Nigeria Interbank Settlement System has released new numbers asserting that Nigeria’s mobile banking usage has risen by 230% despite the reports of multiple failed transactions.
This recent surge in the use of online banking and mobile banking solutions is due to the recent CBN new naira redesign policy and the new withdrawal limit policy introduced, which has forced most customers of the traditional cash-payment method to adopt mobile banking for their transactions.
The new numbers released by NIBSS disclosed that as of January 2023, mobile gateways were used by customers 108.14 million times, which is a 230.72% increase from 32.69 million times which was recorded last year in the same period. Also during this period being considered, the value of mobile transactions rose by 124.85% to N2.37trn from N1.05trn recorded in January 2022.
Although the use of mobile payment gateway has been experiencing an increase in numbers since 2020, the new CBN policies are the driving force behind this recent surge.
Earlier CBN had released a directive that stated that “The maximum weekly limit for cash withdrawals across all channels by individuals and corporate organizations shall be N500,000 and N5m respectively.
“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.” which is one of the main pushes behind the growth.
However, this push has had its effect on the banking system and the idea to go cashless.
Reports from correspondents at Punch have documented how banking apps have failed many times when used to make transactions, thereby leaving people stranded.
A bank customer who was recounting his experience to the Punch said “My two bank apps are currently experiencing problems. They are bringing error messages. And sometimes, the request takes too long to process.”
Speaking about the recent failure experienced by Nigerians and why they have been failing recently, the Chairman, Voriancorelli, and Cofounder Cellulant, Bolaji Akinboro, disclosed that Nigeria has one of the most advanced payment infrastructure designs in the world.
Bolaji also added that although the technology and payment system of the country is very active, but the mobile network backbone is not yet capable of holding this structure.
He said, “The way I will look at it is this. What are the failure points? Because there are the payment apps and the digital payment services; the ones we all use to access all this stuff. I think these ones can carry the pressure.
“The question is the route. If you want to use your app, you need to ride on the mobile backbone. The real issue to me is not even the banking layer, it is the communications backbone. Regarding the communications backbone, Nigeria is not investing right in terms of infrastructure.
“For example, mobile network operators have been complaining about the multiple taxes that are placed on them by state governments when laying fibre. They want to lay fibre but they pay so much for the right of way, and not only that, the charges are not the same across the states.
“If we want smooth services on the payment layer, we need this backbone. So, for me, the greater problem is the backbone, not the apps,” He said.
Akinboro went further to explain that banking apps can withstand the pressure of Nigerians going cashless but it desperately depends on communications networks to run seamlessly. However, according to NCC, to reach this level, there is need for broadband availability and as of December 2022, Nigeria’s broadband access was at 47.36%.
The Executive Vice Chairman and CEO of NCC, Professor Umar Danbatta had earlier disclosed that one of the gains that can be derived from financial service riding on telecom infrastructure is when Unstructured Supplementary Service Data is provided.
However, another source in the payment industry disclosed that the recent failure in services by mobile apps was due to pressure and a lack of robust infrastructure, and there is a need for CBN to mandate banks and financial institutions to invest more in payment gateways.
“I don’t think we are ready for this. I think the infrastructure is not robust enough to carry out the volume of transactions we intend to do.
“With that said, what I believe is over time, the infrastructure will catch up. This will probably happen because the CBN will put pressure on the banks and financial institutions to invest more. With the entrant of new players into the fintech space and telecoms, I think the infrastructure will start getting expanded because we would start seeing a lot of investments in these things. The mobile network operators are investing in their payment service banks. They will step up investment over the next couple of years. But the infrastructure currently isn’t enough, and the success rate is probably around 80 per cent for transactions that go through”, He said.
According to the Apex bank, a mobile-first generation will greatly influence a cashless economy.
In a document titled ‘Payments Vision 2025’, CBN says “The use of cash will naturally slow with the ‘mobile first generation’, which will be economically active by 2025, hence one of the focuses of the PSV 2025 is enhancing the cashless policy of the CBN.”
Although the growth of the financial industry heavily depends on mobile devices and smartphones, access to this technology has continued to experience slowness even in a country like Nigeria.