Since moving to implement the cashless economy policy in Lagos in 2012, the Central Bank of Nigeria has been immensely invested in this ambition to reduce the physical cash in circulation and encourage the use of electronic measures for payment of goods and services. The Apex Bank also explained that the policy would help in scaling up financial inclusions, whilst reducing criminal cases such as robbery, kidnapping, terrorism and extortion. Since the Naira redesign however, there has been an evident scarcity of physical money, thus prompting the enactment of cashless transactions across the country.
The idea of a cashless society has the potential to encourage numerous social and economic opportunities for Nigerians, if properly implemented. The transformation in this financial landscape is said to have had a significant impact on the government, businesses and the society. With the world being so dependent on technological advancements, the traditional approaches to transaction have become so infeasible and more uncomfortably insecure. The cashless system offers a wide range of benefits such as faster transactions and reduced risks like theft and fraud.
CBN moves to reduce the dependence on physical payments.
With the advancements of digital technology, it has become increasingly achievable than ever. Mobile transfers, electronic funds transfer, payment apps and digital wallets have been inculcated into our everyday transactional schemes in Nigeria and globally. With this development, Nigeria is said to be on the path to becoming a cash-lite economy which presents an tremendous opportunity for digital payment providers. In Sweden for instance, over 85% of their transactions are performed electronically which has helped the country in creating innovative solutions like the national digital currency, to their economic problems.
The CBN has overtime, driven its efforts towards establishing a cashless economy by enacting various initiatives to promote the use of digital payments and reduce the country’s reliance on physical payments. The digital payment directive which was issued by the CBN in 2012 was a major indication of the institution’s efforts. This directive implored financial institutions to further invest in digital payment systems, promote the usage among customers and collaborating with the CBN to enact a strong regulatory framework. This initiative was designed to improve transparency and modernism in the financial sector.
Less cash and promote the use of electronic transactions.
As a result of this initiative, the financial sector witnessed immense developments by the expansion of financial access point such as point of sale (POS) terminals, mobile cash facilities, as well as the proliferation of e-payment services. Recently, CBN emerged with a new cash transaction policy, imposing the daily cash withdrawal limit of N500,000 for individuals and N3,000,000 for corporate organizations, all in a bid to reduce the amount of physical cash in circulation and promoting the use of electronic transactions.
Since adoption, this cashless policy has made substantial progress over the years. The number of POS terminals for instance, has significantly increased from about 155,000 to over a million between 2017 and 2022. NIBSS also indicated that the recorded electronic transactions under the NIP platform surged by 42 percent from N272 trillion in 2021 to N387 trillion in 2022. This development can be attributed to the increase in awareness and availability of digital payment services.
Nigerians are easing themselves into the digital payment options.
Amidst the present shortage of Naira in circulation, Nigerians continue to ease themselves into the convenience of digital payment options. Financial institutions have been able to implement the operation of seamless transactions online and platforms like JumiaPay, Palmpay and Opay have been able to assist its customers with seamless payment solutions. Though with some discrepancies such as occasional transaction failures, the CBN’s efforts at modernizing the financial system in the country must be immensely commended for its encouragement of financial inclusion across the country.
Central Bank of Nigeria: Website