2024 POS transactions surpassed ATM usage by 603% – CBN

Nigerians made transactions worth N85.91tn through point-of-sale terminals in the first half of 2024, a figure that is over seven times the N12.21tn recorded for ATM transactions within the same period.

This data, sourced from the Central Bank of Nigeria’s quarterly statistical bulletin, reflects a significant shift in consumer preferences as POS becomes the dominant payment method, and the lack of cash at ATMs and lengthy queues persist.

When compared to 2023, the value of POS transactions saw a 77 per cent increase, rising from N48.44tn to N85.91tn, while the volume of transactions grew by 31 per cent, from 4.87 billion to 6.39 billion.

This growth can be attributed to the widespread availability of POS terminals and the ease they provide for cashless transactions across the country.

In contrast, ATM transactions dropped in value from N14.63tn in 2023 to N12.21tn in 2024, a 16.6 per cent decline, while their volume also fell slightly, from 519.52 million to 496.43 million.

Comparing 2023 to 2022, POS transactions demonstrated more robust growth, as the country battled cash scarcity at the end of 2022 and the start of 2023.

The value of transactions jumped by 205 per cent, from N15.86tn in 2022 to N48.44tn in 2023, while the volume surged by 185 per cent, from 1.71 billion to 4.87 billion.

Meanwhile, ATM transactions showed a mixed trend during this period. The value rose from N12.64tn in 2022 to N14.63tn in 2023, representing a 15.8 per cent increase.

However, the volume dropped significantly from 713.69 million to 519.52 million, suggesting that while fewer transactions were conducted, they were of higher value.

These figures highlight the reduced reliance on physical cash withdrawals as electronic payments gain traction.

Further analysis reveals that internet banking transactions more than doubled in value, rising from N462.17bn in 2023 to N825.5bn in 2024.

The volume of web-based transactions also increased, albeit modestly, from 11.32 million to 11.64 million.

Similarly, mobile payment platforms continued to record strong growth, with the value of transactions rising from N97.06bn to N159.42bn, a 64 per cent increase.

The volume of mobile transactions surged by 50 per cent, from 2.33 billion to 3.49 billion, reflecting the growing adoption of smartphones and the accessibility of mobile banking services.

Cheque transactions, however, continued their decline, a reflection of the dwindling reliance on traditional banking methods.

The value of cheque transactions in 2024 increased slightly to N8.74tn from N6.97tn in 2023, a 25.5 per cent rise, but the volume fell from 8.13 million to 6.88 million, marking a 15 per cent decline.

The data highlights the rapid digitalisation of Nigeria’s payment systems, with POS, mobile payments and internet banking leading the charge.

The surge in POS transactions occurred despite the arbitrary increase in charges common towards the end of the year.

In December 2024, POS agents hiked charges by about 100 per cent, collecting up to N200 per N5,000 withdrawals.

Many Nigerians were at the mercy of POS operators as most banks’ ATMs were empty.

Inside the banks, there was no reprieve as most of the banks turned their customers back for lack of cash, and in rare cases where the customers were able to get cash, they were limited to N10,000 or N20,00 withdrawals.

This happened despite a warning to the banks by the CBN that any bank found not dispensing cash via ATMs would be sanctioned.

The CBN recently sanctioned nine Deposit Money Banks with fines totalling N1.35bn for failing to ensure cash availability via Automated Teller Machines during the festive season.

Each of the banks was fined N150m following spot checks that revealed non-compliance with the apex bank’s cash distribution guidelines.

The affected banks include Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, Globus Bank Plc, Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc.

The fines will be directly debited from the banks’ accounts with the CBN.

Further checks by The PUNCH showed that the high POS transaction charge persists even after the festive period.

Earlier, POS operators attributed the increase to severe cash scarcity caused by banks rationing withdrawals and the implementation of the Electronic Money Transfer Levy of N50 by the Federal Inland Revenue Services charged on any electronic inflow of N10,000 and above.

The stamp duty or electronic money transfer levy is a single, one-off charge of N50 on electronic receipt or transfer of money deposited in any commercial money bank or financial institution on any type of account on sums of N10,000 and above.

On December 1, 2024, the Federal Government began enforcing the policy across fintech platforms such as OPay, Moniepoint, Kuda, and others.

The fintech operators dominate about 70 per cent of the POS agent market.

Also, with the surge in POS transactions, there have been rising cases of fraud through this payment system, among other concerns.

The prevalence of fraud and forgery in Nigeria’s payment system has shown a significant shift in the first quarter of 2024, with POS transactions experiencing the highest increase in fraudulent activities.

According to the Fraud and Forgeries Report in Nigerian Banks for the first quarter of 2024 by FITC, POS fraud cases surged by 31.12 per cent in Q1 2024.

In Q4 2023, there were 2,683 reported cases of fraud associated with POS terminals. However, this number escalated to 3,518 cases by Q1 2024.

POS fraud cases made up 30.67 per cent of the total fraud cases (11,472) recorded in the quarter under review.

Also, fraud cases involving computer, mobile, and point-of-sale systems accounted for the majority of fraudulent activities recorded in Nigeria during the second quarter of 2024.

This led the CBN to introduce a daily cash-out transaction limit of N100,000 per individual customer for Point-of-Sale agents.

According to the apex bank, this was as part of new measures to advance the cashless policy in Nigeria, as well as combat fraud.

The CBN stated that agents are restricted to a cumulative cash-out limit of N1.2m per day, while customers face a maximum cash withdrawal limit of N500,000 per week.

To ensure accountability, the CBN has mandated that all agency banking transactions must be conducted exclusively through float accounts maintained with the principal institutions.

Also, all agent banking terminals must be connected to the Payments Terminal Service Aggregator, and daily transaction reports, including withdrawal limits and float account balances, must be electronically submitted to the Nigerian Inter-Bank Settlement System using a reporting template provided by the CBN.

The circular emphasised that principals of agent banking operations must monitor accounts linked to agents’ Bank Verification Numbers to detect any unauthorised activities outside the designated float accounts.

It further reiterated that principals would be held fully responsible for the actions and omissions of their agents in relation to banking services.

To ensure compliance, the CBN announced plans to conduct periodic oversight and impromptu backend configuration checks.

Any breaches of the directive, the circular warned, would attract penalties, including monetary fines and administrative sanctions.