Nigeria’s push towards a cashless economy has been anything but smooth
While digital transactions are meant to simplify payments, reduce fraud, and improve financial inclusion, the reality on the ground is quite different.
From filling stations to supermarkets, and small businesses to major retailers, Nigerians are being forced to pay additional charges simply for choosing to use their debit cards.
“You will pay charges o,” is now a common refrain whenever Nigerians attempt to settle their bills via Point-of-Sale machines. For a country aggressively pushing digital financial inclusion, this practice is a major setback, one that undermines the very foundation of a cashless economy.
At fuel stations, customers are routinely asked to pay an extra N50 to N100 per transaction, depending on the amount spent.
Supermarkets, restaurants, and even informal vendors have embraced similar tactics, making cashless payments a frustrating experience rather than a convenience.
An editor with one of Nigeria’s leading newspapers, who preferred to remain anonymous, narrated her experience at a popular Lagos filling station.
“They asked me to pay N50 extra,” she said. “They claimed it was for bank charges. So, after paying for card maintenance and transaction fees to my bank, I still have to pay businesses just to use my debit card. How does this support the cashless economy everyone keeps talking about?”
Burden of extra charges
Many Nigerians have taken to social media to vent their frustrations, describing the additional costs as outright extortion.
On X (formerly Twitter), one user, OluwaTosin Ayodele, shared how she was asked to pay an extra N100 after purchasing fuel worth N10,000.
“I bought fuel today, and they said I must pay N100 extra because I used my card. When I insisted on knowing why, the sales representative said it was part of the bank charges. This is daylight robbery. Why should I be penalised for making a digital payment?” she fumed.
Similarly, Chinwe Eze, a Lagos resident, recounted her experience at a supermarket in Ikeja.
“I bought groceries worth N15,000, and when I tried to pay with my card, the cashier told me there was a charge of N50. I refused, but they insisted it was non-negotiable. This is not an isolated case. Even at a local buka where I bought a meal, they told me to pay extra simply because I used my card. It’s absurd.”
What makes the situation worse is that this practice has become an accepted norm in many parts of Nigeria, forcing customers to either comply or opt for cash payments, thereby, defeating the entire purpose of a cashless economy.
Beyond businesses, even POS agents, who were originally introduced to bring banking services closer to people, have significantly hiked their withdrawal charges.
A withdrawal of N10,000 via a POS machine, which previously cost N100, now costs anywhere between N300 and N500, depending on the location.
For many Nigerians, this adds an extra layer of hardship, particularly in a country where access to physical cash has become increasingly difficult.
Bank ATMs are often empty, leaving customers at the mercy of either POS agents or businesses that demand extra charges for digital transactions.
Our correspondent, who dined at a canteen in Ojodu Berger, had a similar experience.
After eating a meal worth N5,600, he was shocked when the seller informed him there would be an additional charge of N150 for using his card.
“So, I have to pay N150 extra just because I didn’t bring cash?” he asked.
The seller simply shrugged. “That’s how we do it here. If you don’t want to pay, you can use cash. The banks also charge us. It’s not our fault.”
Why are SMEs charging these extra fees?
Many businesses justify these extra fees by blaming bank charges. Each time a merchant processes a card payment, banks charge them a Merchant Service Charge, which is usually a percentage of the transaction, Sunday PUNCH gathered.
While larger retailers may absorb this cost as part of their overheads, smaller businesses often pass it on to customers.
“We don’t want to charge extra, but the banks are deducting money from us every time we process a payment,” explained a supermarket owner in Lagos. “If we don’t recover this cost, we will be running at a loss.”
However, financial analysts argue that this practice is not only unethical but also counterproductive to Nigeria’s cashless policy.
“The whole point of a cashless economy is to encourage digital transactions,” said Dr Michael Abiola, a financial expert.
“If customers are being charged extra, they will be discouraged from using their cards, and this will slow down financial inclusion.”
Authorities’ silence
Despite growing complaints, the Central Bank of Nigeria has remained largely silent on this issue.
There are no clear policies preventing businesses from imposing these additional charges, leaving consumers with little choice but to pay or resort to cash.
As Nigeria continues to push its cashless agenda, experts warn that if issues like these are not addressed, public trust in digital payments will continue to decline.
“The Nigerian economy is still largely informal, and most people are already sceptical about banking services,” said financial analyst Akinola Osho. “If card payments come with additional costs, then many will simply return to cash. This will be a huge setback for financial inclusion.”
For now, Nigerians continue to bear the burden of these extra charges. Until regulatory bodies step in to enforce fairer practices, businesses will keep passing the cost onto consumers—one N50 or N100 charge at a time.
Nigeria’s journey towards a cashless economy
Nigeria’s pursuit of a cashless economy has been a strategic initiative aimed at modernising the nation’s payment system, reducing the costs associated with cash handling, and curbing illicit financial activities.
This journey, spearheaded by the CBN, has seen a series of policy implementations, infrastructural developments, and public sensitisation efforts.
The inception
In 2011, the CBN introduced the “Cash-less Nigeria” policy, targeting a reduction in the amount of physical cash circulating within the economy.
The policy aimed to encourage electronic-based transactions for payments of goods and services, thereby enhancing the efficiency of Nigeria’s payment system.
According to the CBN, the policy was designed to modernise the payment system in line with Nigeria’s Vision 20:2020 goal of becoming one of the top 20 economies by the year 2020; reduce the cost of banking services, including the cost of credit; drive financial inclusion by providing more efficient transaction options; and improve the effectiveness of monetary policy in managing inflation and driving economic growth.
To achieve these objectives, the CBN implemented cash handling charges on daily cash withdrawals that exceeded N500,000 for individuals and N3m for corporate bodies. These charges were intended to serve as a deterrent to high cash usage and promote the adoption of electronic payment channels.
Phased implementation, expansion
The rollout of the cashless policy began on 1 January 2012 with a pilot phase in Lagos State.
The choice of Lagos was strategic, given its status as Nigeria’s commercial hub with a high volume of daily transactions.
The initial implementation focused on:
Public awareness campaigns to educate residents and businesses about the benefits of electronic payments.
Deployment of Point-of-Sale terminals and Automated Teller Machines to facilitate cashless transactions.
Collaboration with financial institutions to ensure the readiness of banking infrastructure for increased electronic transactions.
Following the relative success in Lagos, the CBN extended the policy to five additional states, Abia, Anambra, Kano, Ogun, and Rivers, as well as the Federal Capital Territory, Abuja, on 1 October 2013.
By 1 July 2014, the policy was implemented nationwide, marking a significant milestone in Nigeria’s cashless journey.
Despite its noble objectives, the cashless policy has faced several challenges.
A financial and digital rights expert, Mr Tunde Lamidi, said infrastructure deficits, transaction costs, and merchant practices posed a threat to this policy.
“Inadequate power supply and limited internet penetration, especially in rural areas, have hindered the seamless operation of electronic payment systems.
“A significant portion of the population remains accustomed to cash transactions, exhibiting scepticism towards electronic payment methods due to concerns over security and fraud. Also, banks and other financial institutions often impose fees on electronic transactions, which can deter users from adopting cashless methods.
“Most importantly, it is true that many merchants impose additional charges on customers who opt to pay via POS terminals, effectively penalising them for using electronic payment methods,” he noted.
Policy adjustments
In response to some of these challenges, the CBN has undertaken several measures. The apex bank has reviewed some transaction charges and attempted to enhance a more efficient payment infrastructure and system.
The CBN periodically revises the guidelines on charges for electronic banking transactions to make them more affordable and transparent for consumers, although many experts believe some of these charges do the direct opposite of what they are meant to achieve.
Initiatives such as agent banking and mobile money operations have been introduced to bring financial services closer to the unbanked population.
The CBN also stated that it had made investments to improve the reliability and reach of electronic payment systems, including the implementation of the Real-Time Gross Settlement system and the Nigeria Inter-Bank Settlement System.
Additionally, in October 2021, Nigeria launched its Central Bank Digital Currency, the eNaira, aiming to provide a digital alternative to cash and further promote cashless transactions.
The road ahead
While significant progress has been made, achieving a fully cashless economy in Nigeria requires continuous efforts to address existing challenges, says economic analyst Adedayo Adenubi.
Ensuring a consistent power supply and expanding internet access, particularly in underserved regions, is crucial. Additionally, building trust in electronic payment systems through awareness campaigns that emphasise security measures and the benefits of cashless transactions is necessary.
“The apex bank must implement and enforce policies that prohibit merchants from imposing additional charges on electronic payments to encourage wider adoption. Also, there should be regular engagement with financial institutions, technology providers, and merchants to create a conducive environment for cashless transactions,” he said.
Nigeria’s journey towards a cashless economy is a transformative endeavour that promises enhanced economic efficiency, reduced corruption, and greater financial inclusion. However, realising this vision necessitates a concerted effort from all stakeholders to overcome the persistent hurdles.
*This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop
