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Payments Landscape in Nigeria: Opportunities and Risks to 2022

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  • 47 Pages
  • February 2019
  • Region: Nigeria
  • GlobalData
  • ID: 4753238
Payments Landscape in Nigeria: Opportunities and Risks to 2022


The use of cash for consumer payments remains highly prevalent among Nigerians, especially among the rural population; this is primarily due to a limited public awareness of other instruments and limited access to banking infrastructure. However, the Central Bank of Nigeria (CBN) has taken a number of steps to improve this situation. The latest of these is the introduction of rules for establishing Payment Service Banks. As part of its Financial System Strategy 2020, the CBN is focusing on bringing unbanked consumers under the purview of the banking system, as well as promoting electronic payments in the country.

Banks are also attempting to address this issue by launching basic and low-cost banking accounts, expanding payment infrastructure, and making efforts to change Nigerian consumer payment habits. A rise in the economically active population, the advent of digital-only banks, the growing popularity of online shopping, the gradual acceptance of cards among retailers and the proliferation of new payment solutions will help drive electronic payments in Nigeria.

To augment the CBN’s financial inclusion program, commercial banks in Nigeria are striving to provide unbanked individuals with access to formal financial services by expanding the banking agent network in new regions, as well as launching self-service terminals. Similarly, mobile money operators and telecom companies are actively participating in the financial inclusion program.

Pay-later cards are not popular in Nigeria, with a penetration of 0.7 cards per 100 individuals - the lowest among peers such as South Africa and Egypt. The higher adoption and use of credit cards was partially hindered by prevailing economic uncertainty in the country, due to which banks have become wary of unsecured consumer lending. However, this market is expected to register robust growth in terms of transaction value and volume over the forecast period, supported by the growing demand for consumer credit - especially among the increasing middle-class population and high income consumers.

The Nigerian e-commerce market recorded a robust review-period compound annual growth rate (CAGR) of 29.8%, rising from NGN163.1bn ($448.56m) in 2014 to NGN462.9bn ($1.27bn) in 2018. To benefit from this trend, banks and investment companies are launching their own e-commerce platforms in the market. While traditional payment instruments - including cash/cheques, bank transfers and payment cards - remain the preferred method of payment for online shoppers in Nigeria, alternative payments such as KongaPay, Paga and PocketMoni are also being used for e-commerce purchases.

The report "Payments Landscape in Nigeria: Opportunities and Risks to 2022", provides a top-level market analysis, information and insights into the Nigerian cards and payments industry, including -
  • Current and forecast values for each market in the Nigerian cards and payments industry, including debit and credit cards

  • Detailed insights into payment instruments including cards, credit transfers, direct debits, and cheques. It also, includes an overview of the country's key alternative payment instruments

  • E-commerce market analysis

  • Analysis of various market drivers and regulations governing the Nigerian cards and payments industry

  • Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards

Companies mentioned: FirstBank, UBA, GTBank, Ecobank, Access Bank, Zenith Bank, Verve, Visa, Mastercard

  • While bricks-and-mortar branches remain important in Nigeria, digital banks have begun to enter the market. In May 2017, Nigeria-based Wema Bank launched a digital-only bank, ALAT, with whom consumers can open accounts, receive a debit card, apply for loans, pay utility bills and receive discounts at partner merchants. Previously in November 2016, Lidya, an online financial services platform, was launched in the country, which also offers a Mastercard credit card. Similarly, banks are gradually moving towards digital channels to serve their customers. In 2017, FNB customers conducted nearly 97 millions transactions worth NGN4.1tn ($11.28bn) using the FirstOnline and FirstMobile digital channels; these developments will help accelerate the shift towards electronic payments.

  • To further enhance financial inclusion in the country, on October 26, 2018 the CBN released a new set of guidelines for the licensing and regulation of payment service banks in Nigeria. According to the regulation, banking agents, telecommunication companies, postal and courier service providers, mobile money operators, financial technology companies, financial holding companies and any other entity approved by the CBN are eligible to establish a payment service bank. In March 2018, the CBN, deposit money banks, mobile money operators and banking agents launched a new project, the Shared Agent Network Expansion Facilities (SANEF). As part of the initiative, 500,000 agent networks will be deployed to under- and unbanked areas in a phased manner. These agents will offer basic banking services such as cash deposits and withdrawals, fund transfer, bill payments, airtime purchases and government benefits.

  • Commercial banks/credit card issuers in Nigeria are likely to face competition in the consumer lending space with the emergence of the online P2P lending model. In December 2017, for instance, the P2P lender KiaKia launched an online P2P and direct lending platform. According to the company, interest rates for unsecured credit vary between 7.5-15%, against 30% charged by some of its competitors. It also allows borrowers to choose between seven and 60 days for short-term loans, and charges interest only for the chosen days.

Reasons to Buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the Nigerian cards and payments industry and each market within it.

  • Understand the key market trends and growth opportunities in the Nigerian cards and payments industry.

  • Assess the competitive dynamics in the Nigerian cards and payments industry.

  • Gain insights into marketing strategies used for various card types in Nigeria.

  • Gain insights into key regulations governing the Nigerian cards and payments industry.

Table of Contents

  • Table of Contents

  • Market Overview

  • Executive Summary

  • Card-based Payments

  • E-commerce Payments

  • Alternative Payments

  • Payment Innovations

  • Payments Infrastructure & Regulation

  • Appendix

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • FirstBank

  • UBA

  • GTBank

  • Ecobank

  • Access Bank

  • Zenith Bank

  • Verve

  • Visa

  • Mastercard