In a significant shift in Nigeria's payment landscape, the country has seen a marked increase in digital payments, with bank transfers and POS transactions leading the charge. According to a report by the Central Bank of Nigeria (CBN), the volume and value of instant online transactions surged to 5.63 billion and ₦476.89 trillion in the first half of 2024, up from 3.5 billion and ₦256.85 trillion in the same period of 2023.

This represents a 60% and 85% increase, respectively, in the frequency and value of online payments. The CBN attributes this growth to a shift away from traditional cash-based transactions, with Nigerians increasingly preferring digital methods for making payments. Bank transfers, in particular, have become the preferred choice for small ticket payments, accounting for over 51% of total online payment transactions.

POS devices follow at a distant second, accounting for 28.5% of transactions, while mobile devices contributed 15.5%. ATMs ranked fourth with 2.2%, and direct debit accounted for just 0.44%. The growth of POS transactions has been driven by the agency banking industry, which now boasts 1.5 million agents, and fintechs like OPay, Moniepoint, and PalmPay.

In the first half of 2024, over 6 billion transactions were completed via POS devices, which amounts to a billion monthly, over 33 million transactions daily, and over 1.3 million every hour. This surge in POS transactions is a significant departure from the past, with POS transactions valued at ₦3.21 trillion in 2019, and now surging to over ₦85 trillion, a staggering 2576.44% increase.

Meanwhile, cheque transactions continue to decline, with the volume of cheques cleared dropping by 13% from 7.92 million in the second half of 2023 to 6.88 million in the first half of 2024. While the value rose slightly by 2%, increasing from ₦8.553 trillion to ₦8.741 trillion, customers prefer to use electronic and alternative payment channels over cheques.

ATM transactions, on the other hand, have seen a significant decline, with the value of those transactions falling by 10%. There are only 16,000 active ATMs in Nigeria, and with a banking population of 106 million adults, Nigeria requires almost 70,000 ATMs to meet demand. This scarcity and unreliability have led to a decline in ATM usage, with Nigerians using ATMs for only ₦12 trillion worth of transactions—seven times less than the value of POS transactions.

Surprisingly, the volume of ATM transactions increased by 1%, rising from 492.76 million in the second half of 2023 to 496.44 million in the first half of 2024. However, this growth is a rare spot with ATMs; just five years ago, Nigerians performed 839.8 million transactions with ATMs. While other payment methods have grown over the years, ATM transactions have halved, and in just five years they might be a relic of a distant past when Nigerians relied on them for cash.

Overall, 2024 marked a pivotal year in Nigeria's payment ecosystem, with a clear shift towards digital payment methods, driven by increased internet penetration, smartphone usage, and a growing preference for convenient and secure transaction channels. As fintechs continue to innovate and expand their services, it's likely that digital payments will continue to dominate the Nigerian payment landscape.