Data released by the Nigeria interbank settlement system (NIBSS) shows that the volume of transactions performed electronically by Nigerians surged 55 percent in January 2023.
Analysis by BusinessDay indicates that the number of NIBSS instant payment (NIP) users increased to 541 million in January 2023 from 348 million in January 2022, highlighting the growing trend toward a cashless society.
In value, the industry data reported N38.7 trillion in January this year, a 45 percent rise from N26.6 trillion recorded in the corresponding period of last year.
Tajudeen Ibrahim, director of research and strategy, ChapelHill Denham said a major driver to the surge is the Naira redesign policy, he said “As cash in hand became scarce most Nigerians had no other option than to adopt the available electronic channels as NIP is the most preferred platform in use.”
Looking at the challenges faced by e-payment in the previous month despite its surge compared to what was reported in January 2022.
Ibrahim noted that the robustness of this electronic platform to accommodate a large number of users and transactions at the same time, was a major challenge.
Gloria Fadipe, head of research at FCMB said “failed transactions is a major challenge that poses a threat to electronic transactions, and more Nigerians keep facing these problems.”
However, these challenges can be addressed by improving technology, and banks employing credible hands on the IT team, she said.
Further analysis of the industry data shows that payments made through the point-of-sale (PoS) in terms of volume increased to 96 million, a six percent surge from 90 million recorded in the periods under review.
While its value of transactions also showed significant growth of N807 billion in January from N573 billion reported in January 2022, representing a 98 percent rise in its value.
More consumers are shifting towards the use of electronic banking channels for financial transactions, said Gbolahan Ologunro, senior research analyst at Cordros Securities.
“So, there is an increased use of digital channels for transactions and mobile payments,” he said.
Following the same trend, the volume of mobile transactions increased by 237 percent to 108 million in January 2023 from 32 million in January 2022, its value also rose by 124.8 percent to N2.4 trillion from N1.1 trillion in the period under review as reported in the industry data.
However, Mobile payment schemes and mobile phones as channels to which 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 three years despite the current level of mobile penetration in the country.
The surge of electronic transactions has also caused the loss of transactions with Cheques, which has continued to maintain its downward trend in volume to 3.1 million in the first month of 2023 from 3.2 million in the same period of 2022.
In terms of value, N244 billion was reported in the first month of the year, from N237 billion in the same period of 2022.
According to NIBSS, over the years, Nigerian banks have exposed NIP through their various channels, that is, internet banking, bank branch, Kiosks, mobile apps, Unstructured Supplementary Service Data (USSD), POS, ATMs, etc. to their customers.
Lilian Phido, Head of Corporate Communications, NIBSS said “It is very clear that more and more people are accepting the channels of payment that are available and the platforms are stable. With stability, these components have grown.”