CEM REPORT, FINANCE | Nigeria is witnessing a significant shift towards a cashless society, with bank transfers rapidly becoming the preferred payment method. This trend is leading to a decline in the use of point-of-sale (PoS) terminals and cheques.
According to the Nigeria Inter-Bank Settlement Scheme (NIBSS), the first quarter of 2024 saw a significant drop in PoS transactions. Compared to the same period in 2023, the total volume of PoS transactions fell by 19%, dropping from 386 million to 312 million. The value of PoS transactions also experienced a decrease, falling by 8.09% year-on-year, from ₦2.84 trillion in Q1 2023 to ₦2.61 trillion in Q1 2024.
The decline isn’t limited to PoS terminals. Cheque usage is also experiencing a downward trend. NIBSS data reveals a 16.6% decrease in the total volume of cheques processed in Q1 2024 compared to Q1 2023. This represents a drop from 1.08 billion cheques to 900.3 million.
“The numbers speak for themselves,” says Adeola Adegbite, a financial analyst in Lagos. “People are increasingly comfortable with bank transfers. They offer convenience, security, and often eliminate the need to carry cash.”
The Rise of Instant Payments and Bank Transfer
While traditional payment methods are declining, Nigerians are embracing the world of instant payments and mobile transfer. NIBSS data highlights a remarkable surge in these areas. Instant payments witnessed a staggering 90.8% growth in Q1 2024 compared to Q1 2023, with the total value reaching ₦236.46 trillion from ₦123.9 trillion.
Mobile transfers also saw impressive growth, increasing by 87.8% year-on-year. The total value of mobile transfers in Q1 2024 stood at N17.11 trillion, compared to N9.11 trillion in Q1 2023.
“The widespread availability of smartphones and user-friendly mobile banking apps are key drivers behind this trend,” explains Dr. Charles Ukeje, a professor of Economics at the University of Abuja. “People can now make payments seamlessly from anywhere, at any time.”
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The Central Bank of Nigeria (CBN) has been actively promoting the adoption of cashless transactions. “The CBN’s policies, such as the redesign of the Naira and the introduction of the eNaira digital currency, are encouraging people to move away from cash,” says Adegbite.
These initiatives, coupled with the growing accessibility of mobile technology, are creating a fertile ground for a cashless Nigeria.
The Future of Payments in Nigeria
While the decline in PoS and cheque usage is evident, it’s important to note that these methods may not disappear entirely. “There will likely be a continued need for PoS terminals in certain sectors, especially in rural areas with limited internet access,” says Dr. Ukeje.
However, the future of payments in Nigeria seems to be firmly rooted in the digital realm. As mobile phone penetration continues to rise and user confidence in online transactions grows, bank transfers and mobile payments are poised to become the dominant payment methods for Nigerians.
