September 27, 2024/CSL Research
The Nigeria Inter-Bank Settlement Systems (NIBSS) has reported that the value of E-payments transactions in Nigeria hit a record of N89.5 trillion in July 2024. This milestone, revealed in the latest e-payment data, marks the highest monthly transaction value ever recorded on the NIBSS Instant Payment (NIP) platform. The July 2024 total reflects an impressive 89% y/y increase compared to N47.4 trillion in July 2023 and a 12.45% rise from N79.5 trillion in June 2024. This record-breaking performance in July has contributed to an overall 84.37% surge in cashless transactions during the first seven months of the year, totalling N572.63 trillion. This figure nearly matches the N600 trillion in cashless payments recorded for the entirety of 2023, underscoring the rapid shift towards digital payments in Nigeria.
This trend is expected to persist throughout 2024 and beyond as the country continues to embrace electronic payment platforms. The NIP platform, launched by NIBSS in 2011, is an account-number-based, real-time Inter-Bank payment solution. It has become the preferred funds transfer platform in Nigeria, offering instant value to beneficiaries. Over time, Nigerian banks have integrated NIP across multiple channels, including internet banking, bank branches, mobile apps, Unstructured Supplementary Service Data (USSD), POS terminals, and ATMs. Recent cashless policies introduced by the Central Bank of Nigeria (CBN), which imposed limits on cash transactions, have further encouraged the use of e-payment methods.
The surge in electronic payment transactions can also be attributed to the convenience, speed, and security that digital payment solutions offer. The prospects for the Nigerian digital payment industry are highly promising, driven by a combination of strong market demand, regulatory support, technological advancements, and an expanding fintech ecosystem. Nigeria is a leading player in Africa’s fintech sector, hosting some of the continent’s biggest and most innovative fintech companies like Flutterwave, Paystack, and Interswitch. These companies have attracted significant global investments, driving innovation in digital payments. The emergence of numerous fintech startups focused on mobile money, payment gateways, and peer-to-peer (P2P) platforms continues to diversify payment options and foster competition.
The CBN has been instrumental in creating an enabling environment for digital payments, issuing policies such as the National Financial Inclusion Strategy and the cashless policy. However, while the digital payments sector is growing, challenges such as internet connectivity, power supply, and poor digital literacy in rural areas pose obstacles. Addressing these issues could unlock more potential. Cybersecurity also remains a concern, as the rise in digital payments increases the risk of fraud and hacking. Strengthening security protocols will be crucial for maintaining trust in the system. Reducing transaction costs and making digital payments more affordable will drive wider adoption, especially among the low-income population.
