Digital payments in Nigeria have recorded a 276 per cent increase in transaction volume over the past five years, underscoring rapid adoption of electronic channels, even as cash continues to play a critical role in the economy, the Central Bank of Nigeria has said.

This was disclosed at the Committee on Bank Operations Annual Conference on Friday, where the Governor, Mr Olayemi Cardoso, delivered the keynote address through his Special Adviser, Fatai Kareem.

In his address, the CBN governor highlighted the need for a balanced payment ecosystem in which digital innovation and physical cash coexist rather than compete.

According to the data presented during the keynote, the value of digital payment transactions also grew by 581 per cent over five years. The figures, drawn from industry payment infrastructure, reflect increasing consumer confidence, policy reforms, and technological innovation within Nigeria’s financial system.

Despite this growth, the CBN emphasised that cash usage has not declined. Currency in circulation rose from about N2.4tn in 2020 to approximately N5.1tn in 2025, while total currency in circulation increased by 4.6 per cent year-on-year as of December 2025.

He said, “Nigeria’s payment ecosystem has evolved significantly over the past decade. While policy remains somewhat cash-oriented, experience shows that cash continues to play a critical role, particularly in informal markets, rural communities, and among vulnerable populations.

“At the same time, electronic payments enhance transparency, efficiency, and inclusion. When properly governed, electronic channels complement cash, reduce pressure on physical currency management, and provide scalable alternatives during peak demand. The objective is balance: maintaining confidence in cash while accelerating reliable electronic payment adoption.

“Cash availability is not solely a function of currency issuance. It depends on logistics, infrastructure, incentives, and coordination among financial institutions. Failures in access—ATM outages, illiquidity—undermine confidence in the system. Banks play a critical role in shaping the future of cash.

“They must invest in technology, collaborate with regulators, improve cash deposit mobilisation, strengthen fraud prevention, and enhance digital platforms. The Central Bank remains fully committed to building a resilient, inclusive payment system by strengthening infrastructure, modernising currency management, and supporting responsible innovation.”

The governor said electronic and digital payment channels, when properly designed and governed, complement cash by easing pressure on physical currency management, improving efficiency, and providing alternatives during periods of operational stress.

He added that the strategic challenge for Nigeria is not choosing between cash and digital payments, but ensuring citizens can always access cash when needed while building trust in electronic channels for everyday transactions.

“In conclusion, progress is not measured by how quickly we adopt technology, but by how effectively systems improve lives, reduce friction, and expand productivity. The strategic challenge is not choosing between cash and digital payments, but ensuring citizens can access cash when needed while building trust in electronic channels.

“Achieving this balance requires coherent policy, strong oversight, and close industry coordination. When aligned, the payment system supports economic activity, financial inclusion, and public trust,” he asserted.

In his welcome address, the First Vice Chairman of CHBO, Tolulope Ogundipe, who represented the Chairman, CHBO, Abraham Aziegbe, said Nigeria’s financial system is at a defining crossroads, shaped by the rapid rise of digital innovation on one hand and the enduring relevance of physical cash on the other.

He said, “We stand at a defining crossroads. On one side, the breathtaking rise of digital innovation is reshaping financial services at an unprecedented pace. On the other hand, the enduring presence of physical currency continues to ramp up trust, inclusion, and stability in our economy.

“Today, our mission is clear: to explore how cash and digital can co-exist, not as rivals, but as complementary forces that shape Nigeria’s financial future. The story of cash versus digital in Nigeria is layered and complex. Yes, digital payments are surging, reflecting consumer confidence and our collective ingenuity. Yet, cash remains deeply woven into the fabric of everyday life. For millions, especially in rural communities, cash is not just convenient; it is essential.

“Recent figures from the Nigeria Inter-Bank Settlement System highlight this dual reality. Electronic transactions have soared over the past decade, yet outages and infrastructure challenges have triggered spikes in cash usage. In fact, the Central Bank of Nigeria reported that ATM withdrawals reached N36.34tn in just the first half of 2025, a staggering leap from N12.21tn during the same period in 2024. This is not a relic of the past; it is a reminder that cash remains a cornerstone of resilience, continuity, and trust. Our challenge, therefore, is not to diminish cash, but to reimagine its role.”

In his presentation, the Managing Director/Chief Executive, Bankers Warehouse Plc, warned about the high value of cash outside the banking system, describing it as a matter requiring urgent action.

He said, “There was a dislocation, there’s a trust issue. There are a few other things. There is a need to invest in infrastructure, and there’s a need to invest in power. All of those things can affect the system. The cash comes in, and it leaves the banking system.

“It is supposed to come back to the banking system every week and go out and come back—that’s where we’re talking about the velocity of funds and velocity in transactions.

“Now, what is happening is that it’s outside of the banking system, and so when it gets out, people are transacting amongst themselves outside the bank, which can affect monetary policy and impact anything that we do. It means that we cannot even tell the quantum of cash that is authentic or not outside the system. This is a problem that needs to be resolved, and we all need to solve it.”