A Nigerian blockchain-enabled payments infrastructure has teamed up with the Nigerian Inter-Bank Settlement Scheme (NIBSS) to integrate blockchain technology into Point-of-Sale (POS) terminal payments.
This partnership allows participating financial institutions access to the blockchain ledger containing all transaction records. This data will help banks and fintechs with transaction reconciliation, quicker dispute resolutions, reduced customer wait times, and mitigating POS-related fraud like chargebacks.
In traditional POS transactions, there are two intermediaries: the payment switches and the Payment Terminal Service Aggregator (PTSA). The PTSA manages interactions between cardholders and terminals, while the payment switch routes transaction data to the cardholder’s bank.
Unlike the traditional siloed communication in POS transactions, Zone, a payment switch, is leveraging a decentralized blockchain ledger to streamline the processing of POS transactions.
The CEO of Zone explained that the PTSA functionality is integrated into the blockchain network, allowing all nodes to conduct necessary checks. The PTSA from NIBSS will utilize this function for screening payment terminal transactions.
NIBSS will carry out its PTSA functions within the blockchain system, and data from both systems will be consolidated into a central repository for improved PTSA service.
Initially implemented in ATMs, Zone expanded its blockchain technology to accommodate POS payments within its layer-1 blockchain system. The partnership with NIBSS was crucial for accessing POS payments, as Zone’s switching license alone was insufficient.
To scale the blockchain-based PTSA effectively, a wide range of banks and fintechs in the agency banking sector need to participate. Currently, over 30 financial institutions are integrated with the Zone network.
Zone is offering this integration service at no upfront cost to incentivize banks and fintechs to join. The company aims to significantly reduce POS-related fraud activities by achieving a high success rate and increasing transaction throughput.
While the success rate is reported to be over 99%, Zone is mindful of scaling its infrastructure to accommodate the increasing volume of daily digital payments.
Zone envisions a future with minimal POS-related fraud activities, thanks to the implementation of blockchain technology and expects a substantial reduction in such cases over the next five years.