CHANGE FOR NAIJA

An idea I had in 2014 on how to alleviate the "there is no change" hassle which small businesses and their customers face day-in-day-out in Lagos, Nigeria. I posted it here because I had to refer to it in another post where I talk about a new solution by NIBSS (mCash) which has the potential to solve this problem.

THE IDEA

This is a technology solution that aims to alleviate the problem of scarcity of denominations in business. It aims to do this by providing a platform through which any participating merchant can issue change to customers and then, customers can subsequently redeem their change from at any other participating merchant’s business.

The model works thus:

CHANGE ISSUANCE

How will the merchant who owes a customer change transfer value to the customer via the system?

• Business owner signs up for the solution with a small amount, which covers the cost of a host phone and the merchant’s starting credit;

• With the use of the solution on the host phone, a merchant can issue change (anything below 500/1000) to its customers. All a customer needs to supply is his/her phone number;

• When a merchant issues change to a customer, the merchant’s account is debited and a system account receives the equivalent credit. Every fund in the system account actually belongs to customers who have been issued change;

• At the point of issuance, a unique key is generated and associated with the customer’s phone number, issuing merchant name, and the issued amount. An SMS with the generated key, amount and redemption guideline (where to redeem) is sent to the customer while the merchant is notified of the position of their account after each issuance on the app interface (to save SMS costs).

How merchant can always have easy access to their money is still under consideration. I’ve considered a prepaid card.

CHANGE REDEMPTION

The customer can only redeem the value of issued credit at a participating merchants’, either as cash or as business value.

• The customer walks down to any participating business with their phone, phone number and key sent via SMS.

• They buy something and will like to pay in part or in full with one or more issued credits.

• Customer will go on to supply merchant with their key and associated phone number for any amount they want to redeem.

• The merchant enters the key and phone number into the same app and waits for a response. If validation was successful, the app interface shows that and their current account status due to the credit. The key is marked as issued and the redemption point (merchant) column is populated. If validation fails 5 consecutive times on a merchant’s phone (on either same code or same phone number in all the cases), the merchant’s loading interface is suspended for an hour. Possibly, they get a call from customer care to clarify why so many fraudulent redemption attempts are coming from their end.

• Customer as soon as the key is redeemed is notified of the new status of their key via SMS to prevent scenarios where merchant might want to swindle customer.

• The merchant account is credited on successful loading; our suspense account is debited for the equivalent amount.

• The merchant can load their change accounts on the platform either by cash or via online payment. There will be a maximum loading limit. There will also be a minimum withdrawal limit from their change accounts which I can only conceive as a prepaid account for now. 

Think through:

• any alternative way to ensure merchants have two-way access to their Funds apart from prepaid cards?
• Preventing fraud
• Profiting from SMS, registration
• Decide which merchant bears SMS fees (issuing merchant, receiving merchant or both)

  

ON FRAUD

I have conceived that on success, mock apps may spring up, which send keys to customers, making them believe they have real value while the value is actually not redeemable anywhere. This came into mind when I imagined how this solution could revolutionise quality of service in the public transportation sector.

 

Fraud-control measures

• Start your pilot within a controlled area e.g. University, where fraud is less likely

• Start with brick-and-mortar merchants who have fixed shops and are most likely not to try to cheat customers of change by using fake apps to send an unredeemable value. If they're in one place, customer can always go back to the shop if there are issues with redeeming PIN (key)

• Using a customised trademark device on which app installation/internet access is limited. Customers can then be instructed to verify such a device before allowing mobile merchants such as bus drivers to issue change to them

• Persistent and visible publicity of safety measures

• Pilot period of two weeks with each new merchant; a rep. stays and informs customers of the safety and warranty of the CHANGE FOR NAIJA system

• Limiting the maximum amount that can be issued as change to one customer (mobile) in a day