Nigeria built open rails for money; don’t let them close

In a Lagos market, a tomato seller now accepts transfers, taps, and QR codes with the same calm she once reserved for cash. That ordinariness is the real revolution. A decade of engineering “interoperability” into Nigeria’s payment rails—so a wallet can pay a bank account, a QR code can talk to any app, and a merchant can accept customers from anywhere—has turned payments into public infrastructure. It has also delivered hard results: cashless transactions surged to ₦611 trillion in 2023 and climbed to about ₦1.07 quadrillion in 2024 as real-time transfers became the default way to pay.

Interoperability breeds competition. When any licensed payment service provider, as well as switching and processing firms, can reach any account, firms compete on price, uptime, user experience, and risk controls—not on walled-garden access. That dynamic has propelled innovation on Nigeria’s real-time rails (NIP), where billions of instant payments move across banks and fintechs each year. It’s why Nigeria sits among the world’s leaders in real-time adoption, and why merchants, from fuel stations to roadside kiosks, now see digital acceptance as table stakes rather than a boutique extra.

The Central Bank’s frameworks amplified this effect. Its Payments System Vision 2025 enshrines interoperability as a guiding principle of Nigeria’s payment architecture. It emphasises interoperability as central to building an efficient, inclusive, and resilient ecosystem. In addition, guidelines on the operations of electronic payment channels mandate full interoperability across issuers, acquirers, and switches. These are the quiet policy choices that make a bustling ecosystem look effortless.

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The social payoff is just as clear. Inclusion has deepened because rail access has become cheaper and more ubiquitous. Formal financial inclusion rose to 64% in 2023 (up from 56% in 2020), while overall exclusion fell to 26%. In plain language: tens of millions more Nigerians can send money, save, or get paid without touching cash. When rails are open, government transfers reach beneficiaries faster, informal businesses formalise, and women, who face higher barriers, gain safer ways to transact and build credit footprints. The rails did not do this alone—agents, smartphones, and product design matter. But without interoperability, none of it scales.

Yet one stubborn bottleneck threatens to unwind these gains: de facto exclusivity in card processing. Industry participants report that domestic card schemes—most notably Verve and AfriGo—are tied to proprietary switching arrangements that prevent rival switches from processing those cards. In practice, this means merchants and consumers lose benefits they take for granted elsewhere in the system: least-cost routing, redundancy when a processor fails, and head-to-head price competition. It is a quiet form of “rail capture” that raises costs, concentrates power, and dampens innovation.

This is not how Nigeria treats other networks. Visa and Mastercard transactions route through multiple processors and switches, allowing acquirers to pick the path that works best for cost and reliability. Nor is exclusivity consistent with the spirit of existing rules: the CBN’s QR framework explicitly requires full interoperability across participants, and its open-banking guidelines are designed to broaden, not narrow, access to financial infrastructure. Cards should be no different.

The fix is straightforward and familiar to regulators worldwide: mandate scheme-neutral switching for domestic cards. Any licensed switch that meets security and certification standards should be able to process Verve and AfriGo transactions on equal terms, just as they do for international schemes. Give acquirers the right to least-cost routing and require transparent, published fees. Second, separate scheme governance from processing incentives. Where a company both operates a card scheme and sells switching services, enforce functional separation to prevent self-preferencing. Require non-discriminatory access, standardised technical specs, and time-bound certification windows. Third, the CBN can publish quarterly metrics on card-acceptance uptime, routing availability, and pricing dispersion—sunlight that invites competition and gives merchants leverage.

Why the urgency? Because Nigeria’s payments story is a rare macro bright spot. In 2023, e-payments crossed ₦600 trillion; by 2024, more than 11 billion transactions moved through NIBSS rails. Momentum compounds: each additional merchant, wallet, or app adds value to every other node on the network. Each exclusivity carve-out does the opposite; it fragments the graph and raises the clearing price of trust.

Interoperability is not a slogan; it is a constitutional principle for digital economies. Nigeria has already proven what open rails can do for growth, competition, and inclusion. Keeping card processing as open as transfers is the logical next step—one that will lower merchant costs, harden resilience, and ensure that the tomato seller in Lagos never has to wonder which logo her customer carries before she can get paid. The country built the freeway. Now we must keep every lane open.

Benjamin Odey is a financial inclusion expert based in Lagos.

Source: Businessday.ng | Read the Full Story…