Instant transfers are now leading Nigeria’s N572 trillion cashless boom, but the point of sale (POS) transactions are declining.
According to new data from the Nigeria Interbank Settlement System (NIBSS), total cashless transactions surged by 84.37 percent to N572.63 trillion in the first seven months of 2024.
As of the end of 2023, cashless payments had grown to N611.06 trillion from N395.38 trillion in 2022. Experts predict these numbers will reach unprecedented levels in 2024.
The NIBSS tracks cashless transactions across instant payments and PoS channels. Instant payments recorded an 86.44 percent increase to N566.39 trillion over the period.
However, PoS transactions, which had been a leading force when the Central Bank of Nigeria (CBN) introduced its naira redesign policy and withdrawal limits in 2022, saw an 8.19 percent decline to N6.23 trillion over the same period.
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The CBN launched the PoS system and agent banking in 2013 to promote financial inclusion and advance a cashless economy. Since then, the number of registered PoS terminals has grown by 802.93 percent to 4.06 million in July 2024, from 449,998 in January 2020.
“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,” Zone, a fintech, stated in its ‘Nigerian Payments Report 2024.’
While PoS have recorded growth, driven by expanding infrastructure, increased card penetration, and government initiatives promoting cashless payments, the advent of mobile money operators like Opay and PalmPay “suggests a profound impact of rising smartphone penetration in facilitating financial transactions, particularly in remote or unbanked areas,” Zone noted.
After announcing transaction limits in 2022, the CBN encouraged customers to use alternative banking channels, including internet banking, mobile apps, USSD, cards/PoS, and eNaira. Despite the eventual withdrawal of this policy, the cashless economy has continued to flourish, aligning with the CBN’s Payments Vision 2025, which anticipates a natural decline in cash payments.
The apex bank aspires to establish an efficient electronic payment infrastructure by 2025, with mobile technology as a driver.
Read also: PoS usage falls as e-payments hit N572tn in 7 months
“It is evident that the tremendous growth of Mobile App Transfers, Online Transfers, MMOs, and the NIP together paint a clear picture that Nigeria’s payment system is becoming much more cashless and much more dependent,” Zone remarked.
Increasing smartphone penetration—58 percent in urban areas as of 2022—has made mobile applications the preferred method for conducting transactions, driving online transfers and relegating ATM transactions and PoS usage.
“Everyone accepts transfers now, even people that sell in traffic,” said Temiloluwa Lawal, a tech expert.
“Even Keke drivers are accepting transfers,” Daniel Ishie, a mobile money agent, added.
The CBN’s Mobile Money guideline recognises that the growth of mobile telephony and person-to-person payments has helped financial inclusion, with the adoption of mobile channels serving as a means for driving financial inclusion of the unbanked.
According to GSMA, the telecom industry body, OPay is the most downloaded app in Nigeria, with over 30 million users, while PalmPay boasts more than 30 million registered accounts. “The growth of non-MNO-led mobile money providers in Nigeria has driven financial inclusion, alongside the rising use of PSBs,” GSMA said.
It noted that mobile money growth has contributed to a rise in digital payment use, enhancing access to digitally enabled services nationwide.
