In 2024, Nigerians increasingly used bank transfers as digital payments continued their dominant run after a cash crunch in 2023.
While cash remains the dominant means of payment in the country, “Nigerians now prefer digital methods for making payments, reflecting a shift away from traditional cash-based transactions,” the Central Bank of Nigeria (CBN) said in a June 2024 report.
The volume and value of instant online transactions surged to 5.63 billion and ₦476.89 trillion in the H1 2024, up from 3.5 billion and ₦256.85 trillion in the same period of 2023. To put it in perspective, Nigerians increased how often and how much they paid online by 60% and 85%, respectively.
When Nigerians pay online, over half use bank transfers, as web transfers account for over 51% of total online payment transactions, according to the Central Bank of Nigeria.
POS devices follow at a distant second, accounting for 28.5% of transactions, while mobile devices contributed 15.5%. ATMs ranked fourth with 2.2%, and direct debit accounted for just 0.44%.
Bank transfers are a convenient means of payment for many Nigerians as they are instant and with fintechs like OPay, PalmPay, and Moniepoint becoming trusted and popular choices, it has quickly become the preferred choice for small ticket payments.
Many fintechs, realising the dominance and growth of transfers in online payments, have increasingly built products leveraging this trend. Paystack has integrated with several Nigerian banks and fintechs to allow customers to pay online directly from their accounts after transfers accounted for over half of all transactions it processed in 2023.
POS transactions have grown wildly in the past five years
In 2019, PoS transactions were valued at ₦3.21 trillion. In just five years, PoS transactions have surged to over ₦85 trillion, a staggering 2576.44% increase.
A lot has changed in that time, but the growth of POS transactions has been driven by the agency banking industry, which now boasts 1.5 million agents, and fintechs like OPay, Moniepoint, and PalmPay.
In the first half of 2024, over 6 billion transactions were completed via PoS devices, which amounts to a billion monthly, over 33 million transactions daily, and over 1.3 million every hour.
How often do Nigerians use cheques today?
The answer is rarely. Customers are slowly phasing out cheques as the volume of cheques cleared dropped by 13% from 7.92 million in the second half of 2023 to 6.88 million in the first half of 2024.
While the value rose slightly by 2%, increasing from ₦8.553 trillion to ₦8.741 trillion, customers prefer to use electronic and alternative payment channels over cheques.
ATMs might be relics in five years
Many Nigerians have grown accustomed to seeing “Out of Service” messages displayed on ATMs. Not only are ATMs often out of service, but there are also far too few of them across the country to meet demand. There are only 16,000 active ATMs in Nigeria and with a banking population of 106 million adults, Nigeria requires almost 70,000 ATMs to meet demand.
This scarcity and unreliability led to the value of those transactions falling by 10%, as Nigerians used ATMs for only ₦12 trillion worth of transactions—seven times less than the value of POS transactions.
Surprisingly, the volume of ATM transactions increased by 1%, rising from 492.76 million in the second half of 2023 to 496.44 million in the first half of 2024. But this growth is a rare spot with ATMs; just five years ago, Nigerians performed 839.8 million transactions with ATMs.
While other payment methods have grown over the years, ATM transactions have halved, and in just five years they might be a relic of a distant past when Nigerians relied on them for cash.
Overall, 2024 marked a pivotal year in Nigeria’s payment ecosystem, with a clear shift towards digital payment methods, driven by increased internet penetration, smartphone usage, and a growing preference for convenient and secure transaction channels.
