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Controversy trails N1.3bn BVN fee for BDC transactions
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Controversy trails N1.3bn BVN fee for BDC transactions

Mfonobong Akpan

Controversy is trailing the imposition of N1.3 billion annual Biometric Verification Number (BVN) search fee on Bureaux De Change (BDC) transactions. Recall that the Central Bank of Nigeria (CBN) two weeks ago, directed that all transactions consummated by BDCs with effect from August 1, 2015, must have the BVN of the customers. The apex bank also stated that each BDC would pay a token transaction fee of N100 for each access on the BVN portal of the Nigeria Interbank Settlement System (NIBSS) for the confirmation/validation of the BVN number of the BDC’s customers.

At an estimate of 100 transactions per week per BDC, the N100 BVN search fee per transaction would amount to about N10,000 per week for each BDC. This implies N40,000 per month, and N480,000 per year for each BDC. This multiplied by the 2,715 BDCs on the register of CBN amounts to N1.3 billion per year.

The CBN, however, did not specify who should bear the cost of the BVN search fee, whether it is the BDCs  or their customers. The uncertainty surrounding the BVN search fee was compounded last week when top officials of the CBN failed to clarify who should pay the fee.

Vanguard investigation revealed that the meeting between the CBN and BDC was attended by officials of Association of Bureaux De Change Operators of Nigeria (ABCON), and three CBN departmental directors namely: the Director of Financial Policy & Regulation Department, Director of Other Financial Institutions Department and Director of Trade and Exchange Department.

ABCON sources at the meeting confirmed to Vanguard that when asked to justify the rationale for imposing the BVN search fee and whether it should be borne by BDCs or customers, the CBN officials were silent and said that all the points raised against the introduction of the BVN requirement would be addressed by the management of the apex bank next week (this week).

At the meeting, the ABCON team highlighted the challenges and implications of the introduction of BVN as a requirement for BDC transactions, which include further depreciation of the naira in the parallel market.

According to the CBN, the BVN requirement for BDC transactions is effective August 1st, 2015. In a circular signed by the Director, Financial Policy & Regulation Department, Mr. Kevin Amugo, the CBN stated: “This is to inform all licensed BDCs operating in Nigeria that, with effect from 1st August 2015, all transactions consummated by a BDC must have the Bank Verification Number (BVN) of the customers.

This information must be included in the Returns to the CBN. In the case of corporate customers, the BVN of a Director or an Authorised signatory of the entity must be provided. To ensure a hitch-free implementation of this directive, the list of all licensed BDCs would be provided by the Central Bank of Nigeria, to the Nigerian Interbank Settlement System (NIBBS), to enable the company provide necessary hardware token that would be used by the BDC in accessing the NIBBS website.

NIBBS has been directed to make a portal available on its website to facilitate access for the confirmation/validation of the BVN number of the BDCs’ customers. This is to ensure that the correct BVN is recorded by the BDC and included in the returns to the CBN. A token transaction fee of N100 would be paid for each access on the portal. NIBBS will also provide the necessary training manual for an easy to use “operation of the system.”

ABCON, however, called for the indefinite suspension of the implementation of the BVN requirement pending the outcome of the October 31st 2015 deadline given by the CBN on the BVN project and until the highlighted challenges and consequences have been resolved. In a letter to the CBN Governor, presented at the meeting, the Association  called for the cancellation of the N100 BVN search fee, describing it as prohibitive with the potential to further deplete the earnings of BDCs.

According to the Association, “The four-week deadline to start usage and training of   BDCs is too short and patently unachievable.” “As a stand-alone organisation and because many of our clients are walk-in customers, we envisage difficulties in convincing our customers to divulge their personal Bank Verification Numbers without an extensive public awareness campaign. The recent uproar created by Nigerians in Diaspora on London streets regarding BVN registration is a clear example.

“We sincerely feel that the exercise, if not properly handled, is capable of pushing our customers into the warm embrace of black market operators for their currency demands. The policy requires a dedicated network to be provided by each BDC operator to enable us access the NIBSS portal for verification and confirmation of individual BVNs – a process that would be rigorous and cumbersome; given the epileptic nature of network performance.

“We predict that if the directive is not reversed immediately, the value of Naira  against other currencies will continue to depreciate to a band of N350 to N400  per dollar, no matter the liquidity in the market as most of the liquidity will find  its way into the black market.

“The directive may lead hackers to invade the BDCs’ website with a view to securing their financial information including their BVN for their financial crimes. This is evident as most banks in the country warned their clients not to release their BVN to anybody. It is also a fact that these hackers are in the habit of sending fake credit alerts to the unsuspecting public since the advent of the cash-less policy.  Please see attached Diamond Bank warning letter to the public and other banks advertorials in the national dailies.

“It is our belief that the directive will make the public to view with suspicion  the BDCs’ request of  their BVN as BDCs becoming a mini security operative organisation which is outside the purview of their scope of operation, but solely the statutory job of security agents. Even in America, people do not disclose their social security numbers.

“We are worried that if not properly handled, the directive might lead to some people going to the streets as most of their rights would have been disenfranchised. The recent uproar of Nigerians in London over their BVN registration is a good example.

“The CBN should, as a matter of urgency, organise a comprehensive training package for the entire 2,715 Central Bank Licensed Bureaux de-Change operators in the country as well as other stakeholders. “It is incumbent on the CBN management to engage in a wider public sensitisation and awareness campaign for acceptability and compliance before full implementation.

We advise the management of the CBN to increase our allocation and widen the scope of our operations i.e. making us Western Union and Money Gram Agents as was earlier promised. The CBN, in conjunction with the NISS, should ensure hitch-free, efficient and vibrant networking platforms and portals for ease of transactions.”