In Nigeria today, the quote ‘cash is king’ faces a serious extinction threat. Recent global trends show it, and many countries including Nigeria are making active efforts to remove cash in circulation. Although it has been an excruciatingly painful transition for the average Nigerian, on the upside, digital payments are convenient. They’re more secure and they pave the way for new payment flows such as digital currencies.

Why The Central Bank of Nigeria made the Cashless Policy.

In 2012, the CBN shared the ambition for Nigeria to be one of the best 20 economies before the year 2020, and commencing the process of changing to a cashless economy was going to help them get there. To achieve this, they planned to reduce the amount of cash used for business, but not to eliminate cash usage for transactions for goods and services, especially for buying and selling. Their goal was to;  

• Establish a change in our payments systems in Nigeria to foster economic growth and ultimately attain Nigeria’s Vision 20:2020
• Reduce the costs of banking services and use the money saved to lend credit to Nigerians
• Help the Central Bank and commercial banks better manage the economy, inflation, and improve the effectiveness of our monetary policy

What are the benefits of the Cashless Policy?

For the average Nigerian: increase convenience, foster financial inclusion, transaction speed, seamless international payments; offer more service options; reduce the risk of cash-related crimes; avail cheaper access to out-of-branch banking services; and access to credit.

For businesses and corporations: provide faster access to capital; reduce costs and business risks like theft by employees, counterfeit money, and robbery; reduce revenue leakage; reduce cash handling costs, costs of security, withdrawing cash from bank, transporting, and counting; and eliminating the middleman.

For the government: to increase tax collections; improve financial inclusion, increase economic development, improve compilation of economic data; and serve as an efficient tool to fight corruption.

Types of cashless payments used in Nigeria

1. Banking cards: used in online purchases, POS machines, online transactions, etc. E.g., MasterCard, Visa, and Verve.
2. Unstructured Supplementary Service Data (USSD): an option for those who don’t have a smartphone device or internet facility.
3. Mobile applications: a fast, secure, and convenient payment method. Users can add, send, receive, and store money in these mobile apps. They are also able to link these apps to their bank account, make payments to merchants, pay utility bills like electricity bills, and recharge their mobile phones.
4. Quick Response (QR) Codes. a two-dimensional code identified as a pattern of black squares arranged in a square grid and can be read by imaging devices such as smartphone cameras. They are widely used for making cashless payments in which a user just has to scan the QR code of the merchant service to complete the transaction.
5. Gift Cards or vouchers: there are also various stores that give discounts on gift vouchers which enable the receiver to buy anything in the store.
6. POS terminals: a handheld device present at the stores and are used to read banking cards of the customers.

How you can thrive in this cashless society

Experts recommend the following to help ensure that you win in this new cashless world;

• use credible digital banking platforms to budget, plan and effectively track your spend
• make provisions for emergencies; set aside your sleep well money and fall back money
• encourage people around you to embrace the new cashless policy, we will all be better for it

In conclusion, a truly cashless society appears to be imminent. And with the improvement of existing technologies, we might see faster, more transparent, and more secure cashless payments than ever. A cashless economy is the way to go in Nigeria. The benefits far outweigh the cons.