NIBSS Electronic Fund Transfer (NEFT)

A NEFT payment is an irrevocable fund transfer instruction because the payer’s bank simply will not accept the order if there are insufficient funds to cover the payment instruction.

Example of payments that can be effected with NEFT Credit Transfer service:

1. Individual (person-to-person) fund transfers
2. Merchant payments i.e. payments for goods and services
3. Payment of tuitions
4. Individuals paying utility bodies (water, electricity, telephone bills, Multichoice, FSTV, etc.)
5. Revenue collections by government agencies e.g. Customs, FIRS, etc.
6. Distributor payments
7. Government taxes
8. Subscription payments (magazines, clubs, associations, etc.)
9. Charity donations
10. Payment to religious bodies (churches, mosques)

The NEFT is quite similar to the GIRO payment method which has become popular in Europe and other parts of the world.

Value Proposition

The NEFT payment system provides the following benefits.

• Additional consumer payment option
• 24-Hour credit transfer system, with a nationwide coverage for transfer instructions cleared through the Lagos Clearing House
• Clearing delays eliminated, in case of credit transfers
• A payment instrument more attractive to merchants than cheques as the NEFT instrument is an irrevocable transfer instruction.
• A convenient means of settling regular periodic payments as Direct Credits (payer-initiated) or Direct Debits (payee-initiated)
• Can be used to pay government taxes, school fees, donations, salaries, as it is practiced in developed countries.
• Ideal for processing Salary and Pension payments, which are of inter-bank nature.
• Provides necessary information to the beneficiary e.g. Payer’s name, payment narration; this helps the reconciliation process for the beneficiary
• An ideal platform for operating banking products of inter-bank nature e.g. inter-bank standing orders.

Benefits of using or accepting NEFT as a payment method

• Bank transfers are more secure for both the customer and the banks. There are no cheques that may be misplaced, lost or stolen. In addition, since the payment goes directly from the customer to the bank, there is no possibility of fraudulent alteration of the payment amount.
• The sender’s account is debited immediately in case of credit transfers. This makes account reconciliation much simpler for the customer. The customer does not have to worry about unpresented cheques being debited unexpectedly months later, on presentation by the payee.
• As NEFT credit transfers are credited directly, the payment process is much quicker than with cheques, which must first be presented to the paying bank in clearing. This can result in improved cash flow.
• Any payment credited to the beneficiary’s account is a cleared item. There is no possibility of the payment being reversed for insufficient funds, drawers confirmation, irregular signature or any other reasons associated with cheques.