How Nigerians Pay For Good, Services

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Payment Channels in Nigeria
Graph Showing Payment Channels in Nigeria

Data from the National Bureau of Statistics (NBS) has disclosed some interesting statistics on how Nigerians pay for goods and services in the country.

Nigeria Instant Payment (NIP) system is the preferred mode of payment or electronic transfer used by many Nigerians. The data from the NBS which covers January to July 2016 shows that N19 trillion worth of transactions were recorded on the NIP platform over the period, making it the most used platform. The NIP accounted for 56% of all non-cash transactions done over the period. The NIP is attractive because it is a realtime payment system and used mainly for medium and low value transactions. Average value per transaction on the platform stood at N284 million.

Closely following the NIP is the National Electronic Fund Transfer (NEFT) which recorded 7.67 trillion worth of transactions over the period. This represents about 24% of all transactions over the period. The NEFT is used for higher value transactions with average value per transaction on NEFT over the period at N467 million, almost twice that of the NIP.

Payments through cheques came a distant third record N3.3 trillion worth of transactions or about 9% of all transactions for the period. How, the value per transaction on cheques is the highest at N497 million.

ATMs ranked fourth with N2.6 trillion worth of transactions done on ATMs in the first seven months of 2016.  This represents about 8% of payments transactions over the period. Average value per transaction on an ATM stood at N8 million and is the lowest among all the channels.

Mobile payments are the fifth most preferred mode of payment transactions but the value of transactions on mobile payments is still low when compared to the other channels. Just N381 billion of mobile payment transactions were recorded over the first seven months of this year, which is 1.12% of all transactions done over the period. Average value per transaction on mobile payments stood at N14.5 million.

POS transactions are also as low as mobile payments transactions, recording just N368 billion worth of transactions over the period, or just about 1% of all transactions over the period.

Despite the increasing number of e-commerce portals springing up in Nigeria, e-bill payments and web based payments are still low in the country. Which may indicate that e-commerce has still not taken off with Nigerians outside the main commercial cities of Lagos, Abuja and perhaps Port Harcourt.  The value of e-bills payments in the first seven months of 2016 stood at just N171 billion 0.5% of all transactions made during the period. Average value per e-bill transaction over the period stood at N300 million higher than NIP transfers, an indication that e-bills have been adopted by higher end corporates than individuals.

The least preferred mode of payment by Nigerians is the internet or web based payments which stood at just N67 billion over the period. This represents just 0.2% of all transactions done over the period. Average value for web payment is N11 million, perhaps reflection that this mode of payment is still not fully trusted by many Nigerians. It could also reflect low levels of access to reliable and fast internet in the country to execute such payments without hitches.