CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The advent of financial innovation such as credit cards, smart cards, Electronic transfers in the payment system and more recently, the lunching of INTERNET BANKING have transformed the world into a Global Village Linked with Electronic impulses. The concept of Electronic money was introduced in 1996 when the central Bank of Nigeria gave approved to ALL STATES TRUST BANK LIMITED to offer a financial product Known as the ESCA, smart card, an Electronic purse. Subsequently, DIAMOND BANK LIMITED Introduced a parallel product known as Diamond pay card. However, the smart card scheme received a boost in February 1998 when a consortium of 19 licensed banks Floated a smart card company, Smart card Nigeria PLC with a mandate to produce a manage cards issued by the member banks of the consortium. Another consortium of more than 20 banks under the in spices of Gem card scheme in year 2000.
These innovations, which are still at a relatively early stage of development have the potential to challenge the predominant role of cash for making small value payments and makes retied transactions easier and cheaper for consumer and merchants who are current account holders. However, they also raise a number of policy issues because of the possible implication for central Bank monetary policy, consumer system etc. In response to information technology developments in the domestic financial section the central bank of Nigeria commissioned an information technology strategy study in 1991 with the objective of promoting the efficient performance of its statutory duties. The project is being implemented in phases and both the licensed banks and the Relatory Authorities have demonstrated their appreciation of benefits derived from the use of information technology. In view of for foregoing, the central Bank Governors of the group of Ten(a-10) countries Commissioned a series of studies on specific issues related to electronic money in November 1995.