Opay, Palm Pay, others compete with traditional banks, drive up electronic transfer

• An investigation has found that Nigeria's e-payment boomed in recent times as Nigerians continue to use digital channel
• These microtransactions came to light after an attempt by ex-CBN governor Godwin Emefiele to implement a cashless policy
• Reports showed that transactions in the first quarter of 2024 increased by 88.09% to N237 trillion

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Examination of the electronic transfer levy has shown that microtransactions are driving Nigeria's e-payment boom and underscoring the growing use of digital channels in daily life.

Microtransactions are typically transactions valued at less than N10,000. Photo Credit: Cavan Images
Source: Getty Images

Microtransactions are typically transactions valued at less than N10,000.

Why microtransactions increased?

BusinessDay reported that the recent, failed attempt at a cashless policy by then-CBN governor Godwin Emefiele brought attention to these microtransactions.

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Several people switched to digital channels when physical naira become scarce by January 2023. At this time, cashless transactions amounted to N39.58 trillion, up 45.41% year over year according to data from the Nigeria Inter-Bank Settlement System (NIBSS).

Cashless transactions rose by 44.84 percent to N126.73tn at the end of the first quarter of 2023 (before the cash shortage subsided), from N87.49tn during the same period in 2022.

Similarly, transactions involving no physical cash increased from N395.38 trillion in 2022 to over N600 trillion by the end of 2023 as more Nigerians used digital payment methods.

With transactions rising by 88.09% to N237 trillion in the first quarter (Q1) of 2024, this trend persisted.

Electronic Money Transfer Levy

Experts contend that the surge in microtransactions bolsters the government's objectives for digital inclusion and the economy, even though it may not result in higher taxes for the government.

Despite the notable growth in e-payment activities, the government did not receive a larger amount of money through the Electronic Money Transfer Levy (EMTL) contribution.

The amount the government made from EMTL between January and April of 2024 in Q1, 2024 was N66.35 billion, which is the same as what it made in the same period in 2023.

This is mostly because the majority of transactions were under N10,000 and were exempted from taxes.

“Payment methods have become easier, faster, and better, and people are using them for everyday things,” said Adedeji Olowe, founder of Lendsqr.

“Everyone from small kiosks to supermarkets now accepts transfers. If I go downstairs where I live, I can buy something worth N1,000 and pay with transfers,” Olowe stated.

According to him, this shows that the payment industry is developing and that real-time transfers are becoming a more widely accepted method of payment in a market that aims to use less physical currency.

According to ACI Worldwide, a pioneer in real-time payments, Africa had the largest real-time share of electronic payments in 2023—40 percent—with Nigeria leading the continent.

Paystack disclosed in its 2023 spotlight report that transfers accounted for 58% of all transactions made from Nigeria on the site.

The majority of transactions in the nation are for less than N10,000, according to experts in the payment industry.

“The range below N6,000 makes up about 45 percent of transfer transactions. Some in the range of N10,000 is around 25 percent,” an industry source commented.

“There has been a boom in microtransactions. When the cashless issue happened, people started moving away from cards and focusing more on transfers as a means of payment. Because of that, transfers are no longer just for P2P but are now widely adopted,” noted

According to Oyegun, this has resulted in a surge in the number of new fintech companies, including Moniepoint, Opay, and PalmPay.

He added that even point-of-sale withdrawals are typically made using transfers rather than cards.

Nigerians abandon ATMs, choose online transfer

Legit.ng reported that a new report indicates that online transfers are fast gaining ground in Nigeria, relegating Automated Teller Machines (ATMs) to the background.

The report attributed the trend to Nigeria’s growing smartphone usage and mobile applications by banks and fintech for financial transactions.

Nigeria has seen a significant shift in how Nigerians carry out transactions, with online transfers surging to N2,610.5% in the past decade.

Source: Legit.ng