Nigeria has solidified its position as a leader in the transition to digital payments, surpassing regional peers and several cash-reliant economies.
Between 2014 and 2024, Nigeria saw a dramatic 59% drop in cash usage, outpacing countries like the Philippines (43%), Indonesia (44%), and Mexico (41%).
According to Worldpay’s Global Payment Report 2024, this trend is set to continue, with cash transactions projected to fall to just 32% of total payments by 2030. This aligns Nigeria with the broader global movement toward cashless economies.
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One of the key enablers of Nigeria’s payment revolution is its robust digital infrastructure. Platforms like the Nigeria Inter-Bank Settlement System (NIBSS) have been pivotal in delivering fast and reliable transactions. NIBSS acts as the Nigeria Central Switch, connecting all commercial banks, microfinance banks, and mobile money operators (MMOs). This allows for seamless transfer of funds and information between these institutions.
NIBSS ensures that different payment systems and institutions can work together, allowing for transactions to occur between various banks, mobile payment providers, and other financial actors. The NIBSS Instant Payment (NIP) system, comparable to India’s Unified Payments Interface (UPI) and Brazil’s Pix, processes payments in seconds and handles over a quadrillion naira in transaction value in 2024 alone.
Although Nigeria’s transaction volumes have not yet matched India’s—where the UPI processed 16.58 billion transactions in October 2024, up from 11.4 billion the previous year, the foundation has been laid for exponential growth.
Fintech as the Driving Force
Fintech companies have played a central role in this transformation. According to Africa: The Big Deal, Nigeria captured 47% of all fintech deals across Africa in 2024, solidifying its position as the continent’s fintech hub.
Nigeria hosts Africa’s largest fintech ecosystem, with platforms like Flutterwave, Kuda, Paga, OPay, Moniepoint, and PalmPay which are pioneering mobile wallets and agency banking, while Buy Now, Pay Later (BNPL) models are beginning to gain traction. These innovations mirror embedded finance trends in Western markets, such as Shopify Capital and AI-powered personalization tools.
Online and instant payments dominate Nigeria’s digital landscape, fueled by enhanced infrastructure and growing trust in platforms. The COVID-19 pandemic served as a catalyst for the growth of digital payments. When lockdowns disrupted physical banking, only institutions that had invested in digital infrastructure could operate effectively. This moment highlighted the inevitability of digital transformation in financial services.
Today, online and instant payments have become the preferred payment methods in Nigeria. This surge is driven by the growing trust in digital platforms and the expansion of reliable payment infrastructure. Fintech companies have succeeded largely because they tailor their products to the preferences and behaviors of African consumers—an approach that has proven to be critical in building user loyalty and adoption.
To ensure scalability and profitability, many African fintechs have adjusted their business models to account for the continent’s low GDP per capita and limited revenue per user. As part of this strategy, firms have expanded services like Point-of-Sale (POS) terminals and agency banking, particularly in rural and underserved areas.
POS terminals have become instrumental in driving financial inclusion. They provide cash deposit and withdrawal services in areas lacking physical bank branches. The surge in POS usage is fueled by merchant adoption, persistent cash shortages, and the integration of technologies like artificial intelligence and machine learning to better understand consumer behavior and improve user experiences.
In summary, Nigeria’s digital payment landscape has made remarkable strides. Backed by fintech innovation, policy support, and digital infrastructure, the country is well on its way to becoming a cashless economy and a continental leader in financial technology.