Cheque Transactions Up 0.64% YoY to N2.12trn in Eight Months
Kayode Tokede
As electronic transactions gathered significant momentum, cheque transactions rose by 0.64 per cent Year-on-Year (YoY) to N2.12trillion in eight months of 2022 from N2.11trillion in the corresponding period of 2021, data released by the Nigeria Inter-Bank Settlement Systems (NIBSS) has revealed.
THISDAY analysis of the data showed that cheque transactions in 2022 has been hovering at an average of N265.56billion with March and July 2022 reporting the highest and lowest.
According to the NIBSS data, cheque transactions in rose by 12.93 per cent Month-on-Month (M-o-M) to N293.395 billion in March and close July at N240.32billion.
On the contrary, further analysis of the eight months data showed that the volume of cheque transactions dropped by 7.6 per cent YoY to 2,737.91million from 2,963.69million in eight months of 2021.
The trend in cheque transactions between 2018 and 2021 has continued to show contraction as most bank customers embraced the cashless policy of the Central Bank of Nigeria (CBN).
Specifically, the total value of cheque transactions dropped by 11.45 per cent to N4.13 trillion in 2019 from N4.66 trillion reported by NIBSS in 2018. It further dropped to N2.99 trillion in 2020 and closed 2021 at N2.95trillion.
The CBN had in December 2001, introduced the cashless policy in a move to reduce the amount of physical cash in circulation thereby encouraging the use of electronic platforms for settlement or payment for goods and services.
The apex had introduced cash-based transactions which stipulates a cash handling charge on daily cash withdrawals that exceed N500,000 for individuals and N3,000,000 for corporate bodies.
The policy on cash-based transactions (withdrawals) in banks, aims at reducing the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)
The pilot was run in Lagos State from January 2012 while the policy took effect in Rivers, Anambra, Abia, Kano, Ogun and the Federal Capital Territory (FCT) on the July 1st, 2013.
The policy was implemented nationwide on July 1st, 2014.
On the flipside, the data disclosed that a whopping N238.7 trillion NIBSS Instant Payments (NIP) transactions were carried electronically in the last eight months, representing an increase of 42.15 per cent YoY from N167.893 trillion in eight months of 2021.
The surge in electronic transactions shows that more Nigerians bank customers are embracing the cashless policy and dumping cheque transactions.
The NIBSS NIP is an account-number-based, online-real-time Inter-Bank payment solution developed in the year 2011 by NIBSS. It is the Nigerian financial industry’s preferred funds transfer platform that guarantees instant value to the beneficiary.
Analysts attributed the steady decline in cheque transactions to individuals and corporate bodies adopting Instant Payment platform (NIP) championed by the apex banking regulating body.
In a chat with THISDAY, the President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said, “Cheque transactions will never go out completely from the banking sector. In advanced economies, people are still using cheques and there are certain transactions bank customers will want to do that required cheques.
“The law on cheque in Nigeria is very strong. We have the Bill Exchange /Cheque Acts and both are fundamental laws that can never be repel from the banking sector. The old generation still cherish their cheque books and transact businesses with it as long as banks are offering them.
“We await a day bank will totally suspend cheque transactions and I do not see that happening very soon. Cheque transactions will gradually be phasing out in the system but not completely until the generation familiar with cheque transactions are out of the system.
He added, ”It is not a surprise that cheque transaction between 2018 and 2021 has dropped amid the CBN policy of cashless policy. There has been shift in ways bank customers transact business and the decline in cheque transactions is another change everyone must embrace.”
Speaking, the Vice President, Highcap Securities Limited, Mr. David Adnori said, “cheque transactions is an obsolete transfer of funds in the banking sector and electronic transfer expands, of course, we will have the phase out of cheque transactions in the banking sector.
“There is cap on electronic transfer and that is why cheque transactions is still much relevant in the banking sector. By the time Nigeria’s economy extends beyond that cap, especially with digital currency, cheque transactions will witness massive phasing out in the banking sector.
He added that, “As you likely know, the digital transactions does not required third-person transactions. It is a traditional practise that cheque transactions will exceed to exist due the technological advancements in digital transactions.”
The CBN in June 2022 raised the limit for ‘Highly Secured Online Funds Transfer from N100 million to N250 million for Companies and from N10 million to N25 million for individuals.
