In a stark reversal of trends, Point-of-Sale (POS) transactions in Nigeria plummeted by N225.73 billion in the first quarter of 2024 compared to the same period last year. This significant decline of 7.94% reflects a marked decrease in the use of POS systems for financial transactions across the country, while cash outside banks surged, according to data from the Nigeria Inter-Bank Settlement System (NIBSS) and the Central Bank of Nigeria (CBN).
The first quarter of 2024 witnessed a downward trajectory in POS transaction values, with January showing a slight uptick at N850.09 billion, followed by a decline to N805.05 billion in February and further dropping to N961.86 billion in March. This cumulative drop, amounting to N225.73 billion, contrasts sharply with the same period in 2023, indicating a notable shift in consumer behavior.
Similarly, the volume of POS transactions experienced a significant decline throughout the quarter. Despite an initial rise to 112.78 million transactions in January, volumes fell to 97.57 million in February and further to 103.65 million in March. The total volume for the first quarter of 2024 amounted to 314 million transactions, marking a substantial decrease of 73.81 million compared to the same period in 2023.
Interestingly, despite the decline in transaction values and volumes, the registration of POS terminals witnessed an uptrend, increasing by 289,154 from January to March 2024. This growth, representing a 47.02% increase compared to the previous year, suggests continued infrastructure expansion despite reduced usage.
However, the decline in POS transactions coincides with a surge in cash hoarding outside the banking system. CBN data revealed a sharp increase in cash kept at home, with cash outside banks soaring to N3.411 trillion in February 2024, representing a 305% increase from the previous year. This trend of cash retention outside the banking system has deepened, with approximately 92% of all currency in circulation in February 2024 being held outside banks.
The rise in cash hoarding alongside the decline in POS transactions underscores a notable shift in consumer behavior, possibly influenced by lingering effects of the cash scarcity challenges experienced in the previous year. While cashless transactions witnessed a setback, the infrastructure for digital payments continues to expand, reflecting a period of adjustment and recalibration in consumer preferences.
The CBN’s clarification dispels any confusion and emphasizes the importance of accurate information dissemination to maintain confidence in the financial system. As Nigeria navigates through these changing dynamics, stakeholders will need to adapt strategies to address evolving consumer preferences and ensure the resilience of the financial sector.
