Bankers encounter e-payment errors they cannot quickly account for —ATCON President

WHAT is wrong with Electronic payments?

These days, people are being debited at the PoS terminals even when transactions fail and it does not reverse immediately until the customers disturbs card issuers for weeks and months.

What is exactly the problem?

Thank you for raising this prickly issue. I call it prickly because I have also been caught in what I call interoperability of systems. There is always an error generated, device error.

Can it be cured?

Yes. The major problem is multifaceted; firstly, a PoS may not be able to determine whether a bank transaction has actually carried out successfully unless it is able to get a positive response or acknowledgment from the bank that owns the credit or debit card. Secondly, it appears that the PoS may not be able to clear a clear cut connection whilst waiting for an acknowledgment and it then states an error when clearly the bank has sent it a successful acknowledgment and this is the most contentious issue that replicates the scenario that causes most customer complaints.

In some cases the bank rectifies the problem by deducting and then immediately crediting the consumers bank account, to avoid a payment being made against the client account and the PoS reporting an ‘error’, otherwise, the banking processes places the responsibility on the card holder to prove that a deduction was made from their bank account when ‘error’ response was reported to the vendor/merchant. This clearly is a system problem that the banks need to solve with the merchant and make sure that all ‘error’ type transactions are ‘rectified’ or resolved within the 24 hours of the problem first occurring.

A typical real example: There is an error generated while trying to carry out a transaction. It is either at the PoS terminal or at the server.  At the terminal these devices are usually portable in a confined location. They can move from one point to another in a confined location. The basis of communication is it is using the GSM technology, that is a wireless technology. In parts of a building where the signal is weak, it is very unlikely that the transaction will proceed. It may not proceed in a timely manner. The intervention by the operator is to move it to an area where the signal is stronger. That is why you see some users carrying it about looking for a signal because they have experienced what I call device error.

In between that movement, the time allotted for that transaction, which is probably 15 seconds, might have elapsed. This is called device error when they are inside a building. I hear that the Nigeria Interbank Settlement System has on March 22, increased it to 20 seconds to help out.

There is nothing much that can be done about that, other than to install booster antennas within the building. Those antennas have to be provided by the operators.

Remember,  the terminal is connected to any network not just one. The server has its own network. It can not discriminate between networks. It takes a little time before it can gain access to a server that has its own network.  So, the terminal is trying to gain access to the servers via the networks. There are  sophisticated terminals and upgrades. If it is a sophisticated terminal, some terminals can use multiple users/service providers to get to the server and some are dedicated, if it fails it fails. In most cases, if you check the receipt from that terminal,  it could tell you the reason for the failed transactions.

It could be poor communication or server error. It will tell from the terminal as there are various reasons for the failure.   In Nigeria however we conclude that it is network problem because it removes responsibility from the user of the terminal.

Unfortunately, and this is where the interoperability issue has happened. When the reason is known by the device and it happens to be that it is due to the device, there should be no transaction and no deduction  from your Account. This is because it has not communicated, so how can it deduct when your account is not on the device but on the server which is on the banking system. That is why I am very specific about types of errors.

If it is during communication and it says upload and is downloading. It could be a communication error for several reasons.The server may be too busy to execute on the request of the device at that time and so you retry. So most times it works on the second attempt. This is the server telling the terminal ‘’am busy,’’ retry. But again the user ignores that instruction and concludes it is network failure.

What if it has printed a receipt?

If it has got to that point where it has communicated with the server, it will print a receipt.  That means the communication has been established between the device and the server; Because this is wireless communication, not fixed. It depends on the resources available to carry the request and the response. Let us get back to the one that is tasking on the consumer.

A situation where you slot in your card and the terminal says failure, even when your account has been debited, it is my opinion that the transaction between the banks has not been concluded.But at the first instance of getting a positive acknowledgment, they deduct a customer’s money without it completing.

If I am banking with bank A, but you the merchant, Pepper Soup vendor is banking with bank B. He has no account with bank A.

It may be that bank A and bank B are trying to communicate and maybe bank B has told the terminal that the money hasn’t been received and without waiting for a response from bank A to come, it says decline.

But even at that point, a deduction has been made. So, what will happen will be a ‘’debit and credit.’’

It is bank B that will now say, let me reverse because the transaction is not concluded. So a card holder is supposed to see a debit and credit but everyone subscribed to it. That is where  confusion happens, the cardholder may not know what was going on.

There could be many reasons why that happens. There may be no money in the account. It could be slow network among others. That is not communicated to the person holding the PoS. In a case where there is money and deduction is made, some people will now have to go to their own bank to reconcile. It will be found in the system that you have been wrongly deducted and it will be refunded.

In most cases, it will be found in their system and they will tell the customer that it will take 7 to 10 working days. But the 10 working days in most cases runs to a month and 2 months. Why?

If it had happened in that transaction, you wouldn’t need to do that. They know that they are dealing with a large volume of transactions. They cannot hold the server hostage on one transaction. So they allow it to go, hoping that the client will go to his or her bank. That is the problem. Because your time is now being spent fixing internal problems. In trying to go cashless, we have to have better interoperability between the banks to ensure that irrespective of which channel you are using: internet banking, ATM, PoS or any other form of device, it should be consistent. That is the challenge we have right now. Interfaces and inconsistencies cause interoperability issues. That is why you get different responses. Why can’t we have a mandate that says, immediately a cardholder is wrongly debited, reverse immediately or in 24 or 48 hours without a client having to go through the trauma of chasing his or her bank up and down. I think it is for the regulator called CBN to ensure that such a mandate is enforced within the banking system.

 You frequent the United Kingdom, do they also experience such downtime in transactions?

In the UK, before they release any product, it has gone through extensive testing. Why I say extensive testing is because they are coming from a position where they have legacy systems. They do regressive testing to ensure that any new thing they are putting, has not impacted other systems. They make sure, so it is extensive and exhaustive.

This is not to say they don’t have problems but they are fewer and they are dealt with, with immediacy. So the customer contact service is very prompt and decisive such that it will leave you without any doubt that they have solved the problem. It takes everyone the same time. Not like taking one week for some people and two weeks for others. So, there is trust in the system.

They don’t  launch any product that will cause this type of problems. Because it is better to solve the problem before it becomes a big issue.

In Nigeria we are too reactive. It is as if we don’t test these systems before. Maybe the systems are tested only in small pilot area or the laboratory and so when launched in the public, we become guinea pigs. All the errors they cannot verify if a solution exists. Some of  the bankers themselves are trying to understand the system. They are also going through the motions of truly understanding how the systems work.

That is why they can’t attend to you immediately.  There are errors they can’t account for. That is the problem.

 The mobile money has not taken off in Nigeria, especially the way it has in Kenya. Why?

There are three things around the situation in Nigeria. It more or hinges on the other question.  In Nigeria there isn’t anybody that has been able to verify the systems that we adopt irrespective of whether there are laws that exist or not. There is no one as an institution that can verify the systems that we use. There are no standards and so you can do whatever you want.

There lies the problem. We wanted it to be bank led but the banks own banking clients. They don’t own the mobile subscriber.

Those banking clients happen to have one or multiple mobile devices. I say happens to have. It was not a conscious decision.So, we now release mobile apps and the trend is to follow me. One bank leads,  the others copy.

But the integrity of those mobile apps have not been tested on the various smart phones that exist, which are not regulated by another body. You are just a public listed entity that is now entering a space that you have no knowledge of.

It’s  as if it is plug-in and play. If it is that easy, then everyone will be driving Rolls Royces and Bentleys. So you absolve yourself of the fact that you have not fully tested the Mobile App and say it is a communication problem. But, you don’t understand which devices have been tested with the application. That is number one. Number two, Mpesa did not come without basis.

It was tested in the Philippines and Singapore before it was adopted in Kenya and adapted to the African environment. Why were they able to adapt it to that level? Because Safaricom is a Mobile operator that knows the devices. It has the user- behaviour information at its disposal. So it was easier for them and more effective to fix the problems that were inherent in the system and to gain full trust and user acceptance because they owned the client base. The banks have to overcome that. Otherwise, it is virtually impossible.

 Why copy some things when you can partner and use it well?

When it was bank-led, the trust wasn’t there in between them and the Telcos. Because the banks feared that if they disclose information to Telcos, they might grab that clientele. Isn’t it funny that while that debate and situation was on, the MNOs were already doing their own version of mobile as well, giving USSD codes with certain parameters you can use and it will send the same thing to the same banks. So, if I can use USSD code I know what am doing because the application resides in the Telcos infrastructure. The USSD code is processed in the Telcos infrastructure and how did they get access to the bank account. So, it is almost self defeatist. When they realized the coincidence, they now saw that technology has broken that control. It was their initial plan.

In the case of Mpesa, they didn’t have to go through that. It was already accepted by the bank that the SIM card was owned by the Telcos. The SIM card has all the information you need and to add a bank account is easy.

The banks want technology and still want to control it. As long as that happens, you have a dysfunctional system. They are in the banking business and not technology business. That was the reality of now that it was limited or stunted with the banking led initiative to replicate Mpesa. That is why the CBN granted licences to Mobile Money operators and other institutions if they meet certain criteria to help improve financial inclusion. What they were doing before was not improving. But now there are MNOs who leading the race in mobile money transfer. Now, they are just adding new products to legitimize what they were already doing in the past. If the Telcos led initiative is allowed to come to full realization, you will see an increase in financial inclusion and then we will have every opportunity to replicate the successes of Kenya’s Mpesa in Nigeria. The Telcos can do it far beyond what the banks can do.

What about the fears that if it is Telcos led, people’s money in their custody might get lot if for instance the App crashes?

Look, the Telcos were already doing that using mobile wallet and even partnering with moneygram. I feel sorry for the banking sector with what FinTech is already doing. The banks cannot control it. The president or CBN governor cannot control technology. You are fighting a technology battle and you cannot win it. It is generational.

The best option would be to let the Telco’s do their thing. Technology will always win over culture and religion.

 In the area of technology, how can you rate Nigeria?

In the UK when I graduated, it was in the era of digitization of telecoms. And that is why I was schooled by the best. From what I have seen however, I don’t think we have scratched our potentials.

Do you think you have really impacted enough to the telecommunications sector in Nigeria?

I am a doer and so I don’t blow my own trumpet. I just count myself lucky to be where I am. I have people in the private and public sector. What matters is the legacy we leave behind. Technology will take us to where we are going. If it means me leading the way, I will gladly do that.