Transactions in Nigeria’s upcoming e-naira will come at no cost. This is according to a framework that the Central Bank of Nigeria (CBN) has sent out to leading financial institutions in the country.
Additionally, user to merchant transactions will be cost-free.
In the framework, the central bank has reiterated that it will be responsible for issuing, distributing, redeeming and even destroying the digital currency.
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In the process for onboarding customers to CBDC usage, the central bank is using commercial banks that will provide onboarding codes to their customers. Banks can send pre-generated codes to all their customers, but they also have the option to send invitation codes to a selected list of special customers.
The codes will be necessary for usage to the CBDC.
The bank has specified a three-tiered security structure for the digital wallets that will hold the digital version of the Naira:
- Tier 1 wallets for users without bank accounts and who will register using phone numbers linked to national ID. They will also be limited to daily transactions not more than 50,000 Naira ($120)
- Tier 2 has daily limit of 200,000 naira ($490) and will depend on AML/KYC steps completed
- Tier 3 has daily limit of 1 million naira ($2,350) also depending on AML-KYC steps a user completed. This tier may also involved physical verication on top of bank verification numbers. Merchants will also fall in this category but with no transaction limits
The bank has also specified 5 categories to facilitate usage of the CBDC ahead of the deadline for a pilot by October 2021:
- Monetary Authority Suite – CBN’s role to issue and distribute, redeem, and destroy the digital currency
- Financial Institution Suite – Licensed financial institutions can request currency or issue stablecoins, manage digital currency across branches, and implement KYC, AML compliance
- E- Government Suite – the government intends to process digital payments sent to and received from citizens and businesses
- Merchants – Merchants are involved to provide low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis, and reconciliation
- Retail Consumer Suite – The Central Bank recommends user-centered designs for a great user experience. It also proposes the architecture will be expandable to enable innovative features, advanced privacy, and security
The central bank is urging commercial banks to introduce the e-naira as an alternative to cash as the bank moves to increase financial inclusion across Africa’s most populous nation.
CBN also sees the CBDC as a way to transform the financial experience in Nigeria noting that this is an opportunity for banks to change the narrative of poor experience in banking halls.
While CBN has indicated it will provide a wallet, dubbed Speed Wallet, it says this does not stop the introduction of other third-party wallets.
Banks and other licensed operators are encouraged to produce their own wallet solutions.
CBN has assured citizens that the e-currency will not be volatile like other cryptocurencies, but will be pegged and a direct mimic of the Naira, the Nigerian legal tender.
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RECOMMENDED READING: We Will Apply Regulatory Framework and Compliance Mechanisms to Prevent Disruptive Competition for the e-Naira, Says Central Bank of Nigeria
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