Electronic payments in Nigeria grew by 54.55 percent year-on-year to N611.06tn in 2023, new statistics from the Nigeria Interbank Settlement System have shown.
This underscored the growing reliance on digital payments in the country. Cashless payments grew to N611.06tn from N395.38tn as of the end of 2022.
BusinessDay analysis of the data revealed that electronic payment channels were used 11.05 billion times in 2023, a 75.96 percent increase from the 6.28 billion times they were used in 2022. The NIBSS records cashless transactions from the Nigeria Instant Payment System and Point of Sales terminals. The total value of instant payment in 2023 was N600.36tn, and PoS was N10.7tn.
Instant payment channels, including mobile, recorded a usage volume of 9.67 billion, and PoS terminals recorded 1.38 billion. Cashless transactions in the country were partly bolstered by a now abandoned Central Bank of Nigeria’s naira redesign policy and withdrawal limits from December 2022.
After announcing a limit on transactions, the apex bank said, “Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”
Despite the hardship this policy caused in the first quarter of 2023, the CBN in its ‘Payments Vision 2025’ document argued that the use of cash payment will naturally reduce in 2025. It said by 2025, the country aspired to have a cashless and efficient electronic payment system infrastructure.
“The use of cash will naturally slow with the ‘mobile first generation’, which will be economically active by 2025, hence one of the focuses of the PSV 2025 is enhancing the cashless policy of the CBN,” the apex bank highlighted.
“As we implement the PSV 2025 agenda, the CBN will continue to ensure that the Nigerian payments system is widely utilised domestically, supports government’s financial inclusion objectives, and meets international standards while contributing to overall national economic growth and development of Nigeria,” it added in its document.
Cashless transactions continue to pale behind cash-based transactions. Usoro Usoro, Chief Executive Officer, Mobile Money, recently noted that about 90 percent of all transactions in the country are cash-based.
Growing online payments is dependent on digital-enabled businesses, Osaretin Victor Asemota, growth partner at AnD Ventures and Africa partner for Alta Global Ventures, recently noted.
“Online payments depend on businesses that are digitally enabled. If you do not have enough of them, the market is much smaller than we think.
“The market for fintech in Nigeria is not the consumers; it is the merchants and billers. Without a place for you to spend digital money, there is not going to be adoption. Which is why I kept shouting that the PoS agent model was a temporary aberration. We need more PoS merchants,” he said.
As more Nigerians go online, fraud will increase. 78,584 online fraud cases were recorded between the second quarter of 2022 and the second quarter of 2023.
In its ‘Reports on Frauds and Forgeries in Nigerian Banks,’ FITC disclosed that the growth of electronic payment has given room for the surge in online fraud.
This surge in cashless transactions has been despite the country’s weak digital infrastructure with multiple failed transactions continuing to plague transfers in the country.
Confirming this, the World Bank recently said, “The lack of adequate digital and financial infrastructure and processes to support a swift transition to a cashless economy…”
During a recent visit to Nigeria, Wally Adeyemo, US Deputy Secretary of Treasury, affirmed this when he stated, “…we want to make sure that Nigeria has the infrastructure it needs both physical and digital to be able to benefit from entrepreneurs and creativity in the economy.”