The volume of financial transactions conducted electronically in Africa’s most populous nation reached its highest level in five years in 2022, according to new data from the Nigerian Interbank Settlement System (NIBSS).

BusinessDay’s analysis of the data shows that NIBSS’s total instant payment platform (PIN) transaction volume increased 613.1% to 5.2 billion last year from 729.2 million in 2018.

Its value also increased by 381.5 percent, from 80.4 trillion naira in 2018 to 387.1 trillion naira in the same period last year.

Analysts say the notable increase in electronic payments is not surprising given the rising rate of teledensity and the number of Internet subscribers.

“The ease of the Internet and electronic banking cannot be overemphasized, especially with regard to profitability and effectiveness, despite the twin concerns of failed transactions and Internet fraud,” said Temitope Omosuyi, investment strategy manager at Afrinvest Limited.

He said that while adoption was growing steadily before 2020, the year 2022 marked another phase of mass use of online banking following movement restrictions resulting from the COVID-19 outbreak.

“As more people have access to mobile phones, particularly those living in rural areas, electronic banking will continue to grow by leaps and bounds.”

NIP is a real-time online interbank payment solution based on account numbers developed in 2011 by NIBSS.

And according to NIBSS, it is the preferred funds transfer platform of the Nigerian financial industry ensuring instant value to the beneficiary.

“The PIN service started with only two commercial banks as participants. However, today, the number of participants has grown to include all commercial banks, microfinance banks and mobile money operators,” he said.

He added that over the years, Nigerian banks have exposed NIPs through their various channels i.e. internet banking, bank branch, kiosks, mobile apps, unstructured add-on service data, Point of Sale (PoS) , ATMs, etc. to his clients.

A recent report by ACI Worldwide ranks Nigeria among the most developed real-time payment markets in the world. The country ranked sixth behind South Korea, Brazil, Thailand, China and India.

“Nigeria is one of the countries for which real-time payments provide the greatest opportunities for economic growth. Its transactions in 2021 resulted in estimated cost savings of $296 million for businesses and consumers.

“This helped unlock $3.2 billion of additional economic output, representing 0.67 percent of the country’s GDP,” he said.

The report projects that with real-time transactions increasing to 8.8 billion by 2026, the net savings for consumers and businesses are projected to rise to $2.3 billion.

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“That would help generate an additional $6 billion in economic output, equivalent to 1.01 percent of the country’s projected GDP.”

A further breakdown of the NIBSS data also shows that, apart from PIN transactions, the volume of mobile transfers increased by 151.4% to 715.1 million in 2022 from 284.5 million in 2021. Their value also increased by 139 .5% to 19.4 trillion.

PoS also followed the same trend as its volume increased by 22 percent to 1.2 billion from 982.7 million in 2021. In value terms, it posted a 31.3 percent year-on-year rate of increase from N6 .4 trillion to N8.4 trillion.

But check transaction volume fell 9.8 percent to 4.1 billion from 4.5 billion during the same period.

More consumers are opting to use electronic banking channels for financial transactions, said Gbolahan Ologunro, a senior research analyst at Cordros Securities.

“So there is more use of digital channels for mobile transactions and payments,” he said.

A latest Mastercard survey indicated that 99% of Nigerians use digital channels such as banking apps and websites to conduct financial transactions.

This percentage makes the country the highest usage compared to other Middle Eastern and African countries such as Kenya (87 percent), Pakistan (66 percent), Jordan (53 percent), Morocco (34 percent), and Iraq. (27 percent).

“There is now a greater awareness of mobile money, combined with a broader diversification in its uses. Consumers are now more open to using mobile money for more than just transactions,” the report says.

The transition from the old naira notes to the new ones, which have started to enter circulation, is driving the use of e-banking channels ahead of the expiration of the old notes on January 31, 2023.

An Apapa merchant told BusinessDay that customers who come to my store no longer pay cash; they prefer to make transfers to me. “I always make sure I get an alert before I deliver my products to them.”

In 2012, the Central Bank of Nigeria introduced the Cashless Policy, which was aimed at curbing excessive cash handling and reducing the volume of cash in circulation.

More importantly, the policy was introduced to boost the development and modernization of payment systems capable of placing Nigeria among the top 20 economies in the world.