What To Know About The National Domestic Card

Last week, Nigeria joined the number of countries which have launched domestic card schemes as the Central Bank of Nigeria (CBN) in collaboration with the Nigeria Inter Bank Settlement System (NIBSS) deployed the National Domestic Card, which is meant to serve as both a credit card and debit card, among other functions.

With the domestic card, Nigeria follows the example of countries such as China, Turkey and Brazil whcih have harnessed the transformative benefits for their respective payments and financial systems particularly for the unbanked.

A card scheme is a central payment network that uses credit and debit cards to process payments. Its primary role is to manage payment transactions, including operations and clearing.

Visa and MasterCard, two of the largest global brands, offer credit and debit cards that have become synonymous with a payment type that is accepted around the world; these two huge brands are known as card schemes.

Card schemes have four players, the cardholder, the card issuer, the merchant and the acquirer, all of which together make up an open-loop system that allows consumers to seamlessly purchase items or services from merchants by letting the banks do all the work on their behalf.

Asides these four primary players in the card scheme, there are also intermediaries that facilitate the transaction, including the payment gateway and the payment processor.

Nigeria’s National Domestic Card is expected to compete with other industry players like Mastercard, Discovery and Visa cards which have dominated the card payment market in Nigeria. While they remain convenient especially for international transactions, domestic cards are expected to better serve the unbanked market and increase competition within the payment landscape.

According to the CBN, the domestic card is expected to have the capacity to reduce Nigeria’s reliance on foreign-owned financial services companies.

The CBN said it introduced the National Domestic Card because of its belief that Nigeria has achieved significant transformation in its payments system over the past decade.

It furthered that the move was been driven by rapid digital and technological innovation, increasing mobile penetration and the proactive policy initiatives of the CBN which have spurred unprecedented adoption of digital financial services.

CBN spokesperson, Osita Nwanisobi, said the scheme would accelerate financial inclusion and deliver lower cost payments services that are more accessible and affordable for Nigerians.

“Nigeria is Africa’s largest and most vibrant economy and the pace of digitisation and innovation, alongside the expansion of mobile penetration and the proactive policy initiatives of the CBN have driven the accelerated adoption of digital financial services.

“Considering the strength and breadth of its banking sector and the rapid growth and transformation of its payments system over the last decade, Nigeria is ideally positioned to successfully launch a national card scheme,” he said.

The bank said apart from fostering innovation within the Nigerian domestic market, the scheme would allow banks to offer a variety of solutions including debit, credit, virtual, loyalty and tokenized cards amongst others.

“The CBN recognises the significant benefits from delivering Africa’s first central bank-driven, domestic card scheme, which when delivered at scale has the potential to become the largest in Africa, and one of the largest in the world.”