How to use NIBSS with Lendsqr for loan repayments

Sending money out is easy, but ensuring timely repayment is the real challenge for lenders. The quality of the repayment experience directly impacts how quickly and reliably borrowers repay their loans. If it’s difficult for people to make payments, they’re less likely to pay on time.

Payments can be particularly challenging in Nigeria, especially with large transactions. Card routinely fail for various reasons including but not limited to lost cards, blocked cards, bank issues, etc. Some naughty customers even go as far as blocking their cards after taking loans, rendering repayments impossible.

To address this, direct debit has emerged as an effective alternative payment solution. It simplifies the repayment process and improves the overall customer experience.

What is direct debit?

Direct debit is a payment method where borrowers authorize lenders to collect loan payments directly from their bank accounts when due. A signed agreement, either online or on paper, typically grants this authorization.

Instead of relying on cards or checks, direct debit provides lenders with direct access to customers’ accounts, simplifying the repayment process.

This method is widely used globally and is the primary means of loan repayment in most countries. It’s primarily in regions like Nigeria and occasionally Rwanda where loan repayments via cards are more common.

What is NIBSS?

The Nigerian Inter-Bank Settlement System (NIBSS) is a private company established by all Nigerian banks and the Central Bank of Nigeria to manage interbank payments and clearing processes.

Interestingly, NIBSS was initially a department within the Central Bank until 1993, when it was spun off into a separate entity. The leadership and board of NIBSS typically consist of bank managing directors and executive directors, with the chairman of the board always being the deputy governor of the Central Bank of Nigeria.

NIBSS plays an important role in Nigeria’s financial ecosystem as the largest processor of interbank transfers, handling billions of transactions monthly. It also serves as the national switch, managing various payment options such as point-of-sale (POS) transactions and agency banking services.

NIBSS partnered with fintechs to develop a new direct debit system

The Nigerian Inter-Bank Settlement System (NIBSS) direct debit system has evolved over time. Initially paper-based, it transitioned to a more user-friendly digital process through collaboration with several leading fintechs.

This partnership led to the development of a streamlined process for customers to set up direct debit, now available to Lendsqr users.

Lendsqr, through partnerships with payment providers, is able to route direct debit transactions for its lenders, enabling these lenders to easily activate direct debit for their customers.

We have consistently emphasized the importance of direct debit as a convenient and efficient repayment method.

How to use NIBSS’ direct debit system on Lendsqr

Using NIBSS’ direct debit system on Lendsqr loan management software is easy, as it’s natively integrated into the platform. There’s no need for additional integration keys or configurations.

To activate direct debit for a loan product;

1. Simply navigate to the loan product settings and click on the product you want to configure the direct debit payment feature on.

2. Click to edit the product, scroll down to locate the collection method field. By default, there is a debit card payment method set, click the field to access the direct debit option.

3. Scroll down the page and click save changes to enable the edit.

Once enabled, when customers apply for a loan through the Lendsqr mobile or web app, they can easily add their bank account details during the payment method selection. With a single click, they can link their bank account for loan repayments. It’s a straightforward and user-friendly process.

You can explore further for a deeper understanding of how direct debit works on Lendsqr

Protect your loans with direct debit

Using NIBSS with Lendsqr for loan repayments offers a secure and convenient solution for both lenders and borrowers. It removes the need for unreliable cards and simplifies the repayment process.

By following the three-step process outlined above, lenders can easily activate NIBSS direct debit for their loan products on Lendsqr.

Of course, if you need more clarification or need to settle disputes, simply reach out to our support team at [email protected] for quick assistance.