It would seem that the Cashless Nigeria Policy launched in 2012 as part of the Vision 2020 initiative might be feasible after all, as NIBSS reports a 62% increase in POS Usage in 2016, as opposed to 33,720.93 transactions carried out in 2015.
The cashless policy was aimed at curbing some negative consequences associated with the high usage of physical cash in the economy, including:
- High cost of cash: There is a high cost of cash along the value chain – from the CBN & the banks, to corporations and traders; everyone bears the high costs associated with volume cash handling.
- High risk of using cash: Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents.
- High subsidy: CBN analysis showed that only 10 percent of daily banking transactions are above N150,000, but the 10 percent account for majority of the high value transactions. This suggests that the entire banking population subsidizes the costs that the tiny minority 10 percent incur in terms of high cash usage.
- Informal Economy: High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
- Inefficiency & Corruption: High cash usage enables corruption, leakages and money laundering, amongst other cash-related fraudulent activities. Read more
So when NIBSS published its report showing the increase in card transactions in 2016, it proves that the CBN was correct to launch the scheme as the increase shows that more merchants and businesses are starting to see the benefits of going cashless.
NIBSS estimated that a total of ₦651.38 billion worth of transactions were carried out via the PoS from January to November 2016. In comparison, only ₦448.52 billion worth of transactions were carried out via the PoS in 2015.
But why the sudden increase in 2016 though? While there are obviously many reasons like those listed above, that existed since 2012 when the policy was launched, one other reason was introduced in 2016 that influenced more merchants to encourage the use of POS transactions: Flex Advance.
Flex Advance was launched in February of 2016, and it gives merchants access to ‘un-collaterized’ loans based on POS transactions, that can be disbursed in 24 – 48 hrs with very little paperwork, and the merchants do not have to worry about missing repayment dates or destroying their credit history because repayments are made via deductions from POS sales on a daily basis, making repayment flexible.
It really is no coincidence, numbers don’t lie. Join merchants who know the smart way to access funds; learn more about Flex Advance here.