On October 26, 2022, the Central Bank of Nigeria (CBN) redesigned the Naira currency notes and placed limits on bank withdrawal which resulted in scarcity of cash till date.
According to the Apex bank, the redesigning of the N200, N500 and N1000 notes and new limits on large cash withdrawals would help curb money laundering and make digital payments the norm in Africa’s biggest economy.
During this period, many Nigerians adopted various e-payment channels like mobile transfers, USSD codes, PoS services, among others, as means of carrying out transactions and continue their daily activities.
The shortage of the Naira dismissed many businesses like most PoS operators who needed huge sums of money for daily transactions, led to increase in withdrawal charges, stopped ATM operations due to insufficient cash and affected bank transfers because of the huge number of requests from Nigerians flocking into the site.
However, CBN on Thursday, March 24, 2023 confirmed the evacuation of banknotes from its vaults to commercial banks across the country as part of a coordinated effort to ease the circulation of banknotes of various denominations. The Apex bank also ordered the removal of bank withdrawal limits.
This decision is expected to end months of hardships and pains Nigerians have been going through following a controversial CBN naira redesign policy that has caused a severe shortage of old and new naira notes across the country.
Fintech operators who spoke with BusinessDay said that the spread of banknotes and removal of withdrawal limits will have major effects on digital payment channels as there will be adjustment in operations.
Daniel Uka, a PoS operator said it will revive the PoS business and increase the rate of adoption which was hindered by the scarcity.
“PoS Business in Nigeria grows daily and you see many people entering the business because of its easy access. The Naira scarcity crippled most of these plans and also sent most existing ones packing. It will revive fully now. Some quit the business because there is no way to get cash while some resulted in buying money in exchange for money and selling to Nigerians at higher rate,” Uka said.
According to Uka, there will also be stability in charging customers for PoS services, which was becoming a new norm in the period of naira scarcity.
” Everything will just go back to normal. We will now be charging less as usual because there will be easy access to cash and less stress. Those who have also suspended their PoS business will come back to business fully. It will mostly affect business owners who have turned their shop to PoS business and charge almost double of transaction.”
Similarly, a fintech expert who pleaded to remain anonymous said that the spread of the Naira notes and removal of withdrawal limits will ease the looming bank transfer glitches experienced in using mobile apps or codes.
She said, ” All these issues sometimes depend on the number of people trying to access the online transfer site at the same time. In the process, institutions that do not have a strong system or infrastructure will definitely not carry the load which will result in transaction failures. So when the bank withdrawal limits are removed and cash becomes accessible, there will be a reduction in requests for mobile transfers and it will start working effectively again.”
For Bola Deji, a banker at one of Nigeria’s tier one banks, the removal of withdrawal limits and cash spread will ease the embarrassing number of people queuing at ATM machines to carry out transactions.
“I have never seen the number of people queing at the ATM station and banks during this period before. This will reduce the number of people waiting at the queue for bank services because every payment channel will now be active and functional. So there will be other means to get cash, do transfers and subscribe than queing for a while at the ATM stand.”
