What are the popular payment methods in Nigeria compared to Saudi Arabia?

The Middle East and North Africa (MENA) region has recently seen significant growth in e-commerce, which has coincided with significant advances in point-of-sale (POS) payment systems. This dynamic shift, which reflects a broader global trend toward digital transformation, is changing the way customers shop and how organizations operate. This article explores the new payment patterns that are emerging in the MENA region.

Globally, payment systems are rapidly evolving due to changes in consumer behavior and technological improvements. Nigeria and Saudi Arabia offer unique case studies in the MENA region. Nigeria is still heavily reliant on cash, but Saudi Arabia is seeing a significant transformation in payment methods to digital.

Payment Methods in Nigeria

1. Nigeria’s Cash Dominance

In Nigeria, cash remains the most popular payment method, accounting for 55% of total POS transaction value in 2023. Cash usage is expected to decline at a compound annual growth rate (CAGR) of -4% from 2023 to 2027, despite the growing acceptance of digital payments. Cash is expected to continue to account for a significant portion of POS spend by 2027, at 42%.


2. Nigerian Online Sellers Accept Cash on Delivery

Cash holds significant value in e-commerce, as evidenced by the 15% share of cash on delivery (COD) in Nigeria’s e-commerce spend in 2023. While this is expected to drop to 9% by 2027, it underscores how prevalent cash is in online transactions. Given the lack of digital infrastructure and concerns about trust, COD is still widely used.

3. The growth of A2A payments

In Nigeria, account-to-account (A2A) payments are becoming increasingly common for online transactions. The growth of this payment mechanism is expected to reach 34% by 2027, mainly due to its direct transfer capabilities and security. A2A payments are a reliable substitute for cash and conventional credit card payments, especially in the e-commerce industry.

4. The digital wallet market in Nigeria is growing

In Nigeria, digital wallet usage is expected to grow from 11% in 2023 to 22% by 2027. Wallets like PayPal, Paga, and OPay are becoming increasingly popular as mobile phones and internet connections become more widespread. An increasing number of Nigerian consumers are finding digital wallets attractive due to their security and ease of use.

Payment methods in Saudi Arabia

1. Leader in the debit card industry in Saudi Arabia

In Saudi Arabia, debit cards are the most widely used form of payment, both online and offline. Debit cards accounted for 30% of point-of-sale transaction value in 2023 and 27% of e-commerce spending. Debit cards are widely used in Saudi Arabia, mainly due to the popularity of the Mada card brand, which is controlled by the Central Bank of Saudi Arabia.

2. Reduction of cash advances