By Yemisi Izuora-Katsina
The Nigerian Deposit Insurance Corporation (NDIC) has explained that the Deposit Insurance System (DIS) is a financial guarantee, which was specifically developed to protect depositors in the event of bank failure and also to offer a measure of safety for the banking system.
The Corporation also noted that the system was designed to particularly protect small savers who may not be privileged to adequate information on the financial condition of their banks.
Speaking on the “Role and Challenges of Deposit Insurance in Mobile Payments Environment” at the ongoing seminar for business editors and financial correspondents association of Nigeria (FICAN) in Katsina Mr Kingsley Nwaigwe,Deputy Director,
Research , Policy & International Relations Department, NIDC, stated that the Mobile Payment System (MPS) is a system that helps to effect payments for products and /or service/money transfer through portable electronic devices such as Cell phones, Smart Phone or Personal Digital Assistant (PDA).
Nwaigwe said “This is to create awareness on the initiative of NDIC to extend deposit insurance coverage to the subscriber of Mobile Money Operators.
The Corporation’s effort at providing deposit insurance for digital deposit-like products is to reduce the number of the unbanked, boost public confidence in the mobile money sub-sector, hence promoting financial inclusion as well as create a vibrant and globally competitive financial sector in Nigeria”.
According to him, there are four main participants in the Nigeria Mobile Payment Scheme and they are, the Mobile Money Operator (MMO), Payment Agent, Banks and Subscribers (customers).
He said the MMO appoints the payment agents who receives or pay money at various locations on its behalf while the agent maintains the identity and account records of its customers.
He listed three ways through which financial loss could occur in the mobile payments business.
This he said can happen through outright theft by the MMO and its staff or through the payment Agents while also such can occur through the DMB (Deposited Money Bank)- custodian of the pool Account, particularly if the licensed bank is closed.
Continuing he said that the adoption of Pass – Through insurance (PTI) enables the Corporation to extend deposit insurance coverage to mobile payments subscribers and would also to fulfill the NDIC public policy objective of engendering public confidence in the banking system.
The extension of deposit insurance cover to subscribers of mobile money would encourage the use of mobile money platform thereby contributing to financial inclusion and ensuring financial system stability in Nigeria, he added.