2021 began with a dip in the volume and value of NIP and POS transactions in January as they dropped from 264.2 million to 228.7 million and 77.9 million to 70.8 million respectively.
However online transactions have begun to pick up in February, after the massive drop in January.
According to data from the Nigeria Inter-Bank Settlement System (NIBSS), online transaction (NIBSS Instant Payment) during the month rose to over 230 million.
NIBSS Instant Payment is the combination of industry stats of Internet banking, mobile apps, Unstructured Supplementary Service Data (USSD), Internet banking, bank branches, kiosks, mobile apps, POS, ATMs, etc.
The initial drop in January isn’t a surprise as the increased spending during the holiday in December results in subdued spending in January. However, with the return of spending power and the consequent celebration of Valentine in February, online transaction numbers are beginning to bounce back.
A breakdown shows that Nigerian merchants and mobile money operators processed over 71 million points of sale (POS) transactions valued at ₦468.9 billion. This represents an addition of about 1 million transactions from 70 million recorded in January.
Similarly, Mobile Inter-scheme Transaction rose to 15.3 million from 14.9 million recorded in the previous month. E-bills payments, however, dropped by 9% from 101,578 to 92,571 in February.
Value of POS transactions drops by 20 billion
Despite the increase in online transactions, the value of NIP and POS transaction dropped slightly in February.
The value of NIP dropped by about 1% from ₦18.50 trillion to ₦18.32 trillion while POS fell by about 4% from ₦489 billion to ₦468 billion.
while there is no obvious reason for the drop in value, problems like failed POS transactions that were reportedly debited and bad internet services plaguing online transaction could have contributed to the drop.
Mr Godswin, a merchant told Technext that he abandoned his POS machine after several of his customers reported double deductions after transactions. He lamented that in some situations he had to refund the money personally.
However, not all online payment channels saw a drop in value. Mobile Inter-scheme Transaction and E-bills saw the value of transaction rise during the month. Mobile rose to ₦407.8 billion from ₦390.5 billion while E-bills climbed to ₦161.8 billion from ₦155.5 billion recorded in the previous month.
According to the NIBSS, in recent years mobile phones and tablets have been the major channels used for NIP transactions. This would explain why the drop in NIP value was minute despite the drop in POS value.
The report shows that in February, over 9,000 new PoS were deployed but about 3,000 were unregistered during the month. The total number of deployed POS devices now stands at over 484,000.
In the first two months of 2021, over 23 thousand PoS machines have been deployed in Nigeria
While the increase in online payments shows growth in cashless transactions, it does not directly translate to a shift from cash-based payments.
Recall that banking agents use POS and accept transfers when customers want to withdraw cash. So it might be a little bit more difficult to determine which transactions were truly cashless.
However, if Nigeria could pivot from a cash-based economy, it will save Nigeria billions of naira and possibly generate huge revenues. For now, without the major setbacks of the pandemic this year, we can expect electronic transactions to grow even higher.
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