Cash remains a dominant payment method in Nigeria, especially in rural areas where limited awareness of alternative options persists. However, the Central Bank of Nigeria (CBN) is actively working to raise awareness about various payment methods among the population. Another significant development is the introduction of basic and low-cost banking accounts, which aim to optimize the payment infrastructure and reshape the spending habits of Nigerians.
Despite challenges, Nigeria’s economy is achieving remarkable growth milestones, driven by increasing smartphone penetration, expanding e-commerce, and government initiatives promoting technology adoption. A recent survey by Enhancing Financial Innovation and Access (EFInA) revealed that 36% of Nigerian adults are financially excluded, offering promising opportunities for entrepreneurs and fintech companies to thrive. Furthermore, data from the Nigeria Interbank Settlement System (NIBSS) shows a 55% surge in electronic transactions, with a user base of 541 million recorded in January 2023.
Exploring Nigeria’s Top 3 Payment Methods
Credit Card/Debit Card: Nigeria’s payment landscape is primarily influenced by global giants like Mastercard and Visa, adhering to regulations set by the Central Bank of Nigeria (CBN). However, this regulatory environment led to the emergence of the indigenous Verve card in 2011, offering quicker payment processing at a lower cost. Verve has distributed over 30 million payment tokens to enhance its acceptance. Another contender is AfriGo, a result of a partnership between the Central Bank of Nigeria and the Nigeria Inter-Bank Settlement System. Currently, the Nigerian card market is valued at $18.2 billion.
Bank Transfer: Nigeria’s banking sector is poised for significant growth, with the government taking steps to strengthen the fintech infrastructure. The rise of digital banking is evident, with continuous efforts to improve and expand digital banking services for consumers. In 2021, Nigeria recorded 3.7 billion real-time payments, facilitated by nearly 200 fintech companies offering online access to mobile payments and other digital banking services. The increasing use of bank transfers and digital methods has led to a decline in the use of cheques within the country.
E-Wallets: E-wallets are a popular payment mode in Nigeria, commonly used for online shopping and point-of-sale transactions. In 2021, 7% of Nigerian e-commerce sales were completed using digital and mobile payments. Some well-known mobile e-wallets include Google Pay, Samsung Pay, and Apple Pay, along with local options like Naira.com, Chipper Cash, and Paga. The volume of mobile transactions surged from 32 million in January 2022 to 108 million in January 2023, marking a 237% increase in total volumes. This growth is fueled by the widespread use of mobile phones for transactions, with an expected increase of 100 million mobile users between 2023 and 2025.
Challenges and Considerations for Businesses
Despite the rise of electronic payments in Nigeria, challenges persist. The unstable infrastructure, frequent failed digital transactions, and unreliable electricity and internet connectivity hinder the seamless adoption of digital payments. High volumes of failed transactions discourage local consumers from embracing advanced payment methods for their daily transactions. However, the point-of-sale (PoS) volumes have shown promise, reaching 96 million with a 6% increase from the previous period. In a year-on-year comparison, the value of these transactions increased from N573 billion in January 2022 to N807 billion in January 2023.
To fully harness the potential of digital payments, the local population must gain the necessary knowledge and technical know-how to operate digital accounts. Building trust is another significant challenge, as online scams and frauds have tarnished the reputation of digital payments in the country.
How Web Technology Expert Can Assist with Nigerian Payment Methods
Web Technology Expert is well-equipped to help businesses navigate Nigeria’s diverse payment landscape. Our payment method aggregator connects with over 300 international payment methods, offering support to your customers regardless of their location, native currencies, or payment preferences. Whether you’re a large-scale international enterprise or a small business, Web Technology Expert provides a low-code/no-code payment method integration service, enabling you to offer a unified payment system for your customers. Our solution ensures PCI-DSS and GDPR compliance, protects your sales, and includes a dashboard for end-to-end sales monitoring and analytics. With Web Technology Expert, you can expect data-driven improvements in conversions and revenues.