Nigeria's banking sector has witnessed a significant shift towards digital transactions, with ten of the country's largest banks recording a 58% surge in e-payments income in 2024. According to their latest financial statements, the banks saw their combined e-payments revenue rise to ₦674 billion ($419.7 million) from ₦101.6 billion ($266.6 million) in 2023.

The increase in e-payments income is attributed to higher transfer volumes, increased reliance on mobile apps, and card usage across retail channels. The banks that recorded the highest e-payments revenue include UBA, Access, Zenith, First HoldCo, GTCO, Wema, FCMB, Sterling, Stanbic, and Fidelity. UBA reported the highest value of ₦236.3 billion ($147.1 million), followed by Access with ₦178.6 billion ($110.9 million).

The surge in e-payments income is a result of the growing adoption of digital channels by Nigerian banks. According to data from the Nigeria Inter-Bank Settlement System (NIBSS), electronic payment transactions processed through the NIBSS Instant Payment (NIP) platform reached ₦1.07 quadrillion in 2024, the highest ever recorded. This represents a significant increase from ₦600 trillion in 2023.

The increase in digital transactions is driven by factors such as the cashless policy of the central bank, increased internet and mobile phone penetration, and the development of innovative payment platforms like OPay and PalmPay. Additionally, the federal government's instruction to banks and fintech companies to implement a ₦50 deduction on electronic transfers above ₦10,000 has also contributed to the growth of digital transactions.

Analysts believe that banks are increasingly turning to digital channels as a reliable source of non-interest income, driven by high inflation and interest rates, which have compressed traditional banking margins and increased loan risks. "Revenue from e-banking is now proving to be a vital source of income for Nigerian banks, as more people increasingly rely on digital channels," said Israel Odubola, a Lagos-based analyst.

The increase in e-banking revenue has also led to an increase in spending on IT-related infrastructure. According to Gbolahan Ologunro, portfolio manager at FBNQuest Asset Management, "Providing exceptional customer experiences through banking channels will increase customer transactions on those channels." Six major Nigerian banks spent ₦268.7 billion ($171.5 million) on IT infrastructure and tech-related services in 2024, a 74.5% surge from ₦153.8 billion ($98.2 million) in 2023.

The growth of digital transactions has also led to a decline in cash transactions. According to a report by global payment processing company Worldpay, Nigeria recorded the steepest decline in cash transactions, surpassing six cash-reliant economies in the last decade. From 2014 to 2024, cash transactions in Nigeria fell by 59%.

The surge in electronic transactions has significant implications for the Nigerian economy. As cash fades and mobile taps replace physical queues, e-banking has become the new financial frontier. With ₦674 billion earned from ₦1.07 quadrillion in transactions, Nigerian banks are not just adapting to the digital wave – they're cashing in on it.