Naira redesign to increase fintech adoption, cashless transactions

The redesigned Naira notes by the Central Bank of Nigeria (CBN} are set to boost cashless transactions and fintech penetration among the banked and unbanked population in the economy.

A report titled ‘Instant Payments-2020 Annual Statistics’ by the Nigeria Interbank Settlement Scheme (NIBSS) stated that COVID-19 had changed the landscape of e-payments, accelerating the adoption of instant payments as people switch to electronic channels for money exchange.

In 2012, the Central Bank of Nigeria (CBN) introduced the cashless policy which was intended to curb excessive handling of cash and reduce the volume of cash in circulation.

More importantly, the policy was introduced to drive the development and modernization of payment systems capable of placing Nigeria among the top 20 economies in the world.

Godwin Emefiele, the CBN Governor said during the presentation of the 145th communication that over time the circulation of N500 and N1000 notes will reduce as he said their availability in large volumes is partly responsible for the inflationary pressure.

Nigeria’s headline inflation rate has accelerated for the ninth consecutive month to 21.09 percent in October 2022 from 15.60 percent in January, according to the National Bureau of Statistics (NBS).

Gloria Fadipe, Head of Research, FCMB said there is a high chance of fintech penetration, based on the CBN directive on the withdrawal of funds from bank customers.

According to the directive by the CBN, the banking public can access bank branches in the 36 states of the federation to deposit their current N200, N500 and N1000 notes, without any bank charges borne by the customer.

Also Read: Naira Stabilizes At N775 Per Dollar As Supply Increases

“Only the CBN can decide whether charges will be imposed on customers during withdrawals, based on that, customers will have no choice but to leave their money in their accounts and switch to electronic channels to avoid further charge.”

“This will undoubtedly increase the value and volume of transactions through payment systems such as electronic/internet banking, mobile apps, ATM, card/PoS, eNaira and agent banking,” she said.

Chinedu Onuoha, CEO of Mzuri, said the currency redesign will see more people adopt digital payments.

“As we approach the January 31, 2023 deadline, more and more sellers will be concerned about the risk of collecting old notes that they may not be able to change, and insisting on new notes means forgoing sales.”

He further stated that a sudden demand for non-cash payment options will be imposed by these merchants to avoid making losses.

Josemaria Agulanna, co-founder of Keble, said: “There is no doubt that most people will use online banking and this will definitely improve the performance of new banks.”