E-payment transactions grow by 40% to ₦205.4trn in H1 2022- NIBSS report

The Nigeria Inter-Bank Settlement Systems (NIBSS) has said that, from January – July 2022, e-payment transactions through the NIBSS Instant Payment platform (NIP) went up to ₦205.4 trillion – a 40% increase from the ₦145.8 trillion recorded in the same period last year.

According to NIBSS, the value of e-payment recorded reflected the increase in the volume of deals within the period. The volume which rose to 2.7 billion in seven months, represents a 42% increase (from 1.9 billion) recorded within the same period last year.

Earlier this year, NIBSS reported that the total value of e-payment transactions in the first four months of 2022 (January to April) – ₦117.33 trillion – was already higher than the total amount of online transactions in 2019 (₦108.42 trillion). In 2020, the total was ₦162.89 trillion and ₦278.38 trillion in 2021.

According to NIBSS, e-payments adoption payments surged as people transitioned to electronic channels for funds exchange in the wake of the pandemic.

The International Monetary Fund (IMF) has earlier said that the volume of mobile money transactions in Nigeria increased to about 9.72% of the country’s GDP (Gross Domestic Product) in 2020 because of the COVID-19 pandemic.

Commenting on the increase, the Head, Corporate Communications, NIBSS, Lilian Phido told Punch Newspapers:

“It is very clear that more and more people are accepting the channels of payment that are available and the platforms are stable. With stability, these components have grown. With stability, more and more people moving.”

Recall that NIBSS launched its NQR payment solution, an interoperable national QR code standard, in March 2021 to facilitate instant P2B and P2P payments by scanning QR codes. The company says that the solution that will unify the available closed QR Code schemes in the country for consistent user experience and accelerated digital adoption.

The CEO of NIBSS, Premier Oiwoh, said, “With more people being able to pay for goods and services with just their smartphones, the ‘NQR Payment is about re-creating the Nigerian payment experience whilst deepening financial inclusion in the country.”

“Digital transactions supported through the NQR code payments will promote and enhance consumer payment experience while driving growth for business owners,” Oiwoh added.

Real-time payments in Nigeria

Nigeria recorded 3.7 billion real-time transactions in 2021, which resulted in an estimated
cost savings of $296 million for businesses and consumers.

This helped to unlock $3.2 billion of additional economic output, representing 0.67% of the country’s GDP, according to Prime Time for a real-time report published by ACI Worldwide, in partnership with GlobalData.

ACI predicts that real-time transactions will rise to 8.8 billion in 2026, and net savings for consumers and businesses are forecasted to climb to $2.3 billion “as paper-based payments continue to be displaced by real-time payments volume (which is forecasted to grow to 27.2% of the payments mix)“. That would help to generate an additional $6 billion of economic output, equivalent to 1.01% of the country’s forecasted GDP.

Cash remains king, but this shift is a testament to the success of government regulators in fostering rapid growth in digital openness, particularly payments. There is now an ongoing drive within Nigeria to extend this momentum to cross-border use cases.

ACI Worldwide

E-payment transactions: January to July 2022

• In January, transactions worth ₦26.6 trillion were recorded in January. Year on year, this was a 43.7% increase over ₦18.5 trillion recorded in the same month of last year.
• In February, deals worth ₦27.2 trillion were sealed over the electronic platform. Compared with February 2021, when ₦18.3 trillion was recorded, this represented 48.6% growth.
• In March, NIP recorded ₦31.8 trillion in transactions, a 44.5% increase over the ₦22 trillion recorded in the same month last year.
• In April, the value of transactions on the NIP platform stood at ₦29.2 trillion. This also shows a 41.6% increase over the ₦20.6 trillion recorded in April 2021.
• In May, the value of e-payment transactions stood at ₦29.6 trillion, a 43% increase compared with ₦20.7 trillion recorded in the same period last year.
• The NIP transactions rose to ₦31.7 trillion in June 2022, a 37% growth over ₦23.1 trillion posted in 2021.
• In July, provided data reflected a 31% increase from ₦22.4 trillion in 2021 to ₦29.3 trillion this year.

What is driving the increase?

The COVID-19 pandemic has spurred financial inclusion – driving a large increase in digital payments amid the global expansion of formal financial services. This expansion created new economic opportunities, narrowing the gender gap in account ownership, and building resilience at the household level to better manage financial shocks, according to the Global Findex 2021 database. 

– The World Bank.

According to the World Bank, 76% of adults worldwide in 2021 have an account at a bank, other financial institution, or a mobile money provider. This is a 68% increase from the number in 2017 and a 51% increase from the number in 2011.

Two-thirds of adults worldwide now make or receive a digital payment, with the share in developing economies growing from 35% in 2014 to 57% in 2021.

“The pandemic has also led to an increased use of e-payment transactions. In low and middle-income economies (excluding China), over 40% of adults who made merchant in-store or online payments using a card, phone, or the internet did so for the first time since the start of the pandemic. The same was true for more than a third of adults in all low- and middle-income economies who paid a utility bill directly from a formal account.  In India, more than 80 million adults made their first digital merchant payment after the start of the pandemic, while in China over 100 million adults did,” according to the World Bank.

In developing economies, 71% of adults have accounts in banks, other financial institutions, or with a mobile money provider, up from 63% in 2017 and 42% in 2011. Particularly, mobile money has driven up financial inclusion in Sub-Saharan Africa.

The number of e-payment transactions has already been projected to rise. And, with e-payment platforms rising daily, the country is looking at a possible 50% increase in 2023.

FG’s plan to generate ₦484bn from e-payment transactions

The Federal Government plans to make a total of ₦483.73 billion in three years from the online payment boom through the Electronic Money Transfer Levy (EMTL). This projection was made by the Budget Office of the Federation and revealed in its 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper.

According to the budget office, Nigeria intends to make at least ₦137.03 billion in 2023, ₦157.59 billion in 2024, and ₦189.11 billion from EMTL. The office further revealed that the government made ₦111.84 billion from the levy in 2021.

Commenting on the government’s projection, the National President, Association of Mobile Money Agents in Nigeria, Victor Olojo, said, according to Punch Newspaper, “Yes, it will continue to increase with the boom. From what I know about the levy, it is a stamp duty championed by the Nigerian Postal Service for the Federal Government.

“It is a huge meaningful source of revenue to them, although it might not be as significant. For every transaction above ₦10,000 that enters your account, the stamp duty is automatically deducted. It is a big win for the Federal Government.

“However, it has an impact on businesses. For some merchants, say a supermarket that does about 100 transactions in a day and gets charged ₦50 on each transaction, this is away from the cost of running the business. It would have been nice if the value of this ₦50 payment was seen in form of basic amenities.

“Presently, it appears like a rip-off as businesses still have to pay taxes, Value Added Tax, without commensurate impact. It has a negative impact on businesses since there is no visible impact”, she adds.