The first half of 2024 witnessed a dramatic shift in Nigeria’s payment landscape, with Point-of-Sale (POS) transactions eclipsing ATM withdrawals by a significant margin. Nigerians conducted N85.91 trillion worth of transactions via POS terminals, a staggering figure over seven times the N12.21 trillion recorded for ATM transactions during the same period. This surge in POS usage underscores a growing preference for cashless transactions, driven by factors such as persistent cash shortages at ATMs, long queues, and the increasing availability and convenience of POS terminals across the country. This trend represents a 77% increase in the value of POS transactions compared to the N48.44 trillion recorded in the first half of 2023, while the volume of transactions also saw a substantial 31% rise, from 4.87 billion to 6.39 billion. Conversely, ATM transactions experienced a decline, with the value dropping by 16.6% from N14.63 trillion in 2023 to N12.21 trillion in 2024, further solidifying the shift away from traditional cash withdrawals.
The growth in POS transactions is not a recent phenomenon but rather an accelerating trend. Comparing 2023 to 2022 reveals an even more dramatic increase, with the value of POS transactions skyrocketing by 205% from N15.86 trillion to N48.44 trillion, largely attributed to the cash scarcity crisis that gripped the nation at the end of 2022 and the beginning of 2023. This period also saw the volume of POS transactions surge by 185%, from 1.71 billion to 4.87 billion. ATM transactions during this period presented a mixed picture: while the value increased by 15.8% from N12.64 trillion to N14.63 trillion, the volume decreased significantly, suggesting that fewer, but higher-value, transactions were being conducted. This data reinforces the narrative of a declining reliance on physical cash and a growing embrace of electronic payment methods.
Beyond POS transactions, other digital payment channels also experienced significant growth. Internet banking transactions more than doubled in value, rising from N462.17 billion in 2023 to N825.5 billion in 2024, with a modest increase in volume. Mobile payments also witnessed robust growth, with transaction value rising by 64% to N159.42 billion and volume surging by 50% to 3.49 billion. This growth reflects the increasing penetration of smartphones and the wider accessibility of mobile banking services. In contrast, cheque transactions continued their downward trajectory, further highlighting the shift away from traditional banking methods. While the value of cheque transactions saw a 25.5% increase, reaching N8.74 trillion in 2024, the volume decreased by 15%, indicating a continued decline in usage.
The surge in POS transactions, while beneficial for digital inclusion, was not without its challenges. Towards the end of 2024, POS agents significantly increased their charges, sometimes doubling their fees, exploiting the prevailing cash scarcity. This placed a heavy burden on Nigerians who were already struggling to access cash through traditional banking channels. Many banks failed to adequately supply their ATMs with cash, often turning customers away or limiting withdrawals to paltry sums, despite warnings and subsequent sanctions from the Central Bank of Nigeria (CBN). The CBN fined nine banks a total of N1.35 billion for failing to comply with cash disbursement guidelines during the festive season, underscoring the severity of the cash crunch and the regulatory efforts to address it.
The increased reliance on POS terminals also brought with it a surge in fraudulent activities. According to reports by FITC, POS fraud cases increased by 31.12% in the first quarter of 2024, reaching 3,518 cases and representing a significant portion of all fraud cases reported during that period. This rise in fraud prompted the CBN to implement new measures aimed at mitigating these risks and further advancing the cashless policy. These measures include imposing daily cash-out limits for POS agents and individual customers, mandating the use of designated float accounts for all agency banking transactions, requiring daily transaction reports to be submitted to the NIBSS, and holding principals accountable for the actions of their agents. These steps aim to strengthen oversight and improve the security of POS transactions.
In conclusion, the first half of 2024 witnessed a significant acceleration in the adoption of digital payment methods in Nigeria, with POS transactions leading the charge. Driven by ongoing cash shortages, increased convenience, and the expanding reach of digital financial services, this trend reflects a fundamental shift in consumer behavior. However, challenges remain, including exploitative pricing by POS agents, persistent issues with ATM availability, and a concerning rise in fraud. The CBN’s interventions, including sanctions on non-compliant banks and new regulations aimed at curbing fraud and enhancing transparency, underscore the ongoing effort to navigate this evolving landscape and ensure the stability and security of the nation’s payment system. The future of financial transactions in Nigeria appears to be firmly rooted in digital channels, but addressing the associated challenges will be crucial for ensuring equitable access and mitigating risks.
