TABLE OF CONTENTS
- Key indicators
- Payment methods share in Nigeria:
- Which payment method do Nigerian consumers prefer to use when shopping online?
- Nigerian Market Payment Overview
Payment methods share in Nigeria
Which payment method do Nigerian consumers prefer to use when shopping online?
In Nigeria, cash transactions dominate everyday in-store purchases and payments for services provided. On the other hand, credit and debit cards are most commonly used for online shopping, as well as for clothing, jewellery, and similar non-essential items.
Also, Bank transfer is one of the most common payment methods chosen when shopping online in Nigeria in 2020.
Mobile money is a gateway to the Nigerian digital market, where low bank penetration rates and high mobile acceptance led to the massive adoption of mobile money in Nigeria. Customers use their mobile phones to access a digital account held by their mobile network operator. All transactions are authorised and recorded in real-time via SMS. The second most popular payment method in the African region is instant electronic transfers using mobile banking, where customers use their mobile phones to transfer money directly from their bank accounts.
Nigerian Payment Market Overview
Nigeria is the largest economy in Africa and the 24th largest in the world. Nigeria is home to 200 million people, 60% of whom have access to financial services, presenting a significant opportunity for businesses willing to expand in the country.
Payment-centric solutions have proliferated in the past two years, driven in part by central bank financial inclusion efforts and favourable regulatory policies, including revised know-your-customer (KYC) requirements for sub-accounts and accelerated agent networks Development incentives are available across the country. Paga, Tingg and other mobile money services compete with mobile banking apps and USSD (Bank Unstructured Supplementary Service Data) channels to send and receive transactions and bill payments.
In Nigeria, cards are used for most online retail payments. As of January 2021, this payment method accounted for 29% of all online transactions used in the country. On the other hand, 23% and 22% of payments were covered using cash and bank transfers, respectively. In fact, a popular payment method in Nigerian online marketplaces is cash on delivery. Nigerian credit card penetration data shows that a very small percentage of people have a credit card. This means that residents often turn to other payment methods for their online transaction needs.