The sharp rise, a 198% increase, underscores a deeper truth about the country’s economy: cash remains king, even in a rapidly digitising financial landscape.

The data, drawn from the Central Bank of Nigeria’s (CBN) Quarterly Statistical Bulletin, reveal that despite efforts to nudge consumers toward digital channels, cash continues to play an outsized role in daily transactions.

Between January and June 2025, Nigerians made 858.8 million ATM withdrawals, a significant jump from 496.5 million in the same period of the previous year, a near 73% increase in volume.

Policy Push Meets Practical Realities

Earlier in 2025, the CBN revised its ATM fee structure, removing the previous allowance of free cross-bank withdrawals and introducing charges on not-on-us transactions, those made at ATMs owned by other banks.

Under the new rules, customers now pay ₦100 per ₦20,000 withdrawn, with additional surcharges on machines located off-site, such as in malls or fuel stations.

The policy was intended to encourage greater efficiency in ATM operations and reduce excessive cash reliance by making physical withdrawals more expensive.

Yet the surge in usage suggests that cost-sensitive consumers have little choice but to keep cash close at hand, even as fees bite deeper into their wallets.

Why Nigerians Still Reach for Cash

Analysts and industry watchers point to several factors driving this trend:

• Persistent Cash Demand: Many Nigerians still depend on cash for everyday transactions, especially in informal markets where digital acceptance is limited.
• Economic Access: For low-income earners and small traders, withdrawing smaller sums more frequently is often a necessity, even if it incurs higher costs.
• Trust and Convenience: Cash provides certainty and immediate liquidity in a context where network issues, agent reliability and digital fraud concerns can discourage electronic transactions.
• Infrastructure Gaps: While point-of-sale (POS) and mobile money channels are expanding, they have not yet displaced cash as the default means for many consumers and businesses.

These trends are reflected across monthly data, with ATM withdrawals climbing steadily from January through June 2025, even as payment channels such as POS see robust growth.

Broader Implications for Policy and the Economy

The persistence of cash usage raises questions about the effectiveness of policies aimed at accelerating Nigeria’s transition toward a cashless economy.

While electronic payments continue to expand in absolute terms, the accelerated growth in ATM withdrawals indicates that underlying behaviour has not shifted as quickly as policymakers hoped.

Economists warn that an overreliance on cash can undermine monetary control, limit financial inclusion, and slow the adoption of more efficient digital channels.

At the same time, fees designed to discourage cash use can disproportionately hurt vulnerable populations who lack access to alternatives.

What Comes Next?

As the CBN and financial institutions work to expand digital infrastructure and payment options, the data on cash withdrawals serves as a reminder of the challenges ahead.

For many Nigerians, cash is not just a medium of exchange, it is a lifeline in an economy where electronic alternatives are still not fully accessible or trusted.

Whether through policy refinements, financial education or broader acceptance of digital channels, the push to balance cash and digital transactions will remain a central theme of Nigeria’s financial evolution.

The goal?

To reduce operational costs for banks and improve ATM access nationwide.

This announcement has sparked conversations among consumers, financial institutions, and industry experts.

While the CBN policy is positioned as a solution to Nigeria’s ATM challenges, a deeper issue remains unaddressed—transaction inefficiencies.

For years, Nigerian banking customers have struggled with ATM-related frustrations, from failed withdrawals to slow dispute resolutions and system downtimes.

Will adjusting fees make ATMs more accessible? Possibly. But will it make transactions faster, more reliable, and hassle-free? That’s a different question.

The Real Issue: Inefficiency Over Cost

Interestingly, NIBSS reported that active bank accounts reached 311.65 million as at December 2024. However, Nigeria has less than 22,000 ATMs, serving a population of over 200 million people and access to cash remains difficult due to frequent cash shortages, connectivity failures, and reconciliation delays.

For many Nigerians, ATM challenges extend far beyond withdrawal fees. In this 2024 report, nearly 30% of ATM transactions failed due to network issues, cash shortages, or other operational failures.

The current system faces persistent challenges, including frequent transaction failures where customers are debited without receiving cash, leading to frustration and financial inconvenience. Dispute resolution is also slow, with refunds for failed withdrawals often taking days or even weeks to process.

Additionally, the limited availability of ATMs—due to high operational costs—prevents banks from expanding their networks, resulting in long queues and restricted access to cash for many customers.

These issues indicate that while fee adjustments may increase ATM installations, they won’t necessarily make transactions more efficient or customer friendly.

Why Fees Alone Won’t Solve the Problem

The new policy is expected to help banks offset the rising cost of ATM maintenance and cash handling, potentially leading to an increase in ATM installations across the country.

However, simply increasing the number of ATMs or the cash within them without improving their reliability will not solve the core issue.

Expanding the number of ATMs won’t be effective if transaction failures remain frequent. Lower fees will have little impact if customers still spend hours trying to withdraw cash. Even with improved infrastructure, adoption will be limited if trust in ATM reliability remains low.

For CBN’s initiative to truly succeed, banks need to go beyond just cost recovery and expansion—they must focus on efficiency, security, and automation in ATM transactions.

Technology as the Missing Link

One of the biggest gaps in Nigeria’s financial system is the lack of real-time, automated transaction processing for ATM withdrawals.

This is where technology can play a transformational role. Several innovative financial solution technologies have the potential to revolutionize ATM efficiency.

However, advancements like AI-driven fraud detection can enhance security by preventing unauthorized withdrawals, while real-time settlement solutions can eliminate delays in refunding failed transactions, improving overall customer experience and trust in the system.

Some Nigerian banks have already adopted blockchain-powered solutions for ATM transactions. These systems enable instant reconciliation and faster refunds when failures occur. Zone Payment Network, among others, has demonstrated how blockchain can streamline payment processing, reducing disputes and enhancing customer experience.

By integrating blockchain and real-time payment infrastructure, financial institutions can increase efficiency, eliminate delays, and restore consumer trust in ATM transactions.

A Holistic Approach is Needed

CBN’s new policy is a step in the right direction, but for meaningful, long-term improvements, Nigeria’s banking sector must go beyond fee adjustments.

A combination of regulatory policies and technological innovation is essential to create a system where ATM transactions are not just affordable—but also seamless, fast, and reliable.

To achieve this, key stakeholders must prioritize real-time reconciliation to ensure transaction failures are resolved instantly. Investing in decentralized financial infrastructure can help reduce transaction bottlenecks, while leveraging AI and automation will optimize ATM uptime and minimize failures, ultimately improving efficiency and customer experience.

The Bigger Question

As CBN works to improve ATM accessibility through fee restructuring, financial institutions must consider the bigger picture—does Nigeria’s ATM system need more machines, or does it need better technology to ensure smooth transactions?

If we truly want to enhance financial services, the conversation must shift from fees to efficiency.

Would better technology adoption make a bigger difference than fee restructuring?

During a visit to an ATM stand in Lagos, we spoke with a customer who shared that eight out of ten ATMs are either out of service or have no cash. “This Bank never has money in their ATM,” she said.

“Even when they do, it’s usually only until noon, and then they stop working. The only option is to go into the bank and make transfers yourself.”

Techeconomy engaged with an insider at one of Nigeria’s top-tier banks to understand why this problem seems unending. We wanted to know: Why aren’t banks keeping their ATMs filled? Do they deserve the sanctions imposed by CBN?

In response, the insider said, “That’s a broad conclusion for a bank that has over 800 branches. I’m not sure how many branches the customer has visited before arriving at that. However, I can tell you several challenges faced by banks in Nigeria and not just ours, but it is heavier on us because of our high number of branches.”

He continued, “Yes, there is a CBN sanction on banks when your ATMs are not dispensing. The regulatory body expects the bank to load their machines when there is an obvious epidemic in the sector called “POS.”

The PoS Epidemic: A Growing Concern

The PoS (Point of Sale) phenomenon has become a big issue in the Nigerian banking sector, contributing heavily to cash shortages in ATMs. 

With the high reliance on PoS agents across the country, many Nigerians are using them as alternatives to traditional banking transactions. However, PoS agents, who often carry large sums of cash for transactions, are now becoming primary players in the liquidity problems facing banks.

“PoS agents are constantly on standby at ATMs and business locations, to collect and buy cash from customers or businesses,” the insider explained. 

“While these agents may seem to help by making things easier and providing access to cash withdrawal or deposit, in the larger scheme, they’re creating problems. The fact is, businesses are becoming more reliant on PoS agents rather than making traditional cash deposits in banks.

“They are making things difficult for both the masses and the Banks.”

This has caused a drastic reduction in the amount of cash flowing into the banking system, leading to shortages at ATMs. It’s reported that in some urban areas, PoS agents have begun hoarding cash to capitalize on the high demand, further straining ATM services.

While the CBN sanctions are meant to encourage better service across ATMs, it’s still not clear how effective they have been. The insider acknowledged the CBN’s role in attempting to regulate ATM cash availability but also noted the complications faced by banks in meeting these demands, especially when dealing with the PoS issue.

“Yes, the CBN expects us to have cash readily available at ATMs, but what is the bank to do when there is a continuous shortage of cash in circulation? How many companies are still making cash deposits? Most businesses rely on PoS agents now,” the insider said.

According to the Nigeria Inter-Bank Settlement System (NIBSS), the number of PoS terminals in Nigeria surged by 129% over the past three years, with an increasing percentage of Nigerians using PoS services daily. This growth in PoS usage has greatly impacted the ability of banks to maintain sufficient cash flow in their ATMs.

This ATM cash shortage crisis is not an isolated banking issue; it is intertwined with Nigeria’s economic challenges. The scarcity of cash is just one symptom of larger financial challenges the country is facing, including inflation and the ongoing transition to a cashless economy.

The government’s vision of digital financial inclusion, paired with inflation and currency devaluation, has placed high pressure on the banking system. As cashless transactions become more prevalent, many Nigerians are still challenged with access to physical currency for daily needs. These economic factors have compounded the challenges banks face in providing adequate ATM services.

Addressing the Root Cause: PoS Regulation

The key to solving the ATM cash issue lies in addressing the root cause—the unchecked proliferation of PoS agents. While PoS services are undoubtedly improving access to cash for many Nigerians, the increasing demand and the role PoS agents play in withdrawing cash from the banking system are draining the liquidity needed to sustain ATM networks.

The insider stressed, “Before banks can begin to solve the ATM shortage, there needs to be a conversation around regulating the PoS sector. We need to ensure that businesses are encouraged to deposit cash back into the system, rather than hoarding it.”

“The menace of POS first needs to be tackled.”

Meanwhile, the apex bank had recently stated that “Ensuring seamless cash flow is paramount to maintaining public trust and economic stability. The CBN will not hesitate to impose further sanctions on any institution found violating its cash circulation guidelines.”

The statement further read, “The CBN’s investigations and monitoring will continue to scrutinise cash hoarding and rationing, both at bank branches and by Point-of-Sale (POS) operators. The Central Bank is working with security agencies to crack down on illegal cash sales and operational violations, including enforcing POS operators’ daily cumulative withdrawal limit of N1.2 million.

“The new policy on cash-based transactions (withdrawals) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)”

Confirmed in a circular signed by John Onojah, acting director of the Financial Policy and Regulation Department, the goal is to address high costs of operations and enhance banking services across the country.

“In response to rising costs and the need to improve efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020. (the Guide).”

While withdrawals from ATMs belonging to a customer’s bank will remain free, transactions carried out on ATMs of other banks will now attract a charge of ₦100 per ₦20,000 withdrawal. 

Added to this, if the ATM is located off-site—outside a bank’s premises—users will incur a surcharge of up to ₦500 per ₦20,000 withdrawal.

The CBN clarified that this surcharge is an income for the ATM deployer or acquirer and must be clearly displayed for customers at the point of withdrawal. 

For Nigerians making withdrawals abroad using debit or credit cards, banks will apply a cost recovery fee charged by the international acquirer.

Again, the three free ATM withdrawals previously allowed per month for customers using another bank’s ATM have been scrapped. The central bank stated that this adjustment aligns with its goal of ensuring efficient ATM deployment nationwide.

“This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service,” the circular stated.

Banks and other financial institutions have been directed to implement these new charges from 1 March 2025.