Nigeria ranks among top 10 in global payment system

  • CBN doubles efforts to implement robust payment architecture

While it would appear that Nigeria is lagging behind in putting in place a robust payment architecture that will drive its planned cashless economy, there is evidence to show that the nation has achieved a big mileage in its effort to drive a digital economy. McKinsey, in a recent report, disclosed that Nigeria, Africa’s largest economy, ranks eighth among countries that are making waves in digital payment globally. But while the opportunities are huge, there are still a number of challenges to be tackled. Meanwhile, the Central Bank of Nigeria has assured that it is leaving no stones unturned to take the nation to its desired destination with respect to implementing a robust system of payments. BAMIDELE FAMOOFO writes.

Uba Group

Since 2012, the journey to transform Nigeria into a cashless economy has begun, and at the moment, according to a survey conducted by McKinsey, the largest economy in Africa has done so much to build a robust payment system that puts it among the top eight nations in the world.

According to Niyi Toluwalope, Managing Director and Chief Executive Officer, eTranzact International Plc, Nigeria’s payment architecture has developed into one of the most advanced payment ecosystems globally, in terms of development and adoption of modern payment systems.

He attributed the milestones achieved to the proactive steps taken by the CBN to ensure that adequate support is given to all stakeholders in the payment ecosystem. But the Superfintech operator did not fail to disclose that there is much more to be done in the aspect of infrastructure development if the sector is to take its desired place globally.

Godwin Emefiele, Governor, Central Bank of Nigeria disclosed that Nigeria, in the last decade, has moved from heavy reliance on cash and daily visits to brick-and-mortar banks and now relies more largely on cashless transactions to settle its payment needs.

Data from the Nigeria Inter-Bank Settlement System is evidence to show that more Nigerians are embracing the various digital payment platforms convenient for them to conduct their transactions without recourse to brick-and-mortar banks.

“At the end of February, a total of 113.53 million valued at N883.45 billion was recorded, as against the 96.35 million transactions valued at 807.16 billion that was recorded in January this year”

According to NIBSS, the volume of mobile money transactions for the month of February rose by 70 per cent to 183.69 million compared to 108.13 million recorded in the month of January.

NIBSS showed that while the volume of transactions rose by 70 percent, the value of transactions rose by 7.8 percent. Volume had risen from 108.13 million transactions with a value of N2.37 trillion in January, to 183.69 million transactions with a value of N2.55 trillion.

The data suggested that more Nigerians used electronic channels such as bank applications and Unstructured Supplementary Service Data to pay for items that normally would have been cash based.

Similarly, transactions consummated via point of sale (PoS) terminals rose in the review period.

According to the NIBSS statistics, the volume of PoS transactions rose by 17.8 per cent while value of transactions on the channel rose by 9.4 per cent.

At the end of February, a total of 113.53 million valued at N883.45 billion was recorded, as against the 96.35 million transactions valued at 807.16 billion that was recorded in January this year.

Also, the PoS channels’ figure for February this year, showed a 27.7 and 53.6 per cent increase in the value and value of transactions compared to the comparable period of 2022.

In February last year, the channel had recorded 88.9 million transactions valued at N575.96 billion.

The increased volume in transactions was not unconnected to the scarcity of cash in the economy which forced many citizens to resort to using electronic payment channels to pay for their daily transactions.

Role of CBN to achieve robust payment system

Speaking on the role of the Central Bank in making a robust payment system achievable in the country, Emefiele, in a keynote address at a workshop organized by the Bank for financial journalists at Calabar, Cross River State, recently, disclosed that the CBN is playing a tripartite role in the dream of seamless payment system achievable.

First as a regulator, the Bank licenses key operators in the payments system, maintains oversight on the participants and issues policies and regulations to support extant laws in enhancing payments system resilience. In performing this role, the Bank adopts a collaborative approach with other stakeholders.


As an operator, the CBN operates the wholesale payments infrastructure, the Real Time Gross Settlement System. The system, being a key financial market infrastructure, operates in line with the Principles for Financial Market Infrastructure and local laws and regulations. This platform is key to ensuring an efficient and liquid settlement system.

As a catalyst, CBN, through the Payments System Vision statements, helps in engendering innovation and wider adoption of electronic payments in different sectors of the economy.

PSV 2020 was first issued in 2006 with the goal of driving the adoption of electronic payments across sectors and geographies in Nigeria.

PSV 2025 was recently issued as a guidepost for the payments system until 2025. Its main goal is to expand payment options available to customers and strengthen regulation of the payments system.

Other interventions

According to the CBN boss, the Bank has continued to initiate and implement several programmes to drive innovation and meet emerging market needs in the payment system landscape. A key objective is the use of the payments system as a tool to achieve the financial inclusion goals of the country.

His words: “Through these programmes, the CBN has successfully repositioned the Nigerian payments system to be highly competitive and acclaimed as one of the most innovative globally. Thus, many payment products that abound in the country are not readily available in some other countries. These include instant payments, QR codes and Central Bank Digital Currency, i.e. the eNaira.”

Emefiele disclosed that these efforts have culminated into a significant increase in the total volume of transactions on Electronic Payment Channels.

While the use of cash and cheques continues to diminish, web-based transactions such as POS, NIP, ATM and MMO have increased substantially. For instance, between 2017 and 2021, the volume of transactions via electronic channels such as ATM, POS, WEB, MMO and NIP increased by 99.76, 1,775.72, 35,502.58, 2,413.44 and 836.50 percent, respectively.

Key drivers of payment system
Some of the key CBN initiatives that accounted for the significant achievements in the payment system architecture are highlighted below:
eNaira – The advent of the Corona Virus pandemic (COVID-19) no doubt triggered rapid advancements in financial technology leading to speedy digitisation of money and finance. The CBN took advantage of the opportunity by launching the eNaira in October 2021. The eNaira was developed to broaden the payment possibilities of Nigerians, foster digital financial inclusion, with potential for fast-tracking intergovernmental and social transfers. Since its launch, the CBN has continued to modify its features to make it more accessible to a wide range of users. Today, one does not need a smartphone to use the eNaira as it has become compatible with all generations of mobile devices (old and new). Till date, over 1.4m transactions have passed through the eNaira platform.

Open banking – Another initiative of the Bank is open banking aimed at expanding the cache of customer data warehoused in the financial sector for use in developing innovative products to service the needs of the public. The CBN will ensure that the data exchange will be done in a way to safeguard the privacy and concerns of the customers who own the data in the first place. The opportunities presented by open banking are diverse and it serves to enhance financial inclusion and encourage healthy competition in the financial services space as well as promote efficiency.

“As a catalyst, CBN, through the Payments System Vision statements, helps in engendering innovation and wider adoption of electronic payments in different sectors of the economy”

Regulatory Sandbox – The Bank also initiated the Regulatory Sandbox to provide the opportunity for innovators to test their ideas and products to regulators in a controlled environment where the risks and potential of the products could be assessed. The Bank recently opened the first cohort of the sandbox. Startups with innovative ideas are invited to apply to the sandbox.

Cardless and other contactless payment options – The industry is quickly evolving towards cardless and other contactless payment options, including QR Codes, NFC etc. In this regard, the Bank has issued robust regulations to standardise operations of contactless payments in Nigeria. Through contactless payments, financial transactions can be consummated without physical contact between the payer and acquiring devices. It is an innovative payment option for safe and efficient conduct of low-value, large-volume payments.

Bank Verification Number – The BVN has continued to feature in our KYC requirements as part of plans to ease the constraint associated with poor identification of banking customers. We have continued to support the aggressive enrollment of prospective banking customers in the informal sector onto the BVN system. With a total enrollment of 57,431,355 as at 31st March 2023, the BVN is supporting the development of credit profiles for banking customers, which will assist in improving access to credit for credit-worthy borrowers by banks. The BVN, according to CBN, has also helped the industry in investigating fraud and other related crimes.

Some of the extant challenges faced by the Bank in implementing a robust payment system as highlighted by the CBN include the following:
Weak social infrastructure – Effective operation of payment platforms is highly reliant on stable telecommunication networks and power infrastructure. These are currently not optimal in Nigeria, thus, impacting the stability and resilience of the payments system.

Activities of unlicensed entities – Some entities have continued to exploit access to information technology to engage in regulated activities without the appropriate licenses and authorisation.

Cyber threats and fraud – The activities of fraudsters continue to threaten the resilience of the payment platforms. The confidence of the public is impacted by these activities. However, the collaborative effort between the Central Bank of Nigeria and other players in the industry is helping to curtail the nefarious activities of these fraudsters.

In response to the challenges posed by cyber threats, the CBN has put the following initiatives in place:
The Nigeria Electronic Fraud Forum (NeFF): consists of all relevant stakeholders, to proactively address challenges and safeguard the integrity of the e-payment channels.

Payment Card Industry Data Security Standard: mandatory for any entity that processes, stores/saves or transmits payment card data.

The Financial Industry Cybersecurity Fusion Centre: serves as a sectoral Computer Security Incident Response Team (CSIRT) for the Nigerian Financial Services Industry.

In addition, the Bank assured that it will continue to adopt a collaborative approach to achieve minimal cybersecurity threats in the payments system.

“A holistic mechanism for addressing cybersecurity threats requires policy and operational actions by all stakeholders. As you are aware, effective January 2023, the Bank issued a Risk-Based Cyber-Security Framework and Guidelines for Other Financial Institutions, to ensure their operational resilience in the face of cyber-security threats,” Emfiele disclosed.