…amid cash crunch

Many more Nigerians may have embraced Payment Service Banks (PSBs) in the last two months since a crippling cash crunch hit Africa’s largest economy.

This is a fallout of an increase in the volume of online banking transactions arising from the cash crunch and the seeming inability of Nigeria’s traditional banks’ infrastructure to support the increased volume.

Nigerians have been faced with a cash crunch that has direly affected businesses and livelihoods since the country’s Central Bank (CBN) withdrew, redesigned and reissued the higher denominations of the naira banknotes (N200, N500 and N1,000).

The CBN had initially given a deadline of January 31, 2023 for the old notes to lose their legal tender status before later extending it to February 10, 2023.

Despite a ruling by the country’s Supreme Court extending the validity of the old notes to December 31, 2023, the scarcity of both the old and the new naira notes has persisted, forcing many Nigerians to embrace mobile banking services. However, the failure rate of transactions using traditional banks’ apps and the difficulty in resolving these failed transactions, leading to overcrowding in most bank branches, have seen more people embracing PSBs.

Whereas the commercial banks still warehouse the bulk of Nigerians’ deposits, many more citizens say they have opened accounts with PSBs (digital banks) since the cash crunch began – from supermarkets to stalls, big-time traders, small businesses, and even local market men and women.

Nigeria boasts of a number of online banks. Prominent among them are OPay Digital Service Limited, Palmpay, Moniepoint, 9PSB, MoneyMaster PSB, MOMO PSB, SmartCash PSB, HopePSB, among others.

These digital banks, though they have been in existence, have become more popular in the face of the crushing cash crunch. Some Nigerians who have embraced them cite their efficiency and convenience, especially with fund transfers.

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“Traditional banks’ networks are very bad especially when it comes to money transfer and it takes like four to five days before you see the credit alert, but OPay and Palmpay transactions are usually very fast and you will see the alert immediately,” Victoria Adeniji, a POS operator in Lagos, told The Nigerian Observer over the telephone.

Esosa Osagie, a trader in Benin City, said she opened an account with OPay when she found that it was what most of her customers were using and also because of its efficiency.

“All the credit alerts I have been receiving from my customers come from OPay and Palmpay, unlike before. I have therefore opened an OPay account because it makes it easier for me to buy goods from my supplier,” Osagie said.

Payment Service Banks do not have physical branches as their operations are strictly internet-based, making it easier for many to connect in the world of technology and internet.

Being regulated by the Central Bank of Nigeria (CBN) ,their guaranty can be said to be hundred percent i.e safe to use, secured and no fear of crashing on the long run.

Owing to the fact that there are no charges on their services unlike the traditional banks, there might be questions like ;how do they fund their operations, pay their online staffs and still deliver their services accurately.

The digital banks also make account opening easy. Unlike the tedious paper work and documentation that opening an account with the traditional banks requires, account opening with a PSB sometimes requires the customer to online have a mobile phone and a phone number.

Also, some of these online banks grant short-term loans to their customers for an agreed period with stipulated interest. Through this means, many, like Sultan Olayode, have resolved pressing financial challenges.

“I am able to pay my acceptance fee from the loan I took from Palmpay and the interest rate is not too high,” said Olayode, who just gained admission into the university