Nigeria: Cash, digital payments must coexist, says NIBSS

The Nigeria Inter-Bank Settlement System (NIBSS) has reaffirmed the continued relevance of cash in Nigeria’s payment ecosystem, stressing that physical cash must coexist with electronic payment channels as digital adoption accelerates.

Speaking at the 2026 Committee of Heads of Bank Operations (CHBO) Conference in Lagos, NIBSS Executive Director for Business and Products, Ngover Nwankwo, said innovation in payments must be matched with inclusion to ensure no segment of the population is excluded.

“Our focus is balancing innovation with inclusion, ensuring no Nigerian is left behind as digital payment adoption grows,” Nwankwo said.

She emphasized that cash remains indispensable, particularly for segments of the economy that still rely heavily on it, noting that both cash and digital platforms must function side by side.

“Cash and digital platforms must work together, protecting those who depend on cash while delivering secure and efficient services to digital users,” she added.

Nwankwo commended banks for recent operational improvements, noting that cash availability during the December 2025 period was largely smooth, with minimal complaints from the public. She also highlighted the growing use of biometric authentication, which allows customers to request and verify cards using fingerprints without extensive paperwork.

Meanwhile, the Central Bank of Nigeria (CBN) has disclosed plans to introduce a new regulatory policy that will link debit card issuance approvals to banks’ investments in cash withdrawal and ATM infrastructure.

The planned policy, which is currently under review, was revealed by the CBN Governor, Olayemi Cardoso, through his Special Adviser, Fatai Karim. According to the apex bank, the move is aimed at sanitizing debit card issuance and improving ATM operations across the banking sector.

The CBN said the policy will align the number of debit cards issued by banks with their deployed ATM infrastructure, in order to reduce congestion, downtime and uneven cash availability nationwide. Persistent ATM failures and cash shortages, the bank noted, continue to erode public confidence in electronic payment channels, despite the rapid growth of digital transactions.

Under the new framework, banks will no longer be permitted to issue large volumes of cards without making corresponding investments in ATMs and cash management infrastructure.

“Very soon, the Central Bank will be coming up with another policy to sanitize and improve the situation, particularly around how many cards banks issue relative to the number of ATMs they support,” the CBN said, adding that prolonged ATM outages and uneven cash distribution weaken the credibility of the entire payment system.

Karim said the CBN is engaging stakeholders across the industry, with the policy expected to take effect within the next few months, possibly before the end of the second quarter.

Over the years, Nigerian banks have aggressively expanded debit card issuance to drive financial inclusion and digital payments, while ATM deployment and cash logistics investments have lagged behind. This imbalance has resulted in long queues, empty machines and failed transactions, pushing many customers toward informal cash channels such as POS operators, often at higher costs.

Despite ongoing efforts to modernize the payments system, these structural challenges have persisted. The proposed policy is expected to reshape banks’ card issuance strategies, encourage greater investment in ATM infrastructure, and improve uptime and cash availability.

The CBN said improved infrastructure would reduce reliance on informal cash channels and help restore confidence in both cash access and electronic payments—an outcome it described as critical to financial system stability and public trust.

While digital payments continue to expand, the apex bank reiterated that cash remains relevant, especially in informal markets and rural communities. CBN data show that currency in circulation grew by 4.6 per cent in December 2025 compared with the same period in 2024.

The CBN stressed that its objective is not to eliminate cash, but to strike a sustainable balance between cash and digital payments, ensuring Nigerians can reliably access cash while building confidence in electronic channels for everyday transactions and emergencies.