In recent years, Automated Teller Machines (ATMs) seem to be losing ground in Nigeria, as their usage, availability, and access continue to dwindle. Such a pattern mirrors a situation where ATMs are losing their relevance and becoming less favored in the country. ATMs, once celebrated as a hallmark of convenience and modern banking, are slowly losing their prominence, making way for alternative payment methods like Point-of-Sale (PoS) terminals, mobile transfers, and agent banking. ATMs were once revolutionary in Nigeria’s financial landscape, offering 24/7 access to cash and reducing the need for long queues in banking halls.
However, it appears to be losing favor among Nigerians, as more and more customers complain about persistent problems. Numerous customers have expressed dissatisfaction due to the lengthy queues, frequent cash shortages, network outages, malfunctioning ATMs, and daily withdrawal limits. Customers frequently encounter situations where they visit multiple automatic teller machines only to find that none are dispensing cash. Due to these setbacks, Nigerians are now turning to more convenient and dependable methods to perform their financial transactions.
POS convenience driving a shift away from ATM reliance.
The availability of ATMs is far lower, with only one per 12,923 people, as per reports. According to Statista data, just over one billion ATM transactions were recorded in Nigeria in 2023, a decline from the previous year. For context, the volume has been continuously declining since 2020, when it peaked at almost 1.9 billion transactions. It fell to approximately 1.6 billion in 2021 and 1.5 billion in 2022. In the first half of 2024, Nigerians made transactions worth N12.21 trillion through ATMs, far cry below the N85.91 trillion made through point-of-sale terminals over the same period.
As per the data, sourced from the Central Bank of Nigeria’s quarterly statistical bulletin, there has been a discernible change in customer behavior, with POS transactions emerging as the most popular payment option. Meanwhile, problems such as long lines and limited cash at ATMs continue to persist.The financial landscape wave could be set to deepen this gap, with the latest CBN mandate directing all banks and financial institutions to implement new ATM withdrawal fees, effective March 1, 2025. This was justified as a need to enhance ATM operations and the growing expense of financial services.
Revised ATM withdrawal charges may change consumer habits.
Under the revised charges policy, customers withdrawing from their own bank’s ATMs (On-Us transactions) will face no additional fees. However, using another bank’s ATM (Not-on-Us transactions) will incur a N100 charge for every N20,000 withdrawn at on-site ATMs. For off-site ATMs, an extra surcharge of up to N500 per N20,000 withdrawal will apply. This change has sparked concerns among many and could prompt customers to move away from ATMs. With the long-complained issue of long queues and the recently adjusted fees, the service may fall short of customer expectations, pushing them to favor point-of-sale transactions.
While POS agents also charge clients for transactions, for many, the convenience factor of the system may far outweigh the charges, which are now close to ATM charges. PoS terminals provide 24/7 services, in contrast to ATMs that could be impacted by technological difficulties or bank operating hours. Their allure is further increased by the fact that it can perform numerous operations at a single PoS location, including money transfers, bill payments, and airtime recharges. Initially, the early 2023 financial crisis was the primary factor that drove the use of PoS services. It became the lifeline for many Nigerians in need of cash when bank rooms were overcrowded and ATMs ran out.
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Even as the situation normalized, several individuals and businesses had already adapted to using PoS as their main cash access source, decreasing their reliance on ATMs. Although it is unlikely that ATMs would completely vanish, their prominence is definitely being challenged. In order to meet the expectations of their consumers, banks are becoming more aware of this change and concentrating more on agent banking partnerships and digital banking products. The future of the Nigerian banking system appears to be moving toward a hybrid system where PoS services, mobile banking, and other cashless innovations work alongside, but on top of, long-existing ATMs.