Governments worldwide are encouraging cashless payments, and Nigeria is no exception. However, the implementation of a cashless policy in Nigeria encountered challenges, resulting in a serious cash shortage. As Nigerians struggled to pay for everyday goods and services, digital payment providers stepped up to address the situation.
Fintech companies played a vital role during this period, helping Nigerians transition to digital payment services. The Inter-Bank Settlement System reported a 125% increase in mobile payments, while the value of mobile-money transactions soared to 2.5 trillion nairas. As the shortage subsides, it is crucial for digital payment providers to retain their newly acquired customers and position themselves for continued growth.
To properly serve the growing customer base, digital payment providers had to enhance their service capabilities. MTN Nigeria plans to deploy a substantial number of agents to promote mobile wallet use. Similarly, at Baxi, they onboarded a record number of agents, improved money transfer processes, and supported merchants with payment collection solutions.
Despite the surge in digital payments, cash remains dominant in Nigeria. In 2022, cash-based payments accounted for 63% of all POS transactions. Digital payment providers must not assume that cash will be entirely displaced. Instead, they should focus on educating Nigerians about the benefits of digital payments, such as enhanced security, convenience, and increased access to services.
For consumers, digital payment providers should highlight the additional advantages beyond convenience, such as access to streaming services without a formal bank account. Merchants can benefit from improved security and streamlined financial management, leading to easier access to growth financing.
Digital payment providers have a unique opportunity to showcase their offerings. However, they must capitalize on this moment by emphasizing the advantages they bring rather than diminishing the role of cash. By unlocking the potential of digital payments, they can drive economic growth and financial inclusion in Nigeria.
By Mxolisi Msutwana – Chief Operating Officer at Baxi