The Federal Competition and Consumer Protection Commission (FCCPC) has urged deposit money banks to establish a service level agreement with other service providers to reduce financial technology-related challenges faced by customers.
How your bank configures its ATM systems can help you model the trust factor in the land. In Nigeria, the bank debits you before the ATM dispenses money. If the seconds between debiting you and dispensing money, a technical glitch happens, you will go home with no cash even though you have been “paid” according to the bank’s general ledger. So, you need to return to the bank hall to clear it up. That happens in POS terminals: the payment fails with the merchant only to notice later that you were actually debited. In Nigeria, it is Debit and then Pay.
In the US, they actually “lock” your money, then pay before they debit you, making sure under no circumstances would you be debited with no dispensing of cash. But they have something working for them: they have access to your credit file, and that means even if they have paid and you do not have cash, you cannot run away; they will mess up your credit.
Yet, technically, there is no way they can pay you when you have no cash because the systems that check balances and release cash are entwined. And 99.99% of the time, the tech does not fail due to many layers of warehousing and redundancies built in. Everyone is happy and technical glitches do not cause bad customer experiences.
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So as Nigeria’s consumer protection agency pushes for service level agreements between banks and solution providers, the redesign must go beyond signing papers. They have to move higher to technology stacks if they want to prevent that nightmare experience where after customers have eaten in a restaurant, and try to pay via POS, and are informed that the payments have failed, only later to receive successful debit alerts after they have left the restaurant (after substituting with cash payment), on the same failed POS payments.
In the US, they lock the value, and give credit to the restaurant (the merchant), and then debit the bank customer. In other words, there is no way you can have a failed payment for a transaction that was successfully debited. Once they have paid the merchant, they will debit the locked value later. What this means is that a technology glitch will not affect the sequence of events and at the end of the whole process, superior service is delivered.
He said, ”I personally have a problem with banks literally leaving everything to customers to establish when something goes wrong. We are working and it is part of the guidance documents that we will work on.
”Somebody wants to pay for something maybe an air ticket and the ticket is not issued because they say you didn’t make the payment, you have lost the ticket and the fare. In reality, the person did everything to pay and it showed that the fellow paid but the money was not remitted.
”Another instance is where DStv says that you didn’t pay but your account is showing that you paid. Consumers don’t choose the payment system that they desire. They go to their bank and the service provider chooses where they want their payment.
”In that ecosystem, they must have their service level agreement on how they do their reconciliations. That is the service level agreement that we are insisting must exist within the ecosystem.’’
Comments on Social Media Feeds
Comment 1: This is a serious problem here. It has happened to me more than 5 times. The last one, I’ve not seen my money till today.
My Response: I stopped using debit cards when in Nigeria to pay in restaurants since it never works, but later in the evening, I get debit alerts. Because I have no time to visit any bank for N2K or N3k refund, I switched to paying with cash. Simply, go to the bank’s ATM, get cash and pay. But it has to be fixed and they have to reconfigure the sequence, not signing papers. In Diamond Bank those days, I worked in the System Automation Unit and it was our job to design such.
Comment 2: Why do I see this as a startup idea?
My Response: Unless you can serve as a bridge but it is not really a startup idea unless you will build a neobank that uses that protocol for better customer experience. The flow chart can indeed deliver a new basis in the market. Good luck. If you build one, I will adopt your debit card as I will be confident, it will never debit without dispensing value.
Comment 3: Ndubuisi Ekekwe, From my little experience as a software engineer, this will not change anything because of the following reasons:
1 : The number of seconds it take to lock your account before dispensing your cash, is almost thesame with the one it will take to debit your account before paying you.
2: A technical clitch can also happen after the money has been locked(hidden debit) in your account and the atm machine will not pay you. In such a situation, you will also go home without money and you will not be able to access the locked amount until a hidden reversal has been done by the bank.
Summary, the only difference between the two scenarios you explained is that you will not get the debit sms alert but all other things like not having access to the money and going home without cash are thesame.
Other software engineers in the building can throw more light on this or correct me if I am wrong.
Thanks for reading.
My Response: I worked in a bank’s Software Automation Unit as a young graduate. What you have written is theory. If you live in US and have a bank or credit card, when you initiate transaction, they quickly “lock” value and in your dashboard online you will see “pending”. That pending can take up to 3 days to clear.
Provided they can lock that value, they will release the funds. They know that they have 3 days to take that money. Nigeria does not have that “pending” state in your online dashboard.
Note that in a rare state where they noticed that money was not paid, after the pending lock, it takes less than 10 minutes to delete that entry, releasing the funds back to the account. In other words, a glitch existed between the lock and pay phase, once that is resolved in seconds, they delete that entry if there was no payment.
Of course, a US bank has to do that as if it does not do that, class action will hit it.
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Every other party in the chain is trusted but the customer, you give them your money to keep, trusting them, but when you need them to pay back that trust by ensuring that you are not embarrassed, they disappoint.
The thing is that people are overwhelmed by so many things, such that they do not have the time and energy to pay the service providers in their own coin, for all the mess they bring to their lives.
Just like in telecom, at the beginning, the focus is on coverage over quality of service, but as you mature, more questions are asked about your quality of service; the same fate awaits financial services providers, it’s a matter of time.