BY ONOME AMUGE, ROSEMARY IWUALA & CHISOM NWATU
Cashless transactions in Nigeria have recorded appreciable growth since 2012 when the Central Bank of Nigeria introduced its cashless policy to give bank customers ease of transactions, eliminate long queues across banking halls, curtail excessive movement of cash, and control the volume of cash in circulation.
Prior to this time, Nigerians depended largely on a cash-based economy which meant manual transactions across banking halls, whether it was cash deposit or withdrawal, cheque clearance, account opening, checking of balance, statement of account request, or any other transaction. With every bank customer who had a business to transact in the bank trooping to the nearest bank branch, banking halls across the country, especially in heavily populated urban centres, became a nightmarish experience. Large crowds meant long queues, which in turn meant long hours spent in a bank just to carry out a transaction as simple as cash deposit.
The introduction of cashless policy by the CBN in 2012 ushered in the adoption of electronic banking, through Automated Teller Machines (ATMs), Point of Sale (POS), and so on.
The steady growth of cashless transactions encouraged the penetration of fintech companies offering electronic payment services for individuals and business organisations. Not to be left out of the competitive nature of electronic banking, commercial banks created innovative ways to make it convenient for customers to make transactions at any time without needing to visit the bank. The increasing offer of Unstructured Supplementary Service Data (USSD) as an alternative to electronic payment options further strengthened cashless banking.
With the advancements in cashless payment technology, electronic payment systems are fast becoming the substitute for the traditional payment methods, with e-payment platforms enhancing online transactions through issuance of e-tokens, and digital cash. Electronic payment systems have also enabled multiple benefits to businesses and customers by creating emerging opportunities for businesses to extend their operations in remote areas without any geographical limitations.
Thus, electronic payment and mobile transactions have continued to grow in both volume and value, with the Covid-19 pandemic and the resultant lockdowns in 2020 playing a significant role in hastening the adoption of e-payments for funds exchange.
Data obtained from the Nigeria Inter-Bank Settlement Systems (NIBSS) showed that the value of electronic payment transactions increased to N271.56 trillion in the first three quarters of 2022, rising 26 percent from the N215.76 recorded in the corresponding period of 2021.
The NIBSS data also showed that the volume of Point of Sale (POS) transactions in Nigeria increased from 921.19 million between July 2020 and July 2021 to 1.20 billion from July 2021 to July 2022.
According to NIBSS data for 2018 to 2022, Nigerians carried out N12.8 trillion worth of mobile transactions between January and September 2022, more than double the amount recorded in the same period of 2021 and even much more than what was recorded in 2020.
The data showed that recorded mobile inter-scheme transactions in Nigeria grew by a whopping 153 percent year-on-year in the first nine months of 2022 from N5.07 trillion recorded in the comparable period of 2021. The total transactions for the current year represent an even higher margin when compared to the same period of 2020 (N1.89 trillion), 2019 (N461.4 billion), and 2018 (N216.4 billion).
In terms of volume, NIBSS data showed that a total of 438.28 million transactions were recorded through mobile in the review period, higher than the 284.5 million transactions recorded in 2021. Similarly, the sum of N6.05 trillion was spent through POS transactions in the first nine months of the year, a little below the N6.4 trillion recorded in the full-year 2021, with three months left till the end of the year.
In contrast, the volume of cheque transactions which involved physical banking operations declined 2.1 percent to 358.2 million in August 2022, from 366 million in the corresponding period of 2021, according to NIBSS.
To further drive digital transactions, the CBN in October 2021 launched Africa’s first digital currency, eNaira, which has recorded 700,000 transactions amounting to about N8 billion, with over 2.5 million daily visits to the website.
But in spite of this significant progress recorded in the online banking landscape within the past few years, it would appear that cashless transactions have been unable to satisfy expectations of reduced traffic at banking halls. Across many commercial bank branches, long queues still remain a regular sight. As a result, many of the banks have been in a continuous struggle to meet the incessant demands of customers who throng the halls daily.
Most of the customers who crowd the banks are there to lay complaints, mostly of failed transactions on the mobile banking app, PoS or ATM, Business a.m. checks show.
Across various Automated Teller Machine (ATM) points in parts of Lagos, such as Obalende, Oshodi, Festac, and Ejigbo, Business a.m. findings showed that despite the presence of at least two machines in some bank locations, customers are unable to make successful transactions. There were reported cases of customers whose accounts were debited whereas the ATM did not pay them any money. There were also complaints of unavailable electronic networks, card rejections by the machines, the configuration of ATMs to dispense limited amounts of money to customers, amongst other challenges.
As a result of these, some customers are forced to enter the banking halls to complete their transactions.
Yet, there are some customers who have lost confidence in electronic transactions due to past experiences and have therefore decided that they would always go to the bank to perform their transaction, even if that means a lot of inconveniences.
When Business a.m. visited Zenith Bank located at Airport Road Junction, Isolo, Lagos, about 15 customers were seated waiting outside the banking hall. On inquiries, it was found that the bank staff inside the hall had more than a handful of customers to attend to; so, in order not to congest the banking hall, the bank came up with the idea of attending to customers in batches, which was why some customers were asked to wait outside for their turn.
A customer who spoke under the condition of anonymity said she came to report and find a solution to a money reversal issue from a money transfer error recorded from her bank app.
On her perception of online banking, she expressed dissatisfaction, noting that she encounters issues with poor networks and failed transactions.
Would she bother visiting a bank branch if the issue could be resolved through the mobile banking app? She answered in the negative, saying that would not be necessary.
GTB’s Egbe Branch at Ejigbo, Lagos, was a beehive of activities when Business a.m. visited, with over 25 customers in the banking hall and many more trooping in with time.
Some customers could be seen at the counters performing cash transactions like deposits and withdrawals. However, the majority of the customers clustered at the customer service desk apparently laying one complaint or the other.
Glory Umoh, one of the customers, when queried on her motive for visiting the bank, said she was there to activate her account. She explained that the operation demanded her physical presence in the bank as it wasn’t something she could do using the online banking platform on her mobile device.
Another customer, who simply identified himself as John, said he came to pick up his ATM card, which demanded physical presence.
At the Lagos International Trade Fair Complex, which harbours a number of markets, including the Auto Spare Parts Dealers Market, Balogun, and Progressives, all the bank branches were crowded as traders flocked the banks to deposit volumes of cash from the day’s sales.
Business a.m also visited Fidelity Bank’s Airport Road branch in Isolo, Lagos, where new arrivals were confronted with a crowded banking hall. It was observed that the majority of the customers in the banking halls were mostly at the customer service desk to rectify transaction issues, while a few others were performing other transactions like cash deposit, withdrawal, etc.
Segun Famoroti, the branch manager, said the fairly large number of customers at the bank despite the growing awareness and adoption of online banking stemmed from the fact that many Nigerians do not have the patience to fully utilise the online banking platform.
Many customers are easily discouraged once they experience network issues during online transactions, Famoriti said, adding that most of these issues could be resolved online rather than flooding the banks to lay complaints.
The branch manager said the highest number of complaints by the customers has to do with issues regarding payment reversal.
“Once customers are debited, they don’t have the patience to wait for a reversal; they just troop into the bank immediately to lay complaints,” he said.
He noted that despite the emergence of online banking, some customers prefer coming to the bank for physical transactions as many of them consider the traditional banking methods to be more secure compared to online transactions.
Famoriti said telecommunication glitches are responsible for many of the issues that customers go to the bank to complain about. For instance, there are times banks might have reversed a payment but due to poor network, the customer would not immediately receive an SMS notification showing the reversal. At such times, it is not the fault of the bank, he said.
On the way forward, he said that the crowds seen across many banking halls would reduce if telecom service providers improve their infrastructure to provide reliable network services. This, according to him, would prevent numerous network failures which result in customers flocking to the banks.
Oluwaseun Adesanya, group head, strategy & digital financial services at SystemSpecs, a payment and human capital management and services platform, suggested that commercial banks should focus on developing their electronic payment systems to ensure provision of satisfactory services in ATM terminals.
According to Adesanya, the efficient operation of ATMs will improve customer retention to the service and play a significant role in reducing bank queues.