Nigeria to Experience 32% Decline in Cash Payments by 2030 Due to Digital Transactions
Nigeria is set to witness a 32 percent decline in cash payments by 2030, as digital payment methods gain traction, according to Worldpay’s Global Payment Report 2024. Enhanced access to financial services via smartphones and a significant rise in electronic transactions underpin this transformation. Active bank accounts have reached 311 million, highlighting the rapid financial evolution in the country.
Nigeria is currently experiencing a notable shift towards digital payment methods, with a substantial 32 percent decline in cash payments anticipated by 2030, as reported by Worldpay’s Global Payment Report 2024 (GPR). This transformation is attributed to enhanced access to financial services in remote areas through smartphones, which has significantly broadened access to the global economy for millions of Nigerians.
The report indicates that Nigeria leads the Middle East and Africa region in cash usage for point-of-sale transactions, maintaining a cash dominance of 40 percent of PoS value in 2024, down from 91 percent in 2019. This usage is comparatively higher than that in other MEA countries such as Saudi Arabia (22 percent), South Africa (30 percent), and the UAE (17 percent).
Over the past decade, Nigeria has achieved notable advancements in financial inclusion. According to the World Bank, the percentage of banked individuals in Nigeria increased from 30 percent in 2011 to 45 percent in 2021, showing significant progress when compared to South Africa, which grew from 54 percent to 85 percent during the same period.
The Nigerian Inter-Bank Settlement System (NIBSS) has reported a surge in active bank accounts, rising to 311 million in 2024, highlighting the rapid financial transformation occurring within the country. The GPR notably highlights that account-to-account (A2A) transactions via the NIBSS Instant Payments (NIP) have become the leading e-commerce payment method in Nigeria.
Additionally, A2A payments via the Nigeria Quick Response Code (NQR) have emerged as the second most favored payment method at point-of-sale, just behind cash. This increase reflects the growing acceptance and use of instant payment systems across the nation.
Recent statistics reveal that electronic payment transactions in Nigeria reached an unprecedented N1.07 quadrillion in 2024, representing a 79.6 percent increase from the N600 trillion recorded in 2023. Furthermore, the volume of electronic payments saw a substantial rise, with the total number of transactions processed by NIBSS increasing from 9.7 billion in 2023 to 11.2 billion in 2024, reflecting a year-on-year growth of 15.5 percent.
Point-of-sale transactions also exhibited significant growth, soaring to N19.4 trillion in 2024, an 81 percent increase from N10.73 trillion in 2023. Industry experts attribute this surge in electronic transactions to several factors, including the cash scarcity experienced at the beginning of 2023 and the ongoing enforcement of the Central Bank of Nigeria’s cashless policy.
The GPR report underscores the progress of the MEA region in digital payments, noting that e-commerce transactions represented 29 percent of total value in 2014. By 2024, digital payments will account for 49 percent, nearing equivalence with the combined value of cash and card transactions (51 percent). Forecasts suggest that by 2030, digital payments are expected to dominate e-commerce transactions, constituting 65 percent of total transaction value.
Moreover, the shift in payment methods at point-of-sale is notable. Digital payments comprised merely 1 percent of PoS transaction value in 2014, but have grown to one-third of the market by 2024. Worldpay anticipates that by 2030, digital payments will encompass 47 percent of PoS transaction value, almost achieving parity with traditional cash and card payments.
In conclusion, Nigeria is undergoing a significant transition towards digital payment methodologies, indicating a projected decline in cash payments by 32 percent by 2030. This shift is driven by improved access to financial services through smartphones and growing acceptance of electronic transactions. With rising numbers of active bank accounts and the increasing prominence of A2A and digital payment systems, Nigeria’s financial landscape is poised for substantial change by the end of the decade.
Original Source: tribuneonlineng.com
