New Naira notes remain scarce across the banking sector as old notes cease to be a legal tender, yet lenders are still paying old notes.
“This has caused many businesses to carry out their payment operations using electronic channels in order not to default the January 31 deadline of transacting with old notes,” says Chinedu Onuoha, Chief executive officer at Mzuri.
The central bank of Nigeria on October 26, 2022, announced that higher denominations of the Naira including N200, N500 and N1,000 would be redesigned and introduced into the economy from December 15, 2022, while commercial banks were directed to return existing denominations to the CBN.
The new naira became a legal tender on December 15, 2022, after it was unveiled by President Muhammadu Buhari on November 23, this year.
With this new policy, many Nigerians prefer to carry out transactions via electronic channels which has tremendously increased their value and volume significantly over the last two months.
Data from the Nigeria inter-bank settlement scheme records that as at November 2022 Instant payment recorded N39 trillion, the highest value of money transactions recorded on the platform compared to N25 trillion in the same month of 2021.
The NIP platform has become one of the most preferred methods of payment, its growth has been driven by the steady rise in mobile telephony and growing internet penetration across the country.
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Value of mobile transactions increased by 120 percent from N2.1 trillion to N957 million recorded in the period under review.
However, Mobile payment schemes and mobile phones as channels to banking services will continue to gain traction, particularly in Sub-Saharan Africa.
According to the global body of mobile operators, there will be 100 million additional subscribers to mobile money in Sub-Saharan Africa between now and 2025.
GSMA noted that Nigeria, which has the largest population in Africa continues to drive subscription growth on the continent. This will be sustained in the next 3 years despite the current level of mobile penetration in the country.
Cash is ubiquitous and transferable. The Nigerian payment landscape has many options that have displaced cash in recent times, including electronic bill payment, mobile phone top-up, mobile payment and instant payment.
It is expected that physical cash will continue to decline, and in many countries, the use of technologies such as contactless card payment, NFC (Near field communication)0 on mobile devices and low-cost card-acquiring solutions have made cash actually redundant.
The CBN has said that the use of cash payments will naturally reduce by 2025, as the new Naira notes circulate the economy.
The apex bank made this known in its payment service vision 2025 report stating that “By 2025, Nigeria aspires to have a cashless and efficient electronic payment system infrastructure that facilitates financial service in all the sectors of the economy and provides secured, reliable and user-centric financial solutions in compliance with international standards at a minimum risk.”
However, the use of cash will naturally slow down with the mobile-first generation which will be economically active by 2025, it reports.
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