Launched in 2011, NIBSS Instant Payments (NIP) has experienced strong adoption compared to other electronic payment types, comprising 72.6% of all electronic payments in 2020. NIP is an interbank account-to-account system that allows users to make transfers 24/7/365 via internet and mobile banking, bank branches, kiosks, mobile USSD, POS terminals and ATMs. NIP supports P2P, B2B, C2B and B2C payments and is available for both retail and corporate customers with maximum daily transaction limits set at NGN 5M ($13,810) for individuals and NGN 10M ($27,620) for corporates.
The Prime-Time for Real-Time research analysed global real-time, account-to-account payment volumes and forecasts using a global sample of 48 markets. It projects a Compound Annual Growth Rate (CAGR) for real-time payments of 32.2 per cent in Nigeria from 2020 to 2025, far higher than the global projected CAGR (23.6 per cent).
According to the research, real-time payment volumes in Nigeria spiked in 2020, rising to claim over 70% of digital payment transactions. This is likely due to COVID-19, which accelerated digital transformation to draw volume away from the nation’s high share of paper-based payments. Specifically, in 2020, paper-based payments declined compared to the original forecast, while digital payments—including real-time—grew by nearly 1B transactions. That represents 45% growth.
Despite the spike in volume of real-time payment, the research notes that real-time payments adoption and usage are hindered by a large unbanked population, with 56% of Nigerians unbanked as of 2020. In addition, the SME segment is relatively underserved, but a few players are starting to gain significant traction, which has presented opportunities for several digital banks and fintechs
To address this gap in financial inclusion, the Central Bank of Nigeria (CBN) has undertaken a payments modernisation initiative to launch payment service banks (PSBs), making basic banking services available to the unbanked population, thus reducing cash dependence.
An example is the case study of payments-focused solutions, which have been surging ahead, augmented by the central bank’s financial inclusion drive and favourable regulatory policies. These include revised know-your-customer requirements for lower-tier accounts and incentives to accelerate the development of agent networks across the country.
Another example is the CBN’s collaboration with banks and non-bank payment players to restructure transaction fees and transaction limits to encourage digital payments. Given these initiatives, cash in circulation is anticipated to decrease, driving a shift toward electronic payments.
The research concludes that card payments are forecast to grow slightly faster than real-time payments and that there will be an accelerated transition to digital payments overall during the next five years as real-time volumes are expected to reach 7.7B by 2025.
