E-Financial
The Role of E-Payment Systems in Doing Business in Nigeria
By Rotimi Adeniyi-Akintola
Countries the world over are witnessing the rapid evolution of payment systems. These changes follow the technological shift from traditional modes of payment such as cash, cheques and cards, to the digital frontier of virtual currency and mobile platforms.
According to Capgemini and BNP Paribas World Payments Report, global non-cash transactions broke a decade-long record for growth in 2014-2015, with growth volumes in excess of 11%; to reach more than 433 billion transactions.
Two regions fuelled this increase: emerging Asia with a growth rate of 43.4% and CEMEA (Central Europe, Middle East, and Africa), with 16.4% growth. Nowhere has the growth of e-payment been more evident than in Africa.
The swell of different means of electronic payments (e-payment) and mobile payments continues to have a direct impact on local economies in Africa.
Whilst Kenya remains the continent-leader in this regard, thanks to the emergence of the likes of M-Pesa. Nigeria has also witnessed a sizeable increase in the volume of e-payments in recent years.
However, without significantly increasing the rate of financial inclusion in the country through innovative methods, some of which are discussed below, Nigeria runs the risk of never fully actualizing the expansive potential of e-payments on her economy.
Electronic or “E”-payments have significant economic benefits for individuals and businesses alike. Electronic payment lowers costs for businesses, as the more payments they can process electronically, the less they spend on paper and postage.
The convenience of e-payments can also help businesses improve customer retention, in comparison with those offering only traditional means of payments. The direct impacts of e-payments on a country’s GDP are well known and documented.
In 2016, a report by Moody’s Analytics on “The Impact of Electronic Payments on Economic Growth” stated that the explosion of e-payments resulted in an added US$460 million to Nigeria’s GDP from 2011 to 2015.
According to Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Nigeria could save as much as US$9 billion – N3.24 trillion by shifting government payments alone from cash to digital systems.
She was further quoted as saying that such a shift creates the potential to help reduce corruption, increase revenues, and generate investments in health and education.
What this means is that digital tools could be a decisive factor for Nigeria in meeting the 2030 Sustainable Development Goals.
If the expected effect of the shift of government payments alone to e-payment would result in such huge gains, the impact of a similar shift in the private sector would certainly drive economic growth to seismic proportions.
However, despite the adoption of digital payments, cash continues to be utilized as the mainstream mode of payment in Nigeria, especially for low-value transactions.
Cash remains hugely popular in Nigeria, due to the anonymity it affords, the lack of adequate modernised payment infrastructure, and challenges with access to banking systems for the majority of Nigerians (financial inclusion). Other systemic challenges include the poor state of basic infrastructure; particularly electricity/power and telecommunications infrastructure.
Low literacy levels, infrastructure vandalism, and security issues mount further pressures on the shift to more advanced payment systems. Nonetheless, efforts to surmount these obstacles abound, and the opportunity to develop secure and efficient e-payment instruments to drive further economic growth, exists for Nigeria.
What is financial inclusion, and why is it important?
Financial inclusion is one of the major challenges to the growth of e-payments in Nigeria. Despite the Central Bank of Nigeria’s (CBN) target of 80% financial inclusion by the year 2020, the nation continues to struggle to provide financial products and services to its adult population, particularly the low-income demographic.
Financial inclusion matters, as it is one of the most important drivers of economic development. The benefits of financial inclusion for the poor are extremely significant.
Money which sits outside the banking system; in drawers, mattresses and the like, is unable to appreciate in value by earning interest, and hence has a lower worth or net present value when used in the future.
Financial inclusion would provide low income individuals and families with the means to safely make day-to-day transactions, safeguard their meagre savings, manage cash flow spikes and build working capital.
This capital can finance small businesses or micro-enterprises, mitigate shocks and expenses related to unexpected events such as medical emergencies, and improve overall welfare.
According to a 2016 report by Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation, 40.1 million Nigerian adults, representing 41.6% of the adult population are financially excluded – do not have access to bank accounts or financial services. This is a huge setback to the drive towards more advanced e-payment solutions.
Radical measures are required to effectively provide a population of over 170 million citizens with access to financial services.
To this end, the Nigerian government has introduced key regulatory initiatives to drive financial inclusion and electronic payments. In 2012, the cashless society project – to make Nigeria a top-20 economy by 2020 was introduced, as part of a larger Financial System Strategy 2020 vision to boost Nigeria’s financial system.
Further, in 2017, the CBN reintroduced charges for cash handling, starting with 1.5% for cash deposits and 2% for cash withdrawals between 500,000 to 1,000,000 naira. These measures have not been enough to catalyse Nigeria’s financial inclusion goals.
Boosting Financial Inclusion and E-payments
A major untapped resource for advancing financial inclusion would be to leverage existing telecommunications networks. Current mobile penetration stands at over 238,116,977active lines according to the Nigerian Communications Commission, with 21 million smartphones in circulation according to Jumia Mobile Report 2018. Compared to the 97.57 million bank accounts reported by the Nigeria Inter-Bank Settlement System (NIBSS) as being in existence in February 2017, it is evident that more Nigerians own mobile phones than those that operate bank accounts, even accounting for double or multiple mobile line registrations.
A report by KPMG Africa, estimated that only 30 million Nigerians have access to bank accounts.
There is therefore a clear incentive to harness mobile penetration as a means of driving e-payments and in turn driving economic growth.
The example of Kenya could provide some guidance here. Kenyans transacted a record US$33 billion on mobile money transactions in 2016, up from US$27.8 billion from the previous year, according to data from the Central Bank of Kenya.
In recognising this potential, and in an effort to bolster the use of mobile money, the CBN has repealed its decision to exclude telecommunications companies in Nigeria entirely from operating as purveyors of mobile money.
Approval was given to Globacom, Nigeria’s second national operator, to create 500,000 mobile money agent outlets in the country through the Glo Xchange, a mobile money agent network in partnership with 3 commercial banks.
Whilst this is a positive development, much more is required by the CBN in opening mobile payments to the telecommunications companies without restricting them to commercial banks. This will further harness their rich subscriber base.
The CBN is advised to identify opportunities to engage stakeholders and experts in dialogue, to identify avenues for collaboration on mobile payments, and mitigate potential problem areas.
The role of e-payments and financial inclusion in Nigeria’s economy will be further discussed at the “Technology as a Catalyst for the Ease of Doing Business” Conference 2018, due to hold on October 5, 2018, organised by Perchstone & Graeys and Knowledge Resources Limited, in conjunction with The Presidential Enabling Business Environment Council (PEBEC).
If interested, kindly send an email to [email protected] to express your interest in attending this conference.
Nigerians lost N25.85 billion to digital payment fraud in 2025, according to Central Bank of Nigeria (CBN).
Though the figure represents a significant decline from the N52.26 billion recorded in 2024, CBN, said the losses remained substantial for payment service providers (PSPs).
According to the report, although the value of digital payment fraud declined significantly year-on-year, when compared to the N52.26 billion recorded in the previous year, the losses remained substantial for Payment Service Providers (PSPs), underscoring the need for stronger fraud prevention measures across the industry.
In the report, the CBN, also identified systemic risks, cyber threats, the dominance of a few systemically important payment service providers, and the activities of unlicensed payment companies as major concerns confronting the financial sector.
According to the report, although the value of digital payment fraud declined significantly year-on-year, the losses remained substantial for Payment Service Providers (PSPs), underscoring the need for stronger fraud prevention measures across the industry.
“Digital payment fraud in Nigeria stood at N25.85 billion in 2025,” the apex bank said.
It noted that while this represented a considerable improvement from the N52.26 billion lost in 2024, the amount remained significant.
“Though this was lower than N52.26 billion in the preceding year, it represented a substantial loss for PSPs,” the report stated.
The CBN attributed the reduction in fraud losses to enhanced security measures implemented across the financial sector.
It said, “The lower losses in 2025 reflected improvements in monitoring, BVN-NIN integration, and tighter controls.”
Beyond fraud, the report warned that Nigeria’s rapidly expanding digital payments landscape faces increasing systemic vulnerabilities as banks and fintech companies become more interconnected through shared payment infrastructure.
According to the report, a major operational failure involving a single payment service provider could quickly spread across the financial system because of the growing dependence on integrated payment platforms.
The CBN observed that despite ongoing efforts to strengthen payment system integration, interoperability remains a significant challenge.
It disclosed that about half of fintech stakeholders continued to express dissatisfaction with the current level of system-wide interoperability.
The report stated that “about 50.00 per cent of fintech stakeholders continued to rate system-wide interoperability as poor, primarily due to the lack of universal APIs and data-sharing standards.”
The apex bank also expressed concern over the concentration of payment activities among a few Systemically Important Payment Service (SIPS) providers, warning that operational failures involving any of them could have widespread consequences.
It explained that the failure of such providers could trigger a “domino effect”, where insolvency or operational glitches in one payment service provider spread rapidly to others, disrupting the smooth functioning of the financial system.
Cybersecurity also featured prominently among the risks identified in the report.
The CBN warned that payment service providers remain vulnerable to ransomware attacks, data breaches and credential theft, noting that cybercriminals are becoming increasingly sophisticated in targeting financial institutions.
According to the report, “Banking and fintech institutions remained prime targets for ransomware, data leaks, and credential theft.”
It added that, “Cyber threats in Nigeria are no longer random cybercrimes, but increasingly targeted, organised, and identity-driven campaigns.”
The report further cautioned Nigerians against transacting with unlicensed payment companies, stressing that such entities operate outside regulatory oversight and expose users to significant financial risks.
It warned that customers using unlicensed PSPs are not protected by existing regulatory safeguards and that such operators could facilitate illicit financial activities.
“Users of unlicensed PSPs are not covered by regulatory protection that comes with effective oversight and supervision,” the CBN said.
It further warned that, “Unlicenced payment companies are gateways for money laundering which could undermine regulatory efforts and corrode public trust.”
The report underscores the growing importance of strengthening fraud detection systems, improving payment infrastructure interoperability, enhancing cybersecurity resilience, and intensifying regulatory oversight as Nigeria continues to expand its digital payments ecosystem.
Nigeria Revenue Service (NRS) yesterday announced that medium and large companies in Nigeria that earn income from cryptocurrency and other virtual asset transactions will now be subject to a 30 per cent corporate income tax.
NRS stated this in its new guidelines setting out a tax framework for cryptocurrency and other digital asset transactions.
The guidelines cover registration, record-keeping, valuation, and tax treatment for VASPs, P2P operators, and individuals in the virtual asset space.
NRS said the move is aimed at encouraging voluntary compliance and improving transparency as Nigeria’s digital asset sector grows.
The Guidelines on the Taxation of Virtual Assets, provide a comprehensive framework for the taxation of virtual asset transactions and businesses operating within Nigeria’s digital economy.
The guidelines apply to companies, individual taxpayers, Virtual Asset Service Providers (VASPs), peer-to-peer (P2P) marketplace operators and other participants in the virtual asset ecosystem
The latest framework follows the signing of the Presidential Executive Order on Virtual Assets Coordination, 2026 by President Bola Tinubu, which established a coordinated regulatory structure for cryptocurrencies, stablecoins, tokenised assets and other digital assets across government agencies.
According to the NRS, companies that derive profits from virtual asset activities will be taxed under the provisions of the Nigeria Tax Act (NTA), 2025. While small companies will continue to enjoy applicable tax exemptions under the law, medium and large companies will be liable to the standard 30 per cent corporate income tax rate.
The agency stated that taxable income under the guidelines covers a broad range of virtual asset-related activities, including cryptocurrency trading, the operation of virtual asset exchanges, transaction fees, brokerage commissions, custody and wallet services, token issuance, mining, staking, decentralised finance (DeFi) activities, investment gains and other virtual asset business operations.
According to the guidelines, “Applicable rates under the NTA include progressive rates for individuals, and 30 per cent for companies other than small companies.”
The NRS said the guidelines were introduced to provide clarity, certainty and consistency in the administration of Nigeria’s tax laws as they apply to virtual assets, adding that the framework is intended to improve transparency, encourage voluntary tax compliance and support the development of an efficient tax regime for the digital asset sector.
The agency also clarified that merely holding cryptocurrencies or other virtual assets does not constitute a taxable event.
Any appreciation in the value of a digital asset while it remains in a taxpayer’s possession will not attract income tax until the asset is sold, exchanged or otherwise disposed of through a taxable transaction.
Similarly, transfers of cryptocurrencies or other virtual assets between wallets owned and controlled by the same individual are exempt from income tax, provided there is no change in beneficial ownership.
This means that moving digital assets such as Bitcoin or Ether between personal wallets will not trigger a tax liability.
However, the exemption does not extend to transfers involving companies, partnerships, trusts, unincorporated associations or other legal entities, where different tax rules may apply.
The NRS further explained that although these non-taxable transactions do not attract immediate tax, they establish the acquisition cost for future disposals.
Consequently, taxpayers are required to maintain adequate records of acquisitions, transfers and disposals to facilitate accurate tax computations when taxable events occur.
The guidelines also reaffirm that unrealised gains on cryptocurrencies and other virtual assets are not subject to income tax. Instead, tax liability arises only when a taxable disposal takes place, aligning Nigeria’s approach with internationally recognised principles for the taxation of digital assets.
The issuance of the guidelines is expected to provide greater regulatory certainty for investors, businesses and digital asset service providers, while strengthening the government’s efforts to expand the tax base and improve compliance in Nigeria’s growing virtual asset ecosystem.
As more Nigerians adopt digital financial services, fraudsters are also finding new ways to target unsuspecting users. Nigeria has recorded more than 24.1 million compromised online accounts since 2004, with hundreds of thousands of additional cases reported in early 2026. While these figures are not limited to financial accounts, they highlight the growing exposure of personal information and login credentials online.
Fraudsters often use phishing links, impersonation and other social-engineering tactics to trick people into revealing sensitive information such as passwords, OTPs, BVN or NIN details.
To help users strengthen the security of their accounts, PalmPay provides a range of built-in protection tools. One of these is the Transaction Guard.
The feature enables users to set single, daily, or monthly transaction limits. Whenever a transaction exceeds that limit, an additional verification step; facial verification- is required before it can be completed. This helps reduce the risk of unauthorized transfers, even if an account has been compromised.
Here’s how Transaction Guard helps keep your money safe:
- Keeps User in Control
The feature gives you greater control over your account by ensuring that higher-value transactions require your facial verification before they are processed. Transaction Guard requires facial verification before eligible transactions are completed, making it harder for unauthorized users to move your funds.
- Helps Mitigate Account Takeovers
Even if your login credentials or OTP are compromised, Transaction Guard helps limit potential losses by requiring an additional verification step that fraudsters cannot easily complete.
- Reduces the Risk of Fraud
By activating this security checkpoint, Transaction Guard helps protect users against common fraud attempts, giving them greater confidence when faced with scam attacks.
In a recent interview, Femi Hanson, Head of Marketing, PalmPay said: “Nigerians are increasingly embracing digital payments in their everyday lives hence maintaining trust and confidence of users must remain a top priority. Today, security is just as important as speed and convenience. That’s why PalmPa is continuously investing in solutions that give our customers greater control over their finances. Transaction Guard is one of those security features we’ve introduced to help users add an extra layer of protection to their accounts and mitigate fraud.”
How to Activate Transaction Guard
Activating Transaction Guard is quick and easy. Simply open the PalmPay app, go to Profile, tap Security Center, select Transaction Guard, switch it on, and complete the verification process.
As digital payments become embedded in everyday life, taking advantage of built-in security features can make a significant difference. By enabling Transaction Guard, PalmPay users can better protect their accounts and enjoy a safer, more secure digital banking experience.
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