Zone, a Nigerian-based blockchain-powered payments infrastructure company, has entered into a strategic partnership with the Nigerian Inter-Bank Settlement Scheme (NIBSS) to bring blockchain technology to Point-of-Sale (POS) terminal payments.
The collaboration is expected to revolutionise the payments landscape by allowing financial institutions to access a transparent blockchain ledger that records all transactions, thereby facilitating easier reconciliation, quicker dispute resolution, and a significant reduction in fraud.
The existing POS transaction framework involves two key intermediaries: payment switches and the Payment Terminal Service Aggregator (PTSA). The PTSA manages the interaction between the cardholder and the POS terminal, while the payment switch routes transaction data to the cardholder’s bank. However, the current siloed communication between these entities often leads to delays and complications, especially during downtimes.
Zone, which operates as a payment switch, is addressing these challenges by integrating the PTSA functionality directly into its decentralised blockchain network. This innovative approach simplifies the transaction process, allowing for smoother and faster reconciliations. Zone’s CEO, Obi Emetarom, explained that with this integration, each node on the blockchain can perform essential checks, ensuring the efficiency and reliability of POS transactions.
Under this new arrangement, NIBSS will continue its PTSA operations within the blockchain framework, with transaction data harmonised into a central repository that better serves the POS system. Zone initially implemented its blockchain technology with automated teller machines (ATMs) before expanding to POS payments through this partnership with NIBSS, a necessary step due to limitations associated with its existing switching licence.
For this blockchain-based PTSA system to succeed, widespread adoption by banks and fintech companies, particularly those active in agency banking, is essential. To date, more than 30 financial institutions have integrated with the Zone network. Zone is offering its integration service at no upfront cost, providing an incentive for more institutions to join and experience the benefits of this advanced technology.
Despite the potential benefits, Zone must closely monitor transaction volumes to ensure the system’s effectiveness. One of the challenges with blockchain technology is the time it takes to process transactions; some blockchain layers require up to five minutes for finality, potentially delaying access to funds and affecting the overall efficiency.
Zone reports a success rate of over 99% for transactions processed through its system, though specific volume data has not been disclosed. The company was confident that within the next five years, POS-related fraud, particularly those linked to chargebacks, will be reduced to near zero due to the widespread adoption and impact of its blockchain technology.