By Babajide Komolafe

Transaction processing for banks and other financial services is set to surpass US$15 billion (N2.4 trillion) this year as the Central Bank of Nigeria (CBN) intensifies the implementation of the cashless policy of the economy aimed at reducing the quantity of physical cash in circulation.

Mr. Mitchell Elegbe, Managing Director/CEO, Interswitch, the transaction and switching firm that handles front-end-processors of all banks in Nigeria, most Points of Sale (PoS) and automated teller machines (ATMs) including debit and credit cards interbank transactions said the full implementation of the cashless policy at the end of March would grow the electronic payment landscape.

Despite about 18 million to 20 million cards of various makes from debit, credit, e-purse and loyalty schemes in circulation which allows consumers and enterprises to pay and collect bills and taxes via many channels such as ATMs, banks, PoS, online, etc, he said Nigeria still lags behind many nations in bank accounts, ATM and PoS deployments.

Presently, commercial banks are working to raise the level of inter-bank processing and transactions volume to over 1100 million before the end of 2012 which would see many more Nigerians using electronic modes of payment for their transactions including payment of utility bills, tax, and banking payments.

The  CBN said cash transactions represent over 99 per cent of customers’ activities in banks. Statistics from World Bank, MobileActive, Nielsen Online, International Telecommunications Union (ITU), McKinsey, Euromonitor International, Roland Berger and Finscope show that Nigeria remains relatively unbanked compared to Germany, United Kingdom, USA, Saudi Arabia, South Africa, Namibia and Botswana.

While Nigeria has 79 per cent of its population unbanked, Germany, United Kingdom, USA, Saudi Arabia, South Africa and Namibia and Botswana have over 59 per cent of their population unbanked compared to Nigeria.

However, bank accounts in Nigeria have grown from seven million in 2004 to 25.4 million in 2010 at 24 per cent compound annual growth rate (CAGR) contributed by the apex bank’s policy to switch from magstripe to EuroPayMastercard (EMV) chip and pin card conversion.