Failed cashless transactions shrink e-payment in Nigeria by 4.8% in February

The value of e-payment transactions in Nigeria fell to N37.67 trillion in February, the latest data from the Nigeria Inter-Bank Settlement System (NIBSS) has shown. This represents a 4.83% decrease from the January figure of N39.58 trillion.

The decline is tied to several unresolved failed cashless transactions. Thanks to the cash shortage triggered by the controversial naira redesign policy of the Central Bank of Nigeria (CBN), Nigerians turned to digital platforms, leading to an increase in the volume of e-payment transactions.

However, the switch to digital comes with a darker side. Many Nigerians have expressed concerns about the technical glitches in e-payment transactions, evidenced by several failed and unresolved ones, raising serious questions about the readiness of both traditional and modern banks regarding infrastructure.

Unfortunately, tracking the number of failed transactions is difficult because the NIBSS hasn’t updated its efficiency platform portal since 2020.

Mobile money transactions in Nigeria hit an all-time high in January. According to data from NIBSS, 108.135 million transfers were made in January, representing a 237% increase compared to the 32 million recorded during the same period in the previous year. Similarly, the value of mobile transactions rose by 124.8% to N2.4 trillion from N1.1 trillion in the period under review.

Read also: Nigeria’s mobile transfers hit an all-time high of 108 million in January on the heels of CBN’s cashless drive

Botched Naira redesign is helping e-payments

For the CBN, the Naira redesign policy, in pursuit of its cashless agenda, primarily aimed at three things, including improving access to digital payment channels. Since then, the use of mobile transfers has soared, as Nigerians have struggled to get cash in the last two months.

Yesterday, the apex bank declared that the N200, N500, and N1,000 notes would remain legal tender until December 31, 2023, ten days after the Supreme Court’s ruling.

According to the latest NIBSS figures, the usage of mobile transfers grew by 69.87% from 108.14 million times recorded in January to 183.69 million times in February. However, transaction value rose by just 7.88% to N2.56 trillion in February from the January figure of N2.37 trillion.

The value of the transactions processed through the NIBSS Instant Payments (NIP) platform also fell to N36.79 trillion in February from the N38.772 trillion recorded in January. According to NIBSS, e-payment platforms were used 901.46 million times in February as against 638 million times in January.

Read also: CBN declares that old 200, 500, 1000 Naira notes remain legal tender

PoS wins again

Last month, Point of Sales (PoS) transactions in Nigeria jumped to N807.16 billion, a 40.69% year-on-year increase compared to the N573.72 billion reported in January 2022. This figure grew last month. The reason isn’t far-fetched. Left with no option to get cash, many Nigerians turn to PoS merchants who charge high transaction fees.

An analysis of the latest NIBSS numbers revealed that PoS transactions rose from 96.3 million in January to 113.5 million in February. Similarly, the transaction value increased to N883.4 billion last month from the N807.16 billion recorded in January.

Mobile transactions grew to 183,687.1 in February from 108,135.96 recorded in January, just as the value rose from N2.37 trillion in January to N2.56 trillion in February.

Registered mobile users in Nigeria did transactions worth N2.37 trillion in January 2023, a 125% increase from the previous year, implying that more Nigerians will embrace mobile transactions this year. According to the latest Global Findex report by the World Bank, higher adoption of mobile money is driving the growth of account ownership in financial institutions, particularly in Sub-Saharan Africa (SSA) countries like Nigeria.

“It is very clear that more and more people are accepting the channels of payment that are available, and the platforms are stable. With stability, these components have grown,” Lilian Phido, Head of Corporate Communications, NIBSS, said last month.

Read also: As Nigeria makes herculean shift to cashless society, e-payment transactions record boom