Instant transfers drive Nigeria’s N572 trillion cashless boom, although point of sale (POS) transactions are falling.
The Nigeria Interbank Settlement System (NIBSS) has released new data showing that in the first seven months of 2024, the total cashless transactions increased by 84.37 percent to N572.63 trillion.
Cashless payments increased from N395.38 trillion in 2022 to N611.06 trillion by 2023. According to experts, in 2024, these figures will rise to previously unheard-of proportions.
The NIBSS monitors cashless transactions through rapid payments and point-of-sale channels. Over the period, instant payments increased by 86.44 percent to N566.39 trillion.
PoS transactions, on the other hand, fell 8.19 percent to N6.23 trillion over the same time despite being a driving force for the Central Bank of Nigeria’s (CBN) introduction of its naira redesign strategy and withdrawal limitations in 2022.
The CBN introduced agent banking and the PoS system in 2013 with the intention of advancing a cashless society and financial inclusion. Since then, there have been 4.06 million registered PoS terminals, up from 449,998 in January 2020, an increase of 802.93 percent. This data was collected in July 2024.
In its “Nigerian Payments Report 2024,” fintech company Zone said that “POS transactions play a pivotal role in providing enhanced convenience, speed, and security, contributing to the ongoing transformative shift towards heightened adoption of cashless transactions in Nigeria.”
While PoS has grown as a result of government initiatives supporting cashless payments, growing infrastructure, and a rise in card usage, Zone pointed out that the emergence of mobile money services like Opay and PalmPay “suggests a profound impact of rising smartphone penetration in facilitating financial transactions, particularly in remote or unbanked areas.”
The CBN encouraged users to use alternate banking channels, including online banking, mobile apps, USSD, cards/PoS, and eNaira, after announcing transaction limitations in 2022. The cashless economy has thrived despite the policy’s eventual revocation, consistent with the CBN’s Payments Vision 2025, which foresees a gradual drop in cash payments.
The top bank hopes to have a productive electronic payment infrastructure by 2025, with mobile technology serving as a catalyst.
“It is apparent that Nigeria’s payment system is becoming much more cashless and much more dependent, as seen by the phenomenal growth of Mobile App Transfers, Online Transfers, MMOs, and the NIP combined,” Zone added.
By 2022, 58 percent of metropolitan areas will have smartphones, making mobile applications the preferred means of completing transactions. This has led to increased online transfers and a decline in ATM and point-of-sale (PoS) usage.
Tech expert Temiloluwa Lawal stated, “Everyone accepts transfers now, even people that sell in traffic.”
It stated that the expansion of mobile money has enhanced access to digitally enabled services across the country by increasing the use of digital payments.
