Nigeria is looking to real-time payments to help drive economic growth and financial inclusion as its volume of real-time transactions surged year-on-year by 94.7 percent to 3.7 billion in 2021, according to a recent Prime Time for a real-time report.

The report in its third edition was published by ACI Worldwide, in partnership with GlobalData, a leading data and analytics company, and the Centre for Economics and Business Research.

It tracks real-time payments volumes and growth across 53 countries, including an economic impact study which provides a comprehensive view of the economic benefits of real-time payments for consumers, businesses and the broader economy across 30 countries.

Further analysis of the report also showed that in the league table of the world’s most developed real-time payments markets, the country ranked sixth behind South Korea (7.3 billion), Brazil (8.7 billion), Thailand (9.7 billion), China (18.5 million) and India (48.6 billion).

A real-time payment is any payment processing network that is used to send money electronically. It offers consumers and businesses cheaper, faster and more efficient ways to pay.

“Nigeria is one of the countries for which real-time payments provide the biggest economic growth opportunities. Its transactions in 2021 resulted in an estimated cost savings of $296 million for businesses and consumers. This helped to unlock $3.2 billion of additional economic output, representing 0.7 percent of the country’s GDP,” the report stated.

It also stated that with real-time transactions set to rise to 8.8 billion in 2026, net savings for consumers and businesses are forecasted to climb to $2.3 billion.

“That would help to generate an additional $6 billion of economic output, equivalent to 1.01 percent of the country’s forecasted GDP.”

Analysts at ACI’s Worldwide also noted that the country, traditionally being a cash-based economy with an increasingly high population, expects higher speeds, greater simplicity and modern thinking from financial service providers.

“Cash remains king, but this shift is testament to the success of government regulators in fostering rapid growth in digital openness, particularly payments. There is now an ongoing drive within the country to extend this momentum to cross-border use cases,” they added.

In Africa’s biggest economy, NIBSS Instant Payments (NIP) is the country’s real-time payments system. Launched and developed by Nigeria Inter-Bank Settlement System (NIBSS) in 2011, NIP is an account-number based online-real-time Inter-Bank payment solution.

And over the years, Nigerian banks have exposed the NIP through their various channels i.e. internet banking, bank branch, Kiosks, mobile apps, Unstructured Supplementary Service Data (USSD), Point Of Sale (POS), Automated Teller Machine (ATM), etc. to their customers.

According to NIBSS, the NIP volume rose to 1.4 billion in the four months of 2022, showing a four percent increase from over 999 million recorded in the same period of last year.

“The COVID-19 pandemic also encouraged consumers to shift from cash to electronic payment methods, which further supported real-time payments growth,” the report highlighted.

It further added that the NIBSS launched NQR, an interoperable national QR code standard in March 2021 to facilitate instant P2B and P2P payments by scanning QR codes.

“This will further catapult real-time payments use, helping it to record an 18.6 percent CAGR from 2021- 2026 in terms of volume.”

Wole Abegunde, the chairman at e-tranzact said the Nigerian electronic payment industry is still poised for further growth as alternative payment channels evolve, even with more players keying into providing contactless payments.

“The favourable demographics and regulatory support are major enablers and bases of expectation of accelerated growth in the industry.”

On the global scene, real-time transactions growth increased by 64.5 percent to 427.7 billion in 2021 from 118.3 billion in 2020. By region, South & Central America with 51.3 percent, Middle East, Africa & South Asia (32.6 percent), North America (30.2 percent), Europe (23.0 percent) and Asia-Pacific (15.0 percent) are the top fastest growth of real-time transactions.

The report recommends that in thinking about a strategy for 2022 and beyond, banks in the African region need to position themselves to respond to changing and changeable consumer payments behaviour, and greater cross-border interoperability.

“Banks should therefore look at the market as entering a new phase of high opportunity and assess whether the technology they currently use is fit for purpose.

“Rather than think about an account-based system, a card-based system and an EFT platform, they should move to service-based architecture with a central platform where services are consumed, irrespective of the channel from which a request is initiated.

“All this is about long-term thinking. Since regulations will mandate at least some of this journey, it is on banks to seize the moment and build beyond today’s short-term requirements. This will help them construct a business strategy that is future-proof and more fully aligned with what modern Nigeria needs,” the concluded.

First Published on Business Day