges, among others.

In December 2022, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) announced that banks owed telcos 80 billion ($179.1m) in USSD fees.

And the telcos threatened to withdraw USSD services if the banks failed to settle these debts.

But the telecommunication companies have denied having a hand in the present challenges bank customers are facing using their platforms. The banks, they insist, are simply overwhelmed.

Speaking to our correspondent yesterday, the chairman of ALTON, Engr. Gbenga Adebayo, said the current difficulties being experienced by customers in using the USSD for bank transactions had nothing to do with ALTON cutting off the platform for banking services as they are in high level discussion with banks over the issue of the reported N80 billion owed the association by the banks.

Adebayo said, “It is due to heavy traffic and heavy demands on the infrastructure of the banks. The banks appear to be overwhelmed by what they are experiencing; perhaps their systems are not dimensioned to withstand the pressure they are experiencing.”

Many bank customers switched to the USSD platforms to carry out financial transactions due to their inability to get cash over the counter in the banking halls, coupled with the fact that the Automated Teller Machines (ATMs) are not dispensing cash, while the Point of Sales (PoS) terminals have become out of reach of the ordinary Nigerian because of the exorbitant service charges by the operators.

Checks on Sunday revealed that major banks among the new generation ones had disabled the app about two days ago to ensure there was no total collapse of the applications and to guard against possible hacking. This brought further hardship to the banks customers, who had tried to use the service to cope with the cash crunch.

Nigerians have since the beginning of last week been unable to easily access cash as customers were turned back with no cash in the banking halls while many ATMs were not dispensing cash. The few ATMs still dispensing were besieged by mammoth crowds trying to withdraw cash.

However, the various alternative channels have not worked as desired with many transactions not going through or hanging.

The CBN governor, Godwin Emefiele, had earlier this week, in responding to the scarcity of cash in the country, appealed that Nigerians turn towards alternative payment channels.

Mrs Olayinka, a fast-moving consumer goods (FMCG) wholesale trader, lamented that transfers had not favoured her in recent times. She said she used to accept bank transfers from her customers, but not any longer.

“I have stopped collecting transfers. I have also instructed my workers not to accept transfers from anyone. I know that cash is scarce but I will only accept cash for now. This is because all the transfers that customers did to me this past week, I am yet to receive value for them. The customer will insist that they have been debited and yet my account will not be credited. So, to avoid trouble and conflict, I am only accepting cash for now,” she explained.

Also, a petrol station attendant said on Sunday that they had to stop using POS as the company account had not been credited with amounts running into millions of naira from transactions done via POS.

Asides this, banks customers have also complained about the USSD as well as the banking apps. Some bank applications have not been able to open for days and USSD transactions are not going through.

An apps developer who craved anonymity explained that “the most basic reason why transactions are failing this period is because of the immense demand that the current policy of the central bank has put on those channels.

“So basically, people that depended on cash either for payment or collection are now somewhat forced to depend on electronic channels and these channels are now sort of out of bandwidth. Prior to this time, organisations that manage and own those channels have not prepared for the level of demand that a policy like this could put on their channels.

“That is one of the things that we are experiencing now; everybody is forced to use those channels and it is putting pressure beyond the capacity of those channels today.

“So, the present situation has displaced or exposed the lack of investment in technological infrastructure by banks and other organisations to take the immense opportunity that exists in Nigeria around digital payments and electronic banking.”

Going forward and to address the current situation at hand, he said it is important that players in this space start to do more. According to him, beyond the chaos that has been created by the scarcity of cash are opportunities that exist in the digital payment space.

“Imagine the amount of transactions that could be processed per minute with everybody doing digital payments. So, it is a call to invest more in infrastructure. It is a call for players in that space to strengthen their processes so that we can all enjoy and reap the benefits of digital payment and digital banking,” he said.
Meanwhile, the senator representing Kogi South Senatorial District at the National Assembly, Smart Adeyemi, has said that Nigerians are now dying for lack of cash.

According to Adeyemi, Nigerians, especially the poor, are now calling on the Central Bank (CBN) Governor, Godwin Emefiele, to call on President Muhammadu Buhari to reconsider the seven days he asked for in order to take action.

“I am in support of the need to change the currency, but I am not in support of the way and manner the whole process is being done.

“Many died because they had no cash to buy drugs, some died because of high blood pressure. The big men have cash in their houses. President Buhari’s seven days is too long to effect a change.

“The pain is much. Everyday is like a year for people to bear. I was elected, I was not appointed. People are asking us, how will they pay money to get money. Artisans are dying on a daily basis,” Adeyemi said.

According to the senator, President Buhari should listen to Kaduna State Governor Malam Nasir el-Rufai.

“We are your brothers,” Adeyemi said of himself and el-Rufai. “The president should listen to us and not allow democracy to derail. It’s giving room for insinuations that they are doing this against a political party.”

Querying the way the Naira swap has been handled, the Kogi South senator said: “What is the sense in giving out old notes, and new notes not being given to you? The majority of Nigerians are still poor. Do you want people to keep dying? Adeyemi asked Buhari.

“How do people survive on a daily basis? I am not in support of those who stole money. Go after them. I am speaking for the poor, the artisan. We have reason to believe that they are working against APC and Tinubu. People are frustrated. ”

By Bukola Idowu, Sunday Isuwa and Innocent Odoh – Leadership Nig