The value of electronic payment transactions in Nigeria jumped by 298 percent to N135.52 trillion Year-on-Year (YoY) in the first quarter of 2023, as cash crunch pushes more Nigerians to online transactions.
The transaction volume which was released by the Nigeria Inter-bank Settlement System (NIBSS) marks a significant increase from the N34.04 trillion recorded in the same period last year.
“The number of e-payment transactions shot up by 984 percent to 4.7 billion in Q1’23 from 433.4 million in Q1’22, while the value rose year-on-year by 298 percent to N135.52 trillion in the first quarter of the year (Q1’23) from N34.04 trillion in Q1’22,” the NIBSS said.
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Analysis of data showed that the value of e-payment transactions stood at N42.42 trillion in January but went down by 4.3 percent, month-on-month, to N40.6 trillion in February from where it rose by 34 percent to N54.5 trillion in March.
The volume of e-payment transactions stood at 1.12 billion in January rising by 29 percent, Month-on-Month (MoM) to 1.45 billion in February and up by 46 percent, MoM to 2.13 billion in March.
NIBSS Instant Payment (NIP) channel had the highest value of transactions with N123.72 trillion and the largest volume of transactions with 2.5 billion during the period.
While the increase gives a boost to the nation’s cashless policy, it was masterminded by the cash scarcity emanating from the naira redesign policy – introduced by the Central Bank of Nigeria (CBN) late last year.
The implementation of the policy, which involved phasing out old N200, N500 and N1,000 notes within a short deadline of a few weeks – amid insufficient new notes, created a cash crunch crisis.
The CBN had originally fixed January 31st as the deadline for the old naira notes to be returned to the banks, declaring that they’d cease to be legal tender after then. But the feasibility of the deadline was not attainable, forcing the apex bank to extend the deadline to February 10.
It took judgment from the Supreme Court, annulling the policy, to force the apex bank to allow the old naira notes to co-circulate with new notes.
While the CBN mopped up more than N2 trillion of the old notes from circulation within the period, the redesigned notes were overwhelmingly insufficient. The resulting cash scarcity threw the economy into chaos, forcing a shift to digital transactions as people looked for alternatives to cash payments.
However, the banks are still struggling to contain the increase in online transactions, which has created rising cases of failed transactions. More than 40 percent of failed online transactions are yet to be resolved.
Banks’ failure to resolve the issues have been attributed to shortage of infrastructure and reduced manpower in the banking sector. This is partly as a result of most technical staffers of the banks leaving Nigeria for better jobs overseas.
The CBN said it is working with the banks and other stakeholders to see that the issues, which are becoming a deterrent to people’s eagerness to embrace cashless policy, are resolved as soon as possible.