The Nigerian Payment System has grown significantly over the years, attracting significant interest and investment from domestic and foreign investors. Positive regulatory policies, a young population, and influx of talent and expertise have further contributed to Industry growth. A large majority of Nigerians continue to rely on non-formal financial services for their day-to-day payment needs.
The increasing pace of technological innovation has altered the layout of the Industry, affecting the way in which payments are made and processed. The volume of cheque payments has shrunk by more than 50% between 2017-2021. This is in line with global payment trends as access to internet-enabled mobile phones has altered consumer behavior. Payment fintechs are at the forefront of innovation as companies seek to improve the delivery of financial services. The increased adoption of digital payments is in line with global payment trends as access to affordable and reliable internet-enabled mobile phones have altered consumer behavior.
The Industry’s three major segments – the infrastructural providers, core business and broader ecosystem –are ever-evolving with each segment contributing to the growth of the Industry. The Industry continues to attract new entrants into its various segments as opportunities to grow remain present.
Looking ahead, digital payment penetration is expected to rise as mobile network providers finally make use of their vast geographic presence to deliver financial services, and agency banking penetration continues to rise. Some big banks’ restructuring to a Holding Company structure (Holdco) allows traditional financial services organisations to participate more freely in the Industry, contributing their expertise and knowledge while competing with other Industry players. In general, we anticipate continued Industry expansion in the near future. However, adverse changes in economic conditions and regulations will significantly raise Industry risk.
Our Agusto & Co. 2022 Payment System Industry Report captures the following: