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Thursday,
February 27, 2020 / 11:18 AM / By CSL Research / Header Image Credit: Cellulant
According to data published by the Nigerian Inter-Bank
Settlement System (NIBSS), volume and value of POS transactions grew 46.7% y/y
and 40.6% y/y to 41.3m transactions and N313.4bn respectively in Jan 2020.
However, on a q/q basis, volume and value of POS transactions declined 10.5%
and 15.9% q/q from December 2019's figures. In addition, volume and value of
mobile payments increased 914.5% and 396.6% y/y to 7.4m transactions and
N133.2bn but declined 10.7% and 10.6% q/q respectively.
We note that the decline in January 2020 relative to
December 2019 was expected as transactional activities usually receive a boost
from spending associated with the festive period. In our view, the robust y/y
growth was driven by greater adoption of digital platforms among the populace
and increased investments by players within the sector.
We recall the Federal government raised VAT and
introduced stamp duty charges of N50 per N1,000 transaction value carried out
via POS terminals in Q4 2019. We expected this to impact on the willingness of
Nigerian consumers to use POS terminals but this was later revised by the CBN
to N50 on a minimum of N10,000 transaction value. We think the decision of the
apex bank helped in sustaining the gains recorded in the sector.
We note that the aggressive expansion embarked upon by
key players including Banks and fintech players has contributed to the growth
in digital payments. Banks and regulators likewise have increased awareness of
these alternate digital payments platforms particularly in rural areas as part
of the financial inclusion drive. POS terminals availability has continued to
improve with POS terminals deployed growing 37.3% y/y to 306,409 terminals.
As we highlighted in our FINTECH thematic report, we
believe Nigeria's growth frontier for the next decade is the digital payment
& lending business.
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