In this week’s edition of Follow the Money, the focus shifts to the fast-evolving economics of digital payments and how they are reshaping revenue models across Nigeria’s biggest banks. Once dependent on loan interest, treasury operations, and modest service fees, banks are now seeing electronic transactions become one of their most reliable non-interest income streams—powered by higher transfer volumes, wider mobile adoption, and the intensifying shift away from cash.
New financial disclosures from eight leading institutions—Access Holdings, GTCO, UBA, Zenith, First HoldCo, Wema Bank, Stanbic IBTC, and Sterling Financial Holdings—show just how quickly this transformation is unfolding. For the first nine months of 2025, these banks collectively earned ₦514.82 billion ($356.91 million) from electronic payments, up 14.41% from ₦450.02 billion ($311.99 million) in the same period of 2024.
UBA led with ₦157.51 billion ($109.19 million), closely followed by Access Holdings at ₦151.35 billion ($104.93 million). The standout performer was Wema Bank, which posted a remarkable 160.32% surge to ₦24.42 billion ($16.93 million)—a sign of how aggressively mid-tier lenders are scaling digital channels.
Although the contribution of e-payments dipped slightly as a share of total fee income—from 29.03% in 2024 to 26.38% this year due to overall fee growth—the segment continues to cement itself as a long-term driver of bank revenue. The trend comes as Nigerians increasingly abandon cash. Between 2014 and 2024, cash usage fell 59%, a decline sharper than in the Philippines, Indonesia, or Germany. The downturn has been accelerated by smartphone penetration, fintech innovation, and regulatory shifts pushing instant and cash-lite payments.
How Banks Capture Revenue from E-Payments
Digital transactions processed through web and mobile channels hit ₦2.27 quadrillion ($1.57 trillion) in 2024, up from ₦1.32 quadrillion ($915.12 billion) a year earlier. In the first quarter of 2025 alone, Nigerians moved ₦647.05 trillion ($448.58 billion) through the same channels.
The economics are straightforward: banks earn ₦10 per transfer below ₦5,000; ₦25 for transfers up to ₦50,000; and ₦50 for anything above that threshold.
To illustrate the scale, GTCO processed ₦35.8 trillion ($24.82 billion) in the first half of 2025 via GTWorld and GAPS/GAPSLite. With an assumed average transfer of ₦50,000, that volume would translate into 716 million transactions, generating ₦35.8 billion ($24.82 million) in fees—excluding the government’s flat ₦50 duty on transactions above ₦10,000.
This exponential growth has intensified pressure on technology infrastructure. Web and mobile transfers rose to 31.76 billion in 2024—a 17.57% jump—prompting six of the eight banks to increase IT and technology spending by 11.39% to ₦301.54 billion ($209.05 million) in the first nine months of 2025.
Rising Competition from Fintech
While banks continue to dominate transaction volumes, fintechs are rapidly reshaping user expectations. Wallet-based providers like OPay and PalmPay processed ₦20.71 trillion ($14.36 billion) in Q1 2025—a fraction of what banks handle, but a staggering 1,518.64% increase from Q1 2021. Their low fees, instant transfers, and superior user experience have pushed banks into defensive innovation; some are now reducing or waiving charges entirely. In April 2025, Sterling Bank removed transfer fees on its OneBank app—an early sign of price-driven competition.
The Unfinished Story: Exclusion and Infrastructure Gaps
Behind the headline numbers lies a stark truth: millions remain outside the digital payments ecosystem. Moniepoint’s 2025 Informal Economy Report shows that only one in four informal businesses earns at least 10% of its revenue digitally. Cash still accounts for 51% of their transactions.
- Six in ten Nigerians remain offline, particularly in rural communities.
- Smartphone access stands at 39% in rural areas, compared with 73% in cities.
- For a significant share of young and low-income Nigerians, persistent poverty makes even a single transfer fee burdensome.
These gaps reveal that the digital payments boom still has enormous headroom for growth—and simultaneously that current gains benefit banks far more than underserved populations.
A Sector Approaching a Crossroads
As transaction volumes surge and banks ramp up their digital infrastructure, debates are emerging about whether the financial system is expanding inclusion or simply scaling fee-based revenue streams. Fintechs, sensing the friction, have targeted underserved demographics with cheaper and faster alternatives, forcing the banking industry to respond.
What happens next will depend on how quickly infrastructure improves and how effectively players—both banks and fintechs—balance profitability with accessibility. What is clear, however, is that digital payments have shifted from a minor revenue line to a central pillar of banking strategy, reshaping competition, investment priorities, and the future of financial services in Nigeria.