Mobile payments adoption has continued its growth momentum in the first six months of 2019 while ATM transaction volume has had a stop-and-start trajectory in the same period.
The National Bureau of Statistics (NBS) released the Selected Banking Sector Data – Q2 2019 on Sunday.
First and second-quarter data from the National Bureau of Statistics (NBS) showed that ATM transaction volume which grew to 68, 524,157 in January dropped to 60,803,325 in February only to climb back to 73, 632,232 in March. It saw more than 2 million transactions in April and about 300,000 to reach 75,433,302 in May. However, in June the volume dropped to 71,183,606 the lowest since March.
Mobile payments volume, on the other hand, has stayed up in the first half, growing at a very healthy volume between January and June. NBS data showed that in January, February, and March volume grew by 737,909, 932,355, and 1,258,533 respectively. The remaining three months of the first half also grew by 19,148,956; 21,214,603; and 22,937,368.
The data could be an indication that Nigerians are gradually moving away from attachment to ATM – the pioneering electronic payment channel in the country – to embracing more convenient channels. The number of ATMs across the country has failed to gain traction since about 2003 when the first ATM was deployed. According to eFactsheet by the Nigerian Inter-Bank Settlement System (NIBSS), Nigeria’s 68.5 million active bank customers, spread across the 36 states and Abuja, have access to only 18,731 ATMs as of March 2019. Interestingly, the number of ATMs deployed in 2016, stood at 17,398. In other words, less than 1,000 ATMs have been deployed in nearly three years – 2016 to 2019. By comparison, South Africa with less population has about 30,000 ATMs deployed.
Apart from being inadequate, there is also the headache that poor network gives bank customers. ATMs require an internet provider to work efficiently. However, internet connectivity is highly unstable in Nigeria, hence the ATM transactions experience many interruptions.
It should also be noted that unlike mobile payments, ATMs are costly to deploy. Usually, ATM engineers rely on two radio connections. GSM networks or mobile wireless are hardly reliable so they are rarely used. There is an ATM kiosk which needs to be built and made functional with air conditioners, at least two for one ATM. Given that it requires a minimum of 72 hours of autonomy, there will be a need for an inverter. An inverter for two ATM setup would cost N2.5 million. Finally, there is the purchase of the ATM itself; the cost of one goes for $15,000.
There have also been calls in recent times for banks to upgrade the technology to meet 21st century standards. The existing ATM technology was deployed with the mindset of acquiring new customers. The changing times driven by young customers emphasize on offering cutting-edge features, like the ability to take out cash from an ATM by using a code from a smartphone app, instead of inserting a debit card.
Mobile payments which could be via banking apps or USSD, however, do not require physical spaces like ATMs, as they largely depend on the number of people with mobile devices and telecom subscriber base. In Nigeria, those numbers are growing daily. Active mobile lines grew to 173.7 million in June 2019 while internet users hit 122 million. From a cost point of view, banks prefer to deploy their investments in upgrading mobile payment platforms.
