Report: Nigeria World’s Topmost Cash Dominant Economy

.Says digital wallets are the people’s payment choice

Dike Onwuamaeze

Nigeria has been rated the world’s topmost cash dominant economy with 55 per cent of financial and economic transactions being settled with cash payment in 2023 while Norway is the least cash economy at 4.0 per cent utilisation.

This was revealed in the Worldpay’s ‘Global Payments Report 2024: How Consumer Choice is Changing Commerce’, which stated that digital wallets are the people’s payment choice around the world in 2023 as cash accounted for 16 per cent ($6 trillion) of global transaction value in 2023, including double-digit share in 30 of 40 markets in this report.

It said: “In 2023, wallets accounted for 50 per cent of global e-com spend of more than $3.1 trillion and 30 per cent of global POS spend of more than $10.8 trillion.”

The report also projected that wallets would remain the fastest growing means of payment and would account for more than $25 trillion in global transaction value, about 49 per cent, in 2027. 

Commenting on Nigeria, the report stated that cash remained the undisputed number one choice among Nigerian consumers and “accounted for 55 per cent of 2023 POS transaction value, the highest share in this report.”

It, however, stated that “Nigerians are turning to digital payments,” which would lead to “decline in use of cash at -4 per cent CAGR from 2023 to 2027” even though it forecasted that cash would “retain supremacy through 2027 with 42 per cent share of POS spend.”

It said: “Cash’s importance translates to e-commerce, where cash on delivery represented 15 per cent of 2023 e-com spend (in Nigeria), second only in this report to Vietnam’s 17 per cent. Cash on delivery is projected to gradually cede share, to an estimated 9.0 per cent of e-commerce value by 2027.”

The report also said that “efforts by the Central Bank of Nigeria (CBN) to implement digital cash have proved challenging. A May 2023 IMF working paper assessed Nigeria’s Central Bank Digital Currency (CBDC) e-Naira as ‘disappointingly low.’ Launched in October 2021, e-Naira has yet to reach even 1.0 per cent of Nigeria’s consumers.”

The report also stated that in 2023, cash was the leading payment method at POS transactions in 12 of the 40 markets that it covered in 2023 but projected that cash will be dominant in only five countries in 2027.

These 12 markets are Argentina, Colombia, Japan, Malaysia, Mexico, Nigeria, the Philippines, Peru, Poland, Spain, Thailand and Vietnam.

But it projected that “by 2027, we project that cash will remain the leading payment method in just five markets: Colombia, Mexico, Nigeria, Peru and Spain.”  

Nevertheless, cash remains a vital payment tool for billions of consumers worldwide as it is used disproportionately by lower income consumers, as well as those that are unbanked and under banked.

“In 2023, cash accounted for less than 10 per cent of POS transaction value in one quarter of the markets covered in this report, namely Australia, Canada, China, Denmark, Finland, Hong Kong, Netherlands, New Zealand, Norway and Sweden.

“By 2027, we project five additional countries will fall below the 10 per cent transaction value threshold for cash, especially France, Singapore, South Korea, the United Kingdom and the United State of America.”  

According to the report, the global payments landscape has throughout history been shaped most decisively by the technologies of the day.

It further said: “Cash in all its forms ruled for millennia and through the industrial age. Analog electronics arrived in the 20th century to support the reign of cards.

“The emergence of the internet and e-commerce ushered in the arrival of alternative payment methods in the late 1990s”.

“Today, digital innovations generate an ever-expanding array of payment types and offer consumers more payment options than ever.”

The report also pointed out that the world is entering an era defined not by technology, but by people whose choices would be the main driver of the payment landscape.

“Consumers and their collective choices are the new center of payments gravity, a living force that’s pushing merchants to optimise payment choices.

“Today’s choice era is one of limitless possibilities for consumers, merchants and the payments industry that connects them.

“The era where people drive payments sees disruption as the engine of opportunity.

“This new era is one where the payment industry is reinventing itself, looking to a future where they must satisfy a tapestry of need crafted by distinctly local intersection of choices.

“The era when people drive payments is a true synthesis of what came before, with cards and cash taking on new – and still essential – roles both in their traditional and newly reimagined digital forms,” the report said.