Tolu Abolade, a customer experience representative, cannot remember the last time she held more than N10,000 cash. “I only have it for transportation. I pay for every other thing with transfers,” she said.
Abolade’s comments reflect a shifting spending culture among many Nigerians and local businesses, which is increasingly leaning more towards transfers than cash. New data from the Central Bank of Nigeria (CBN) shows that electronic payments via internet and mobile platforms surged to N2.27 quadrillion in 2024, a 72.63 percent jump from N1.32 quadrillion in 2023.
Given that 2024 was a leap year with 366 days, this translates to N71.89 million worth of transfers every second, N4.31 billion every minute, N258.81 billion every hour, and N6.21 trillion daily.
Meanwhile, reliance on physical cash continues to decline. In 2024, N252.39 trillion was processed via automated teller machines (ATMs) and point of sale,(PoS) terminals, usually the main cash access points for many.
In June 2024, the CBN, while revealing that web transfers alone accounted for 51.91 percent of total electronic transactions, said: “While cash remains relevant, the adoption of non-cash payment channels has surged. Electronic transactions, facilitated by platforms like the NIBSS Instant Payment (NIP), have become increasingly popular.
“Nigerians now prefer digital methods for making payments, reflecting a shift away from traditional cash-based transactions.”
According to Worldpay’s Global Payment Report 2024, cash transactions in Africa’s most populous country declined by 59 percent between 2014 and 2024 and are projected to fall further to 32 percent of total payments by 2030.
The report noted Nigeria’s leadership in digital payments across Africa and among traditionally cash-heavy economies. However, digital payments penetration remains slow in rural areas, according to a report entitled, ‘Nigeria Payment Report’ by Zone and TC Insight.
“A major challenge is limited access to internet connectivity, which restricts consumers in these areas from fully leveraging digital payment platforms,” it read.
Overall surge in e-payments aligns with the apex bank’s Payments Vision 2025, which predicted a decline in cash use as a ‘mobile-first generation’ becomes economically active in 2025.
What led to the surge?
The pandemic, a CBN naira redesign policy in 2023, and a rise in smartphone ownership and improved internet access have accelerated this transition. According to GSMA, the global telecoms body, smartphone penetration in urban Nigeria grew to 59 percent and 26 percent in rural areas in 2023.
Fintech platforms like OPay and PalmPay, and banks in general, have capitalised on this momentum, leading to a surge in mobile-based transactions.
“There has been a spike in the volume of mobile-based transactions, showing that Nigeria is ready and ripe for cashless-based transactions,” said Femi Adeoti, group managing director of Routelink.
Worldpay highlighted, “Mobile devices are playing a central role in the transformation.” Data from the Nigeria Inter-Bank Settlement System (NIBSS) shows that the value of mobile money transactions through apps like Opay and PalmPay has surged by 2,507.94 percent since 2020.
“Most Nigerians now have a wallet from Opay or another neobank,” said Bolaji Akinboro, Chairman of Voriancorelli and co-founder of Cellulant. “They’ve made transactions faster and easier.”
Upsides of cashless transactions
The CBN notes that cashless transactions reduce the cost of banking, enhance financial inclusion, and streamline payment systems.
According to Enhancing Financial Innovation & Access (EFInA), Nigeria’s financial inclusion rate rose to 64 percent in 2023 from 56 percent in 2020. The CBN projects that this will rise to 80 percent by 2026.
Cash is still king
Despite these strides, cash remains dominant at PoS terminals and is expected to retain its lead for in-store transactions until at least the end of 2025, the Zone and TC Insight report stated.
“Cash-based transactions still account for a sizable amount in exchange for goods and services,” the report noted.
By the end of 2024, the number of deployed PoS terminals had grown to 5.56 million, a 127.07 percent increase from 2023. In this time, currency in circulation grew to a record N5.44 trillion in December 2024, after dipping to N982.09 billion in February 2023 during the peak of the naira redesign policy.
“People still trust cash better than using a digital payment product or channel,” stated Adeoti of Routelink. In 2024, technology upgrades and glitches by commercial banks left bank customers stranded.
In his article ‘Nigeria’s Budding Digital Economy: Coping with Disruptive Technology,’ Olugbenga Agboola, chief executive officer of Flutterwave, stated that the country’s digital infrastructure has remained inefficient and costly.
Babatunde Mumuni, chief innovation Officer at Wema Bank, echoed this sentiment, citing challenges including poor internet infrastructure, macroeconomic volatility, and rising cybercrime.
“Connectivity gaps, particularly in rural areas, hinder adoption and slow transaction speeds,” he said.
A dependent digital infrastructure is crucial for trust, which a cashless economy depends on. “Continued infrastructure development, regulatory support, and digital trust are expected to deepen cashless adoption,” said Ajibade Laolu-Adewale, chairman, Committee of e-Business Industry Heads (CeBIH).
As e-payment continues to grow, Stanley Jacob, president and chairman of the Governing Council of the Fintech Association of Nigeria, stated that its future lies in building inclusive, scalable, and collaborative systems that work beyond Lagos and across Africa. (BusinessDay)
