An Aggregator DEFFINITON PICTURE An Aggregator is a person or thing that aggretes.
FRAMEWORK FOR CONCENTRATORS v 14022013...NIBSS Aggregator Engagement Procedure Version 3.0 2...
Transcript of FRAMEWORK FOR CONCENTRATORS v 14022013...NIBSS Aggregator Engagement Procedure Version 3.0 2...
FRAMEWORK FOR ENGAGING AGGREGATORS AS DIRECT CLIENTS TO NIBSS FOR E-PAYMENT FACILITATION
Version: 3.0 Date: FEBRUARY 7, 2013 Status: Final
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The information contained herein is proprietary and shall not be duplicated, published or disclosed to any third party in whole or in part without its prior written consent, which shall never be presumed of:
NIGERIA INTER-BANK SETTLEMENT SYSTEM (NIBSS) PLC Plot 1230, Ahmadu Bello Way, Bar Beach, Victoria Island, P. M. B. 12617, Lagos Phone: 234-1-2716071-4 / Fax: 234-1-2716075
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Technical Data Document Title: Framework for Engaging Aggregators Version: 3.0 Status: Draft
Authors and Participants Name Contact Signature Function Aituaz Kola-Oladejo Business Intelligence Analyst Creation
Samuel Oluyemi Head, Strategy & Marketing Revision
Christabel Onyejekwe ED, Business Development Approval
Niyi Ajao ED, Technology & Operations Approval
Ade Shonubi Managing Director Approval
Revisions Version Data Description Author 1.0 25/06/2012 Document Creation Strategy & Marketing 2.0 02/11/2012 Document Revision Strategy & Marketing
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Table of Contents 1 Introduction ............................................................................................................................ 4
2 Definition of Aggregators ....................................................................................................... 6
3 Basic Assumptions/Justification for Engagement of Aggregators ..................................... 7
4 Criteria for Engagement of Aggregators ............................................................................... 8
5 Aggregator Stratification ...................................................................................................... 11
6 Procedure for Engagement of Aggregators ........................................................................ 13 Page 3 of 17
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1 Introduction
Nigeria Inter-Bank Settlement System (NIBSS) Plc provides inter-bank
electronic funds transfer services through the NIBSS Electronic Funds
Transfer (NEFT) and the NIBSS Instant Payments (NIP) platform.
NEFT is a paperless and batch-based funds transfer service introduced on
March 15, 2004 to broaden e-based retail payment options in Nigeria
NIP on the other hand, is an On-Line-Real-Time Account-based Inter-Bank
funds transfer service introduced to meet the yearnings of the Nigeria
financial system customers, who desire immediate value for beneficiaries of
funds being transferred from the
NIBSS on January 9, 2006 established an Automated Bulk Clearing (ABC)
Services that enables corporate bodies, government ministries, departments
and agencies to deliver electronic (bulk) files containing several payment
instructions through their respective Bankers or directly to NIBSS for
processing at the Automated Clearing Sessions. With ABC, processed
payment instructions are delivered to bank account in any Bank and Other
Financial Institutions (micro-finance banks and mortgage institutions) across
Nigeria. The ABC Service was introduced in three variants of:
a. Automated Direct Credits (ADC) - Salaries, Pensions,
Allowances, Benefits Payments etc; and
b. Automated Direct Debits (ADD) - Insurance, Premiums, Lease Rentals, Utility Bills Payments etc.
c. Funds Sweeping on behalf of collection agencies from the
accounts of agency/collecting banks
The NIBSS ABC Services operate like the American ACH and the British BACS. The service has since 2007 been used for the payment of Federal
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Civil Servants Salaries, Allowances and Deductions under the Integrated
Payroll and Personnel Information System (IPPIS) scheme. It has also seen
ABC Services processing transactions on behalf of some aggregators like:
1. ACL Enterprises 2. Access Solutions Limited
3. E Softies Limited
4. Soft Alliance & Resources Limited 5. SW Global Limited, and
6. Pay 4 Me Limited
NIBSS engaged the clients directly where Aggregator had indicated interest
in using the NIBSS platform on the ascribed failure of the banks and card-
based payments processors to directly process these transactions on behalf of the clients of Aggregators. NIBSS undertakes direct processing of
payments and/or execution of collection mandates where the clients insist
that NIBSS should handle the e-payment on the consent of the Banker(s).
Meanwhile, NIBSS under the recent transformation project for the positioning of the Company as a truly shared services company to the Nigeria financial
system sees the Deposit Money Banks (DMBs) as its critical client. The
strategic focus of the management of NIBSS is to avoid competition with the Deposit Money Banks (DMBs) in the discharge of her catalytic role of
facilitating e-payment services.
Nonetheless, the stifling pressure on NIBSS to act as middle man between the
Aggregators and their customers, which necessitates NIBSS processing payments and collection on behalf of the Aggregators demands putting
mechanisms in place for handling these class(es) of payments and collections processors in the Nigeria financial system.
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2 Definition of Aggregators
In the context of this document, an aggregator is an institution with a
registered company name and a sizable number of clients aggregated into
their e-payment platform with which they perform electronically
consummated processes. These are enterprise/payroll solution providers
who have extended their operations to payments and/or collections on the
demand of their clients for straight through processes (STP). These are
solution providers set up by private companies to address challenges usually
experienced by large corporate bodies, small and medium enterprises
(SMEs), educational institutions and other business entities in data
generation necessary for processing payments and receiving collections from
many payers through any bank or to a bank customer in either Deposit
Money Banks (DMBs), Primary Mortgage Institutions (PMIs) and Micro
Finance Banks (MFBs).
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3 Basic Assumptions/Justification for Engagement of Aggregators
Aggregators, as they are set up, have potential to generate critical mass
payments and/or collections files that could enhance the volume of
transactions that would further deepen e-payments adoption in Nigeria
especially in the areas of salary, allowances and pensions payments; and
revenue, premium and taxes/rates collections.
These Aggregators are spread across Nigeria trying to rake in payments and
collections transaction processing mandates from Government Ministries,
Departments and Agencies (MDAs) at Federal, State and Local Government
levels as well as Big Businesses/Corporate Bodies; and Public and Private Educational Institutions at Nursery, Primary, Secondary and Tertiary Levels.
Some of these Aggregators currently use Card Companies who have made
incursions into batch-based payments using unsuitable mechanism of switch
engine to process these Aggregators payments and/or collection files
OnLine-Real-Time. Some have been found to use the Deposit Money Banks as
conduit to pass these files.
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4 Criteria for Engagement of Aggregators
A critical assumption for the focus of this document is that Aggregators have
significantly become inalienable ally for growing in the volume of e-payment
business in the Nigeria financial system generally. NIBSS consequently
cannot continue to ignore them.
The engagement of Aggregators therefore needs to be a volume-driven strategy to deepen e-payment adoption in Nigeria. The giant stride already
made in Automated Direct Credits which is a transaction push was not
without the run they gave the Deposit Money Banks in their desperate move
to corner all Government payments processing. The currently weak adoption
of Automated Direct Debit through transaction pull of collections on behalf of
Government Agencies, Parastatals, Billing-based Companies, among others
call for strategic decision to integrate and incorporate Aggregators into
NIBSS strategies for deepening e-payment processes and processing. Within the above context, it is being suggested that:
a. Aggregator to be considered shall be an indigeneous registered Enterprise Solution Provider registered by the Corporate Affairs
Commission;
b. An aggregator must provide a letter of intent from the prospective clients if a start-up.
c. Aggregator to be enlisted to work with NIBSS shall have evidence of
at least a mandate to process payments or collection for at least a
Federal Ministry, Department or Agency; State Government Ministry,
Parastatals or Agencies; 3 or more Educational Institutions;
Corporate Bodies and/or Corporate bodies or billing institutions
recouping collection
d. Record of having processed similar payments or undertaken
collections on other payments processing platforms would be an
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added advantage for easy accreditation to connect to NIBSS
platform
e. Aggregator shall grow payments and/or collection volume by at least
5 per cent annually of current clients and/or enlistment of new clients f. Aggregators must have database of its own staff salaries, allowances
and deductions for the pilot test of the e-payment solution of NIBSS
g. Aggregator must have obtained an SLA tripartite agreement from its
Banker accepting to accept settlement responsibility for transactions
processed by NIBSS on behalf of such Bank’s customer (hereby
attached)
h. Aggregators shall pay integration fee of Two Hundred Thousand
Naira Only (N200,000) or as reviewed from time to time as
necessary, which it shall be advised before technical integration to
the NIBSS payment platform
i. Aggregators shall pay the necessary transaction processing fees per
item in a file to be processed through NIBSS.
Above all, the following must be done to engage an aggregator: I. A Business Case must be written before any aggregator can be
integrated to NIBSS payment platform. II. A review of 3 years audited financial statement provided by the
Aggregator OR A start-up must provide a Letter of Intent (LOI) detailing the prospected clients and expected volume.
III. A tripartite agreement will be signed by the Aggregator, nominated Bank and NIBSS.
IV. A due diligence must be conducted by the Legal team on submission of the following documents:
・ Certified True Copy of Memorandum and Articles of Association ・ Certified True Copy of Statement of Authorized share capital - Form C02 ・ Certified True Copy of Certificate of Incorporation.
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・ Certified True Copy of Particulars of Directors - Form C07 ・ Notice of Address
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5 Aggregator Classification
The emerging e-payment transaction aggregation opportunities occasioned by the increasing adoption calls for the categorisation of aggregators into
high, medium and low volume players. Aggregators that shall be engaged by NIBSS shall be categorized into two:
・ Super Aggregators ・ Medium Aggregators
5.1 Super Aggregators They shall on enlistment on the NIBSS e-payment platform show evidence of
capability to drive payment and collections above 200,000 transactions items in
the first year of enlistment with annual growth rate of a minimum of 5 per cent
going forward.
Super Aggregators shall be entitled to concessionary pricing based on volume trends. 5.2 Medium Aggregators
They shall on enlistment on the NIBSS e-payment platform show evidence of
capability to drive payment and collections in the range 50,000 and 200,000
transactions items in the first year of enlistment with annual growth rate of a
minimum of 5 per cent going forward. 5.3 Exceptions (start-ups)
A start-up must show evidence of business potential of 50,000 annual
volume at the minimum. The following additional clauses shall be applicable to Start-ups:
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5.3.1 A start-up shall provide a letter of Intent from prospective clients indicating the transaction volume and business type i.e. payments or collections.
5.3.2 The least volume required in this category is 50,000 annual volumes. 5.3.3. Failure to meet this annual volume attracts an annual penalty charge of N200, 000.
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6 Procedure for Engagement of Aggregators The engagement of Aggregators shall pass through a painstaking procedure
of: 6.1 Receipt of Letter of Intent to process payments using NIBSS
Payment/Collection platform. This will contain a brief introduction of the company; its business intent; and
expectations from integration to the NIBSS payment platform,
with clear identification of the NIBSS product or service being
sought. Where NIBSS identifies an Aggregator playing
dominant role in the e-payment sphere, NIBSS may invite such
Company for discussion towards enabling e-payment
handshake.
6.2 NIBSS shall invite the Aggregator for first hand discussion on
business idea and on conviction of genuine business idea proceed to the conduct of due diligence
6.3 NIBSS shall perform appropriate Due Diligence to:
6.3.1 Confirm corporate status
6.3.2 Confirm if it is a legal entity
6.3.3 Confirm experience in the field (with proof e.g.
certificates, licenses)
6.4 Impressive Due Diligence shall give way to preliminary discussion of Terms and Conditions of Engagement, or the dos
and don’ts of engagement
6.5 Preliminary discussion should give clear timelines for the execution of Non Disclosure Agreements (NDA), Memorandum of
Understanding (MoU)
6.6 Appointment of Banker to the payments/collection scheme by
Aggregator
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6.7 Step 5.6 shall prepare ground for necessary Business Case
documents to justify engagement of Aggregators
6.8 Signing of Tripartite Agreement between Aggregator; the
Banker and NIBSS
6.9 Payment of integration fees
6.10 Exchange of information - both parties exchange information,
technical data, and system parameters, etc.
6.11 Both parties perform system development/system integration
according to agreed user requirements.
6.12 Pilot run
6.13 NIBSS shall issue a certificate of partnership to an Aggregator
6.14 Go live