‘Online Transfers Rise By 2610.15% In 10 Years, Displace ATM Transactions’

Online transfers are becoming more popular in Nigeria, pushing Automated Teller Machines (ATMs) operations to the background, even as a new report has attributed this trend to the country’s increasing smartphone usage and trend toward using mobile applications for transactions.

Nigeria has witnessed a significant shift in the way people conduct financial transactions, with online transfers experiencing a staggering 2610.15 per cent increase over the past decade.

This surge in digital payments has led to a decline in the use of ATMs for transactions.

The report titled: “The Nigerian Payment Report 2024,” by Zone, in partnership with TechCabal Insights, clarified the way in which online transfers have replaced ATMs as the main method of financial transaction for Nigerians.

According to the report, in 2012, when the Central Bank of Nigeria launched its Payments System Vision (PSV2020), the aggregate value of ATM transactions in Nigeria was N1.98 trillion, while the amount of online transfer payments during the same period was N31.57 billion.

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The subsequent 10 years witnessed a boom in online transfers; by 2022, ATM transactions were valued at N32 trillion, while online transfers reached N783.6 trillion, a staggering ‪2610.15 percentage increase overall and a 43.78 per cent year-over-year gain, the report disclosed.

The report’s data showed that, while the total volume of transactions increased by 36.26 per cent, from 10.32 trillion to 14.06 trillion over the same period, the total transaction value for online transfers increased significantly, rising from N545.03 trillion in 2021 to N783.66 trillion in 2022, or 43.78 per cent year over year.

Also, recent data by the Nigeria Inter-Bank Settlement System (NIBSS) showed that the number of electronic payment transactions in Nigeria rose to N600 trillion in 2023, a 55 per cent increase from N387 trillion in 2022. This growth is attributed to the increasing adoption of digital payment platforms and the convenience they offer.

NIBSS instant payment platform, enables real-time electronic funds transfers, has been instrumental in this shift.

This growth demonstrated an improved digital payment infrastructure, allowing companies to aggressively encourage online payments and reflecting growing customer confidence in digital platforms for peer-to-peer, e-commerce, and bill payment, the report said.

On the reason for the decline in ATM transactions, the report stated that increase in smartphone penetration is the main reason for decline in ATM transactions. “Although the total transaction value of ATM transactions increased by 53.78 percent year-on-year, from N21.23 trillion in 2021 to N32.64 trillion in 2022, there was an 8.55 percent decline in volume, from 4.45 billion in 2021 to 4.07 billion in 2022.

“There has been a noticeable evolution in ATM usage over the years. As of 2010, Nigeria had about 7,100 ATMs, rapidly growing to over 11,000 in 2011 due to the CBN mandating banks’ removal of offsite deployment. In the following decade, the number of ATMs doubled peaking at 22,600 in 2021, which has remained as of December 2023. However, there’s still a demand for ATMs, with an estimated 60,000 ATMs required to meet up with its growing population. This has led to an increasing adoption of alternative banking channels,” it stated.

The report also disclosed that advertising spend on digital, surpasses other media platforms, adding that, “This shift underscores a trend towards digital payments, such as POS terminals, mobile wallets, and online transfers, signalling increased smartphone and internet usage. POS transfers experienced a 17.00percent increase in total volume, rising from 982.83 million in 2021 to 1.14 billion in 2022.

“Mobile app transfers, with a total volume of 831.54 billion in 2021, increased to 1.86 trillion in 2022, reflecting a 123.85percent change in transaction volume. The total transaction value for mobile app transfers increased from N53.20 trillion in 2021 to N111.12 trillion in 2022—a noteworthy 108.84 per cent year-on-year growth.

“Also, Mobile money (MMO) transfers in Nigeria witnessed a 151.18 per cent increase in total volume, rising from 248.5 million in 2021 to 714.5 million in 2022.

Concurrently, the total transaction value rose from N8.06 trillion in 2021 to N19.4 trillion in 2022, marking a significant 140.73 per cent year-on-year increase. The convenience and accessibility offered by mobile money services, particularly in remote or unbanked areas, have been key drivers of this growth.”