In an exclusive media chat with Dare Owolabi, the Executive Vice Chairman of Arca Payments Company Limited, a prominent figure in Nigeria’s financial technology sector, discusses the company’s role in payment gateway, payment switches, and the newly introduced ARCA Agency Banking (ArcaMoney). The interview, conducted by Anthony Nwosu, delves into the Nigerian payment landscape and the company’s relationship with the regulatory body, the CBN, while also exploring strategies to enhance electronic payments in the country.
ARCA has been into the Fintech ecosystem, tell me the journey.
ARCA, established in 2016, is a Fintech company holding numerous regulatory licenses issued by the Central Bank of Nigeria, including a Switching License, Agency Banking License, Processing License, and more. Distinguishing itself as one of the few entities with this array of licenses, ARCA takes pride in having developed its switches in-house. The company’s proprietary switch technology has played a pivotal role in its journey, propelling it to significant achievements within the fintech ecosystem and solidifying its market presence.
ARCA’s core mission revolves around simplifying payment acceptance and processing for financial institutions and SMEs, with a primary focus on Africa’s dynamic payment landscape. Its suite of products and solutions seamlessly operates within the multifaceted payments environment, effectively bridging the gap between individuals, financial institutions, banks, and businesses, all contributing to the growth of Africa’s digital economy.
Industry watchers always cite Kenya as a leader in electronic payment in Africa, Do you think that Kenya is leading the way?
My perspective differs; the assertion about Kenya’s prominence often centers around the MPESA model, which has indeed seen remarkable success. However, Nigeria boasts an exceptional electronic payment system anchored by institutions like NIBBS and our interbank payment model. Our ability to execute instant transfers is particularly noteworthy, a feature not universally available. Notably, even in the United States, there are limitations on the amount you can transfer.
It’s worth noting that while I acquired a mobile money license in 2010, the reality is that mobile money adoption in Nigeria hasn’t achieved the same scale as Kenya. Nevertheless, Nigeria stands out as a leader in payment gateways and various fintech sectors. Our domestically developed payment gateway has found utility in several other African nations, affirming our substantial contributions to the advancement of payment systems across the continent. Indeed, we’ve made significant strides in shaping the African payment landscape.
Do you think that the regulator, CBN, is doing much to support indigenous fintechs like yours?
Yes, the regulator has been very supportive to the industry, the Central Bank of Nigeria has shown leadership and created an environment for us to thrive. The Nigerian fintech space has scaled from what it was in the early 2000s to now. They have been very supportive of some of the products and compliance. The CBN has also ensured that risk and other complications are taken care of and we just need to work and collaborate from the operational and legal point of view.
You can be described as a stakeholder in Nigeria, are you looking at expanding to other African countries?
Yes, we can not only play in Nigeria, we have the intention of exporting our expertise to other African countries. We are going into the East African region in a few months’ time, we are working on our license in Kenya, and we are looking at South Africa also. These are the few countries we are looking at. By the time our licenses are ready, we will deploy in those countries.
Tell us about the business-to-business (B2B) Solutions.
These are looking at PoS services, a lot of our PoS are across regions and we have unique features in our PoS called the Arca Pay, this addresses some of the challenges we have today in PoS space, we have our Agency Banking which we just launched and it is in pilot mode but the numbers that are coming out from the Agency Banking solution is very impressive and we are deepening that. We have other things such as issuing cards through the banks and most of our customers are very impressive be it virtual or physical cards.
Your Agency Banking solution that you launched is making waves in the ecosystem, what are the unique solutions that you have added there as a feature?
Our Agency Banking, named ArcaMoney, empowers authorized agents to facilitate financial transactions for customers, enhancing accessibility to banking services. In our quest to develop this innovative solution, we conducted a thorough analysis of existing agent banking models, including their relationships with merchants and aggregator frameworks. Through extensive research, we meticulously engineered a platform that ensures the seamless execution of transactions, providing customers with instant settlements and industry-leading uptime.
Moreover, we carefully considered commission structures that would satisfy our merchant partners, incorporating these features into our solution. Our Point of Sale (PoS) system has been meticulously designed to simplify banking and transactions for agents. By making our PoS system readily available and more cost-effective across various regions, we have streamlined processes, resulting in improved accessibility. We are also actively engaged in raising awareness about these developments within the industry.
Tell us about your Arca payment gateway ( ArcaPay) and disbursement?
Arca’s platform simplifies fast and secure fund transfers for businesses, with advanced technology for single and bulk transfers. While Arca TMS is a software that manages POS terminals, offers monitoring and analytics for ARCA Payments and its customers,and provides a report engine for acquirers and merchants to access transaction data from their terminals. Arca payment gateway ( ArcaPay) ArcaPay facilitates secure and speedy electronic payments for merchants by acting as an intermediary between them and their customers. We also created Arca Switch which is a cutting-edge payment infrastructure for modern demands. Our open-source switching system, built with cloud-native tech, facilitates seamless payments between both FI and NFI players.
What are the security parameters you have as a switching and payment gateway solution provider?
Security is not merely a token gesture within our platform; we take it seriously. Our commitment to security is exemplified by our robust compliance team dedicated to this sphere. We are proud to hold the Payment Card Industry Data Security Standard (PCI DSS) certification and maintain strict compliance—a pivotal benchmark in the payment sector. This commitment has been upheld for years, and it underscores our alignment with global best practices.
Furthermore, our track record speaks for itself; we have never encountered a fraud issue. This success can be attributed to the vigilance of our dedicated fraud monitoring and compliance teams, who consistently prioritize security as a paramount concern.
What are the measures that you have put in place to address downtime and support systems?
Well, in the area of downtime we have put into place a robust mechanism that deals with online real time here, but sometimes it comes from our internet network providers but we have backup that addresses these challenges. We have ensured that we have support system that addresses queries 24/7
What advice can you give to the regulator as an industry stakeholder in Nigeria?
My advice is simple, that we should continue to collaborate, work together and develop framework together. We should continue to showcase our capabilities across board, especially those that work with regulators from bank, microfinance point of view and other areas. This will help us have a holistic team that will help up align with the view of the regulator.
Are we looking at any new solution from ARCA ?
Our current focal point revolves around enhancing our Agency Banking offering. We have plans to introduce new features and functionalities that are currently absent in the system. This initiative is a key priority for us as we approach the end of this year.Looking ahead to the coming year, our focus will shift towards the development and presentation of our payment switch. We anticipate showcasing a range of innovative features within the payment switch that will contribute to an enriched user experience.
During this final quarter, we are actively engaged in conducting extensive awareness campaigns and sensitization efforts, particularly centered around our Agency Banking services.
“Furthermore, our track record speaks for itself; we have never encountered a fraud issue. This success can be attributed to the vigilance of our dedicated fraud monitoring and compliance teams, who consistently prioritize security as a paramount concern.”
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