Cash payments are projected to decrease by 4% by 2027 as digital transactions continue to gain momentum.
This change reflects the growing preference among Nigerians for more convenient and secure payment methods, according to the Global Payment Report 2024 (GPR) published by Worldpay.
Historically, cash has been the dominant form of payment in Nigeria, particularly in e-commerce.
The GPR 2024 report revealed that Nigeria leads the Middle East and Africa in cash dominance for e-commerce transactions, with cash on delivery accounting for 15% and account-to-account payments representing 32% of transactions in 2023.
Despite this stronghold, the report indicates that the reliance on cash is steadily waning.
According to the report, cash accounted for 55% of Point of Sale (PoS) transaction value in Nigeria in 2023, marking the highest share across the region.
However, the preference for digital payment methods, such as digital wallets, is on the rise. The report projects that digital wallet usage in Nigeria will grow from 18% in 2023 to 37% by 2027, while traditional payment methods like debit and prepaid cards are expected to decline.
This transition is further supported by findings from the Informal Economy Report 2024, a collaborative study by Moniepoint, the Small and Medium Enterprise Development Agency (SMEDAN), and the Ministry of Trade and Investment.
The report revealed a growing trend among Nigerian consumers towards digital payments, with 24% preferring to pay with cards and 18% opting for bank transfers. Cash, once the preferred method, has now fallen to third place, with only 15.2% of customers choosing it.
As the global trend towards digitalization continues, Nigeria is not left behind. The declining use of cash is not just a trend in Nigeria; it’s a regional phenomenon.
In South Africa, for instance, cash payments are projected to fall by 3% by 2027, with the share in PoS transactions expected to drop from 33% in 2023 to 26% by 2027.
The growing adoption of digital wallets in Nigeria is indicative of a broader shift in consumer behavior. These wallets offer a range of benefits, including convenience, security, and the ability to make transactions without physical cash.
The GPR report notes that the use of digital wallets in South Africa is also on the rise, accounting for 20% of e-commerce and 7% of PoS spending in 2023.
This digital transformation presents significant opportunities for businesses and financial institutions in Nigeria. With an increasing number of consumers embracing digital payments, there is potential for greater financial inclusion and economic growth.
However, it also poses challenges, particularly in ensuring that the necessary infrastructure and regulatory frameworks are in place to support this shift.
