The Central Bank of Nigeria, CBN, is set to launch Nigeria’s digital currency called e-Naira.
The apex bank recently announced global Fintech company, Bitt Inc., as the Technical Partner for the digital currency project, dubbed “project giant”
In a document sent to commercial banks in the country, the CBN outlined several features of the digital currency.
According to the document, the e-Naira won’t replace Nigeria’s fiat currency, rather, it will run alongside paper currency, with the CBN responsible for issuing, distributing and redeeming the digital currency among other monitoring and management functions.
Based on the sensitization document, the e-Naira will function under a tiered Anti-Money Laundering and Know Your Customer (AML/KYC) structure with different transaction limits.
The bottom of the AML/KYC pyramid will reportedly encompass unbanked citizens who will be mandated to provide their national identity-linked phone numbers for verification. Users in this category will be limited to a daily transaction limit of N50,000.
Those with bank accounts fall under the second and third tiers depending on the number of AML/KYC steps completed. These two levels will have daily limits of N200,000 ($487) and N1 million ($2,438), respectively.
Users of the third tier will likely have to complete a physical AML/KYC verification process in addition to the bank verification number, BVN, requirements stipulated for tier two.
Users classified as merchants will also fall under the same N1million limit as tier three but will have no restrictions as to the amount they can send to their bank accounts.
The CBN plans to ensure seamless transfers between e-naira wallets and bank accounts with no fees for several types of transactions. The zero-fee structure will help incentivize the adoption of the digital currency, especially amid complaints about transaction costs associated with mobile and digital banking in the country.
To use the e-Naira to transact, users will have to download the speed wallet, validate their account on the wallet by using either their phone number, National Identity Number (NIN) or Bank Verification Number (BVN). Once done, users can begin to use the wallet. According to the presentation, users will be able to send money using Peer-to-Peer (P2P) transactions through their wallets to other wallet holders, Person-to-Merchant/Business where e-Naira users can pay for items to merchants who have the e-Naira wallet and vice versa.
The e-Naira will be able to better implement the CBN’s cashless policy.
It will also reduce the need for printing money in the long term. As more people adopt the E-Naira as a means of payment, the need for paper currency will drop and the government can spend less on printing.