Gone are the days when the banking halls were usually filled with people who wanted to withdraw, deposit, make a transfer, request customer care services, or open a bank account.
- Gone are the days when the banking halls were usually filled with people who wanted to withdraw, deposit, make a...
- Several factors are responsible for this, but they fall under one category: Technological advancement.
- Once you are issued your ATM card, you can insert it into the ATM and withdraw your cash immediately.
- With POS machines, customers can withdraw, deposit, pay bills, and pay for goods and services without moving long distances.
Keep reading for the full breakdown on digital payments — everything you need to know is covered below.
However, this has significantly reduced. Several factors are responsible for this, but they fall under one category: Technological advancement.
Technological development, especially in the banking sector, has helped to drastically reduce queues in the banking hall. This has not only reduced the number of bank employees but also the crowds in the bank, thereby reducing the banks’ operating costs.
One cannot underestimate the government’s efforts in decongesting the banking hall by introducing the cashless economy policy implemented via the CBN in 2012. This policy, aimed at encouraging digital payments and decreasing cash transactions, promotes online banking, Point of Sale (POS) terminals, and mobile money.
In Nigeria, in particular, and Africa at large, the banking sector is one of the technologically advanced sectors, thereby reducing the crowds that troop to the bank to make financial transactions. The factors responsible for this include the following:
1. Online Banking/mobile money
2. Introduction of ATMs
3. Introduction of POS machines
4. Emergence of Fintech (neobanks)
5. USSD
1. ATM introduction
Gone are the days when banks issued cash withdrawal booklets. These booklets had to be filled out and taken to the bank to withdraw the required amount, leading to an overcrowded hall and wasting productive man-hours. This also inflates the banks’ operating costs.
However, ATMs have made it easier to withdraw money without entering the banking hall. Once you are issued your ATM card, you can insert it into the ATM and withdraw your cash immediately.
ATM usage in Nigeria is booming; in Q1 2025, withdrawals reached N15.97 trillion, up 192.7 per cent from Q1 2024’s N5.46 trillion. With 411.42 million withdrawals, up from 210.66 million in Q1 2024, transaction volumes also increased significantly, representing a 95.3 per cent increase.
2. Online banking/mobile money
The introduction of mobile apps has simplified financial services. Without moving close to the banks, you can do whatever financial transactions you need at your fingertips. You can transfer, make payments, pay utility bills, save, invest, and get loans.
Nigeria saw 6.48 billion online transactions in 2024, totalling a record N392.34 trillion. With 82 per cent of banking customers between the ages of 18 and 34 preferring mobile banking, this growth is driven by a shift to digital payments.
In addition, there was a notable uptick in mobile app transfers—which do not include mobile money—with a 123.85 per cent increase in transaction volume to N111.12 trillion in 2022.
3. POS machines
Aside from creating employment, introducing POS machines has also enhanced financial inclusion. POS agents can be found even in the remotest areas.
This has made banking closer to the people, especially where there are no banks or ATMs. This technological development has reduced the time and cost of travelling a long distance to a bank to make financial transactions.
With POS machines, customers can withdraw, deposit, pay bills, and pay for goods and services without moving long distances.
The use of POS in Nigeria is growing. Statistics from the CBN show that in 2024, POS transactions reached a record N18 trillion, up 69 per cent from N10.7 trillion in 2023. The number of transactions increased by 8 per cent from 1.4 billion in 2023 to 1.5 billion in 2024. On average, POS operators handle ₦N116.79 billion per day, or N4.9 billion per hour.
In May 2025, there were 5.90 million active point-of-sale terminals, up 119.46 per cent from 2.69 million in March 2024. Fintech companies are spearheading the rollout of the 8.36 million registered point-of-sale terminals.
Cash shortages, a lack of banking infrastructure, and fintech companies’ aggressive POS terminal expansion are the leading causes of the growth. Because they provide a variety of financial services and formal financial services to about 11 million Nigerians who were previously unbanked, point-of-sale (POS) agents have become indispensable.
4. USSD
Unstructured Supplementary Service Data (USSD), which permits mobile banking, airtime purchases, bill payments, and transfers without internet access, remains a vital component of financial inclusion in Nigeria. With an estimated 50 million smartphone users by 2024, it is especially important for unbanked and rural populations.
However, one advantage USSD has over others is that you can do your financial transactions without a data subscription or a smartphone.
5. Fintech emergence
The emergence of fintech companies is one technological advancement that has significantly revolutionised the financial sector.
These fintech companies have proven that you don’t need to invest in massive infrastructures before providing financial services. It only requires your mobile number to open an account.
Fintechs such as Opay, Moniepoint, PalmPay, Kuda, and others have attracted Gen Zs, enhancing fierce competition with traditional banks. This has caused traditional banks to divest into fintechs to catch up with the trend.
Fintechs perform virtually all the same functions as traditional banks. The significant advantage of fintechs over traditional banks is their strong digital infrastructure.
Nigeria led Africa in real-time payments in 2024 with N7.9 billion transactions, nearly 3 per cent of the N266.2 billion transactions worldwide and far more than any other African economy.
It is estimated that 60 per cent of Nigerians, mainly those between the ages of 18 and 34, use digital payments. A growing number of mobile wallet users—more than 30 million in 2023—over 430 fintech companies, and substantial venture capital investment—nearly half of the continent’s total between 2019 and H1 2023—all contribute to this growth.
Challenges
While Nigeria has made significant progress in the banking sector, challenges persist.
Nigeria’s digital divide has been one of the significant challenges facing the government’s cashless economy policy.
The country’s digital gap is marked by a notable gender gap and a significant urban-rural divide in internet access, skills, and tools. For instance, 68 per cent of women do not own a smartphone, whereas 92 per cent of men do, and over 60 per cent of people in cities use the internet, compared to only 23-25 per cent in rural areas.
In addition, there are significant infrastructure issues, such as restricted access to dependable electricity and internet connectivity, particularly in rural areas, and more than half of the population lacks basic digital skills.