In Nigeria, the familiar question of "savings or current?" when you step outside has a new contender: "Are you paying with transfer?" Digital payments have transformed how we make transactions, but it wasn't always like this. For countless Nigerians, the frustrating experience of standing in long bank queues to access cash for everyday needs, waiting anxiously for payment confirmations for days, commuting miles to find the nearest ATM, or dealing with the hassles of moving money is not exactly a distant memory, except maybe GenZ.
Today, the rise of digital payments is revolutionising how we do business and make payments. According to the Nigeria Interbank Settlement Scheme (NIBSS), bank transfer payments surged by 125% in January 2023, followed by a similar growth in other mobile payment methods. This positive shift was fuelled by CBN's cash policy and the thriving FinTech sector.
We've made great strides in digital payments, thanks to supportive regulatory policies that encouraged FinTech innovation. However, the road ahead holds both challenges and opportunities. Let's explore the future of money in Nigeria and the exciting possibilities that digital payments offer our economy.
Future of money in Nigeria: What lies ahead?
With the increasing adoption of digital payments opening doors to new opportunities, accelerating economic growth, and promoting financial inclusion for millions of Nigerians, digital payments are set to transform how money moves in Nigeria and here are some of the ways it will happen:
Increased Money Mobility
In recent years, Nigeria has seen a significant shift from cash to digital payments due to their convenience, speed, security, and most importantly regulatory policies. Smartphones and internet access have also fuelled the adoption of digital payment solutions.
However, the payment landscape in Africa remains fragmented, creating challenges for cross-border acceptance. To overcome this, it's crucial to establish interoperability, enabling seamless transactions for customers and businesses.
Fintech companies can play a vital role by building a unified system that accepts multiple payment methods from various providers. This streamlined approach will simplify electronic payments across borders, fostering business growth and scalability.
Unlocking credit access
In the past, many people faced challenges accessing loans, mortgages, and other credit-based offerings due to the heavy reliance on cash transactions. Even if they could access these financial services, it often involved extensive documentation and collateral requirements.
However, with the fast adoption of digital payments, a new opportunity emerges. People are now building a digital trail with every transaction they make, which can be used as a powerful tool to assess their creditworthiness. This shift will enable businesses and financial institutions to evaluate customers based on their digital history, going beyond mere liquidity. As a result, businesses can unlock the latent value that was trapped in cash transactions for their customers by offering tailored financial products and services, leading to greater financial inclusion and economic growth.
The future of money in Nigeria is not just about the convenience of transactions but also about empowering individuals to access previously untapped financial opportunities, making it a win-win for both consumers and businesses.
Increased payment options
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While Nigeria boasts various payment options such as cards, bank transfers, mobile money, USSD, and in-app wallets, some businesses continue to experience issues like manual confirmation of transactions, especially for in-person payments. This presents an exciting opportunity for the future of money, as there is still room for faster, more seamless, and integrated payment solutions.
The key lies in the development of contactless payments and innovative integration with emerging technologies like the Internet of Things (IoT) and fintech. By embracing contactless payments, businesses can enhance the speed and efficiency of transactions, providing a more seamless experience for customers.
While embedded payments is slowing growing, the integration of different payment wallets is a crucial aspect that needs attention. Enabling the smooth movement of money between various digital wallets will empower individuals to manage their finances more efficiently and access a wider range of services with ease.
As the financial technology landscape continues to evolve, the future of money in Nigeria looks promising and it will play a vital role in shaping the way we transact and manage money, ushering in a new era of a more connected, efficient, and user-friendly financial ecosystem for all.
E-Commerce growth
There is a surge in digital payments in Nigeria, and as a result, e-commerce is flourishing. People love the convenience and safety of online shopping, leading to a big shift in how we buy things. This change has opened up fantastic opportunities for small and medium-sized businesses (SMBs) to succeed in the digital world. By using secure digital payment options and adapting to the changes brought by COVID-19, businesses can reach more customers beyond their geographical borders.
Beyond traditional e-commerce, social commerce is also emerging as a game-changer in the digital landscape. Social media platforms are no longer just spaces for connection; they have evolved into vibrant marketplaces allowing businesses to leverage the power of social media to enable product discovery, brand engagement, and seamless purchasing experiences. By integrating digital payments with social commerce, businesses can directly engage with potential customers and streamline the purchasing process, further bolstering the e-commerce ecosystem in Nigeria.
The future of retail in Nigeria is closely linked to the growth of digital payments and e-commerce. As these two elements work together, they create opportunities for economic prosperity
Enhanced efficiency and transparency
In the past, the lack of visibility in cash transactions made it challenging to monitor and track financial activities, creating opportunities for potential leakages and fraudulent practices.
However, with digitised payments, every transaction leaves a digital footprint that can be easily recorded and audited. This transparency empowers regulatory authorities to closely monitor financial activities, mitigating the risk of financial malpractices.
Moreover, businesses and individuals benefit from increased visibility into their financial transactions, enabling informed decision-making and more efficient financial management
Embracing the future
Nigeria is on the path of a financial revolution as the world moves towards a cashless future. Embracing digital payments can bring new opportunities, boost economic growth, and include more Nigerians in the financial system. The future of money in Nigeria looks bright and full of possibilities. By embracing this transformation, businesses and individuals can unlock the country's full economic potential and create a prosperous future for everyone.