2023 Payment Landscape Outlook | Nigeria
Nigeria expects an GDP growth of 3.1% in 2023, hampered by rising interest rates, declining demand from China, and supply chain issues. However, resilience amongst Nigerian commodities trade and dynamic consumer goods looks to uplift the economy. This region may further benefit from its favourability towards alternative payment methods. Just 42% of Nigerians have bank accounts, just below average for the Middle East and Africa, paving the way for digital wallets and e-payments to take centre stage as the easy and fast way for Nigerian payments.
We’re looking at what 2023 may bring for the payments landscape in Nigeria and what key trends are shaping this industry.
Growth of e-payments
One key trend in the Nigerian payments market is the rise of mobile payments. With a large proportion of the population lacking access to traditional banking services, Nigerians seek alternative solutions for making and receiving payments. This includes platforms which allow for digital payments, even if they don’t have a bank account.
There has been record growth of e-payments in Africa, with mobile-money transaction volumes in Nigeria doubling to circa 800m in 2020, according to the Central Bank of Nigeria. In fact, Nigeria saw the fastest growth of e-payments with a rapid rise of 35% per year. Nigerian merchants recorded a 40% increase of e-payments during the first half of 2022, compared with the year prior - there was a revenue growth of $484.3bn compared with $345.3bn in 2021.
There is also likely to be a growth in the use of point-of-sale (POS) terminals in Nigeria. POS terminals are devices that allow merchants to accept card payments, and their use is expected to increase as more and more people in Nigeria adopt debit and credit cards as their primary payment method. This trend is being driven by the increasing availability of POS terminals, as well as the growing use of mobile banking and digital payment apps.
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A year for fintechs
High dissatisfaction among businesses and consumers with traditional banking services has spurred on the need for FinTechs to provide modern solutions with high-speed settlements, lower costs, as well as being convenient and accessible. FinTechs can provide Nigeria with increased economic activity through digitised finance, increase productivity for businesses and consumers, and stimulate online retail such as e-commerce and marketplaces.
A recent ACI report showed that Nigeria is already in the top ten of global real-time transaction rankings in absolute terms. It’s therefore likely that new technologies and alternative payment methods will have steady growth in the country in 2023. Adopting a modern technology which is more accessible for Nigerians drives forward financial literacy and inclusion to help businesses grow not only across Nigeria, but also into other markets.
Another important trend in the Nigerian payments market is the rise of digital currencies. While the use of cryptocurrencies like Bitcoin is still relatively small in Nigeria, it is expected to grow in the coming years as more people become aware of the benefits of these currencies, including their security and low transaction fees. This trend is being driven by the increasing use of mobile devices and the internet in Nigeria, which are making it easier for people to access and use digital currencies. However, digital currencies bring risk and may not be the chosen method for businesses wanting to have steady and reliable global payments.
Overall, it is clear that the payments market in Nigeria is undergoing significant transformation, with new technologies and payment methods being introduced on a regular basis. As the use of digital payments continues to grow, it is likely that traditional payment methods, such as cash and checks, will become less common in Nigeria. This shift is expected to have a number of implications for the financial industry in Nigeria, including changes in the way that payments are processed, the emergence of new financial products and services, and the development of new regulatory frameworks.
Explore Verto’s Solutions today to see how we can help your business grow and overcome common market challenges in 2023. Read our CEO and co-founder, Ola Oyetayo’s reflections on 2022 and what trends he expects to see going into 2023.
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