The National Bureau of Statistics (NBS) recently reported that Nigeria recorded a total of N39.15 trillion worth of electronic transactions in the last quarter of 2018. The 2018 Q4 review titled: “Sectoral breakdown of Credit, e-Payment Channels and Staff Strength”, showed that the transactions were recorded in the country’s banking sector. The e-transactions were carried out through e-payment platforms such as Automated Teller Machines (ATM), Point of Sales (POS), Nigeria Inter-Bank Settlement System (NIBSS) Instant Payments (NIP) and web transactions.
The report also claimed that a total volume of 616.53 million transactions valued at N39.15 trillion were recorded in the period as data on Electronic Payment Channels in the Nigerian banking sector. Similarly, analysis of the report showed that NIBSS Instant Payments (NIP) transactions dominated the volume of transactions recorded just as 228.21 million volumes of NIP transactions valued at N23.57 trillion were recorded in the fourth quarter of 2018.
From all indications, experts acknowledge that the increasing adoption of e-payment system in Nigeria is a good one which can boost the federal government’s cashless policy. In January 2012, the Central Bank of Nigeria (CBN) introduced a policy on cash-based transactions, which stipulates a cash-handling charge on daily cash withdrawals that exceed N500, 000 for individuals and N3, 000,000 for corporate bodies.
The policy on cash-based transactions (withdrawals) in banks, aims at reducing, but not eliminating the amount of physical cash (coins and notes) circulating in the economy and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)
The cash policy, which became operational in Lagos in January 2012, was introduced for a number of key reasons, including driving development and modernisation of payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020; ensuring that an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
e-Payments have significant economic benefits for individuals and businesses alike: It lowers costs for businesses because the more payments they can process electronically, the less they spend on paper and postage. The convenience of e-payments can also help businesses improve customer retention, in comparison with those offering only traditional means of payments. The direct impacts of e-payments on a country’s Gross Domestic Product (GDP) are well known and documented.
The International Monetary Fund (IMF), in its projections said that Nigeria can save as much as US$9 billion – N3.24 trillion by shifting government payments alone from cash to digital systems. It also expected that such a shift will create the potential to help reduce corruption, increase revenues and generate investments in health and education. If the anticipated effect of the shift of government payments alone to e-payment would result in such huge gains, the impact of a similar shift in the private sector would certainly drive economic growth to seismic proportions.
As e-payment becomes popular, we suspect that there may be many challenges in the Nigerian e-payment space which will need to be addressed. We implore banks and providers of electronic payment services to provide peer-to-peer payments beyond traditional banking models and to facilitate a cashless society that can enable any purchase seamlessly.
We also urge the regulatory bodies, banks and other stakeholders to come up with measures that will curb the rising cases of electronic fraud in the country. However, it has been observed that while the increased adoption of digital financial services have boosted the volume and value of electronic transactions in Nigeria, it has also increased vulnerability to electronic fraud attacks, with losses to electronic fraud projected to hit N6.1 trillion by 2021 in Nigeria.
Without doubt, digitisation is fraught with risks which banks must manage by protecting themselves from cyber-attacks, combating financial fraud and all forms of money laundering. With the advent of ICT, Cyber –crime has come to stay since the modern business world relies on technology to operate. It is difficult to successfully run or operate major businesses, financial, medical, academic, transport, agriculture, manufacturing, and mining, without the use of computers along with related software.
We also urge the government to provide a robust infrastructure network for more penetration of e-payment system in Nigeria. There is need for increased security, collaboration and consumer education to protect bank customers from the risk of losing their money to electronic frauds.
