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PoS, cheque usage fall on bank transfers’ surge

PoS, cheque usage falls on bank transfers’ surge

As Nigerians move towards a cashless society, the rise in the usage of bank transfers is dragging down the use of point-of-sale terminals and cheques for payment.

Data from the Nigeria Inter-Bank Settlement Scheme (NIBSS) show that in the first three months of the year, the total volume of PoS transactions declined by 19 percent to 312 million from 386 million. In terms of value, PoS transactions fell by 8.09 percent year-on-year to N2.61 trillion from N2.84 trillion in the first quarter of 2023.

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NIBSS data showed that the total volume of cheques processed fell by 16.6 percent to 900.3 million in Q1, 2024 from 1.08 billion in Q1, 2023.

According to a report by Financial Derivatives Company Limited, PoS transactions declined month-on-month due to an increased appetite for bank transactions and the increase in PoS charges by the operators.

BusinessDay recently reported that the decrease in PoS transactions may increase the use of other payment channels, such as Automated Teller Machines (ATMs), mobile banking apps, and USSD.

NIBSS data showed that instant payment grew by 90.8 percent to N236.46 trillion in Q1, 2024 from N123.9 trillion in Q1, 2023, and mobile transfers rose 87.8 percent to N17.11 trillion from N9.11 trillion.

The growth of digital payments in the country has been attributed to the growth in mobile phone penetration and efforts by the Central Bank of Nigeria to enable a cashless economy.

A 2012 digital payments directive by the apex bank required financial institutions to increase their investment in digital payment infrastructure, promote digital payments among their customers, and work with the regulator to develop a strong regulatory framework.

This investment and the growth of the fintech space have championed the surge in digital payments being recorded in the country.

According to ‘The State of B2B Payments in Africa,’ by Duplo, strong real-time payment processing infrastructure and solid backing by the government have led to the decline in cheque usage.

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The company said, “It’s a steady change. And as Nigeria Inter-Bank Settlement System e-payment volumes suggest, soon, it could be full-on goodbye cash and cheques, to hello bank transfers, and other digitised payments for B2B Payments…”

The company added that cheques present additional operational costs for businesses. For example, a study found that it can cost small and medium businesses an average of $22 to process a single paper invoice. They are also cumbersome and create bureaucracy.