According to the latest figures released by the Nigeria InterBank Settlement System (NIBSS) the West African country recorded a reduction in the volume of PoS transactions in January 2016 compared to the figures for December 2015.

Christabel Onyejekwe, Executive Director, Business Development at NIBSS, says there were NGN46 billion worth of transactions that were performed on ATMs across Nigeria in January compared to NGN53 billion recorded in December 2015.

While noting that the December festive period may have been responsible for the difference, Onyejekwe also observed that the number of PoS terminals deployed by merchants have not increased for the past one year.

She said: "There is dilemma in the deployment of PoS terminal in that space, which has remained at 62, 000 for the past one year because of high exchange rate of the naira to the dollar, which makes the cost of a terminal high ...to go for as much as N80, 000 per terminal."

Commenting on the development, Tunde Ogungbade, managing director at electronic transaction management support provider Global Accelerex, said since PoS terminals used in Nigeria are imported, their prices are expected to rise in response to the dwindling fortune of the Nigerian currency over the past four months.

He said: "In the short run, I do not believe it will have a significant impact on PoS terminal deployment rates. We will continue to see forward-looking banks leveraging PoS terminals and other e-channels to drive down cost and offer innovation to merchants and customers. However, in the long run, this may have an adverse effect on the deployment rate of PoS terminals because these same banks have already been hit by the reduction in revenues due to the policy changes that eliminated COT charges to customers, in spite of the new policy on current account maintenance fees. In future earnings reports, cost reduction will be critical to achieving earnings, therefore, banks will be more prudent with costs and investment offers to their investor confidence. Return on Invested Capital (ROIC) for PoS terminals will be more scrutinised."

Stimulating cashless initiative

Ogungbade said Nigeria can stimulate its cashless initiative in 2016 by increasing its campaigns on the cashless policy.

He called for the discouragement of deposits of large amounts at banks to drive adoption at the merchant locations and thereby leverage the direct interaction between consumers and merchants for education.

"When a merchant starts to encourage a consumer to engage electronic channels for commerce, awareness and campaign at the grassroots level has begun," he said.

However, Regha Onajite, CEO of Electronic Payment Providers Association of Nigeria (EPPAN) said the motivation for adoption for consumers is the convenience and security since there is no compulsion to adopt by the way of penalty.

"But hopefully, as people begin to align themselves with the benefits of electronic payment, we should gradually see a hundred percent increase in the next one year," she said.