Around 100 users were affected, with some reporting unauthorised transactions. Passwords were reset, credit monitoring was provided and the company said the issue, linked to part of its Working Capital product, had been active between July and December 2025 before it was discovered and corrected.

This appears small, as the platform did not shut down and markets did not panic. But I believe the big issue sits elsewhere.

The incident exposes a structural weakness in the cashless economy, a system that depends entirely on digital trust, centralised platforms and uninterrupted code.

The Cashless System Has No Shock Absorber

Cash absorbs failure. If one bank’s card network glitches, cash still works. If a payment processor has downtime, physical notes settle transactions. But with economies moving further into digital-only rails, that shock absorber disappears.

Digital payments now account for the overwhelming majority of retail transactions in advanced economies. In the United Kingdom, debit and credit cards represent more than 85% of consumer payments.

Globally, non-cash transactions have been growing at double-digit annual rates. Emerging markets are scaling even faster as mobile wallets replace traditional banking.

Efficiency has improved, friction has reduced, but resilience has become more fragile.

When money exists as code, failure is binary. Either the system works, or it does not.

Concentration Risk Is Growing

The global cashless economy runs through a small number of dominant platforms. PayPal reports over 400 million active accounts worldwide and processes more than a trillion dollars in annual payment volume.

Add card networks, digital wallets and online gateways, and you have a tightly interconnected ecosystem.

This concentration creates scale and convenience, but also creates single points of failure.

If a major payments node is compromised, whether through a coding flaw, cyberattack or infrastructure outage, disruption spreads quickly. Merchants cannot settle.

Refund cycles stall, subscription services fail, cross-border transfers are delayed, and small businesses feel it first because they rely heavily on digital rails for liquidity.

The PayPal exposure did not escalate to that scale. But it revealed how long a vulnerability can remain embedded inside a critical platform before detection. Five months is not a short time in financial systems.

In a cashless economy, detection lag is systemic risk.

Digital Trust Is Not Infinite

Consumers rarely abandon platforms after breaches. Behavioural data shows that convenience and network effects usually outweigh fear. But trust weakens gradually. It does not collapse overnight. It erodes.

In a system without physical alternatives, confidence is everything. If users begin to question whether their data or funds are secure, their behaviour changes subtly. They diversify platforms, withdraw balances faster and hesitate on large transactions.

Trust underpins liquidity.

And liquidity underpins financial stability.

The Illusion of Seamless Security

The digital economy creates an illusion of precision and control. Transactions settle in seconds. Fraud detection algorithms flag anomalies instantly. Authentication systems appear sophisticated.

However, the PayPal incident was not a sophisticated nation-state attack. It was reportedly a coding error inside an interface. That shows vulnerability does not always come from external hackers. It can originate internally, through routine development processes.

Platforms are scaling, codebases expanding, integrations multiplying and third-party dependencies increasing, but complexity is growing faster than oversight.

The more seamless digital finance appears on the surface, the more complex and layered it becomes underneath.

Complex systems fail in unexpected ways.

Systemic Risk Has Shifted Shape

Traditional financial crises were driven by credit excess, leverage and liquidity mismatches. Today, systemic risk has evolved. Operational fragility is growing alongside digital dependence.

International regulators have already flagged cyber threats as one of the top risks to financial stability. The concern is not just theft, it is service disruption and cascading effects across interconnected systems.

In a cashless economy, payment platforms are not peripheral but infrastructure.

If infrastructure weakens, confidence weakens. If confidence weakens, economic activity slows.

Regulatory Convergence Is Inevitable

Fintech once operated in a lighter regulatory environment compared to banks. That gap is narrowing and incidents like this strengthen the case for tougher operational resilience standards.

Expect stronger audits, faster disclosure requirements and possibly mandatory cyber stress testing for major platforms. If digital payments are essential to economic function, they will be supervised like essential utilities.

Is fintech innovative? Yes! But is it resilient?

What Breaks Next?

The cashless economy seeks efficiency, transparency and speed. It does well in all three, but it also concentrates risk inside digital architecture that most users never see.

The PayPal incident is not an isolated lapse but a signal. When vulnerabilities continue inside core payment systems for months, even at small scale, it forces a big thought.

Have we prioritised growth over durability?

The structural weakness in the cashless economy is not fraud but dependence. Dependence on uninterrupted code, concentrated platforms and continuous connectivity.

If one payment platform fails briefly, inconvenience follows. If several fail simultaneously, confidence follows. And in finance, confidence is the system.

The directive, issued on 17 December 2024, aims to promote a cashless economy and enhance financial transparency in agency banking operations.

According to a circular signed by Oladimeji Yisa Taiwo on behalf of the Director of Payments System Management, the policy mandates all Deposit Money Banks, Microfinance Banks, Mobile Money Operators, and Superagents to comply with immediate effect. 

These measures aim to simplify agent banking services, prevent fraud, and encourage the adoption of electronic payment systems.

7 Key Highlights of the New Policy

1. Daily Cash-Out Limit: PoS agents must limit individual customer withdrawals to ₦100,000 per day.
2. Agent Cumulative Limit: Each PoS agent’s total daily transactions must not exceed ₦1.2 million.
3. Weekly Withdrawal Cap: Customers can withdraw a maximum of ₦500,000 per week, regardless of the channel used.
4. Separation of Services: PoS agents must clearly distinguish their banking activities from other merchant services and use an approved Agent Code (6010) for all transactions.
5. Float Accounts Usage: Transactions must be exclusively conducted through float accounts maintained with principal institutions.
6. Transaction Reporting: Agents are required to send daily transaction reports electronically to the Nigerian Inter-Bank Settlement System (NIBSS) using a template provided by the CBN.
7. Monitoring and Compliance: Institutions are tasked with monitoring agent accounts and ensuring all transactions adhere to the guidelines.

Monitoring and Penalties

The CBN has stressed that it will conduct regular oversight to ensure compliance. Institutions responsible for agent banking services are required to monitor linked accounts and report any unauthorised activities. Violations of these directives will attract heavy penalties, ranging from monetary fines to administrative sanctions.

While the policy aims to bolster financial inclusion and reduce fraud, it could lead to challenges for PoS operators and customers. Agents who depend on high-volume transactions may face operational difficulties, while customers in rural areas might experience reduced access to cash, especially during peak periods like the festive season.

Towards a Cashless Economy

This directive is part of the CBN’s strategy to promote a cashless financial system in Nigeria. In addressing operational irregularities and encouraging the use of electronic payment methods, the apex bank hopes to enhance financial accountability and security.

The CBN has urged all stakeholders to comply with the new guidelines and contribute to a stronger and secure banking system in the country.

Waving your hand to pay after shopping at a store, or simply placing your mobile phone on the checkout counter could seem strange – at least to a number of people in Nigeria. But it is possible and in fact, already standard practice in some countries.

This, and other cashless methods can also be possible in Nigeria if the right technologies are adopted. After all, some people already use tollgates where courtesy of something called e-tag, they are let through without waiting to pay every time. It is a form of cashless technology too.

Global cashless payment volumes are set to increase by more than 80% from 2020 to 2025, from about 1tn transactions to almost 1.9tn, and to almost triple by 2030, according to analysis by PwC.

Asia-Pacific will grow fastest, with cashless transaction volume increasing by 109% from 2020 to 2025 and then by 76% from 2025 to 2030, followed by Africa (78%, 64%) and Europe (64%, 39%). Latin America comes next (52%, 48%), and the US and Canada will have the least rapid growth (43%, 35%).

Here are some technologies Nigeria should be looking into so as to strengthen the move towards being cashless.

QR code

Have you ever come across a sign that says ‘scan to pay’ (with a pattern of black squares) after shopping at a store? Any business or individual that receives payment can provide this option, which is derived from Quick Response codes, which are machine-readable barcodes that store information.

In 2020, Ghana became the first African country to introduce a universal QR code. In South Africa, the Payments Association of South Africa (PASA) has identified a need to streamline the experience of both payer and payee and is in the process of standardising QR codes across the sector.

In 2021, the Nigeria Inter-Bank Settlement System Plc (NIBSS) launched the New Quick Response (NQR) payment solution code, which it describes as “an innovative payment platform implemented on behalf of all financial service providers.”

The New Quick Response code solution offers a robust platform that delivers instant value for P2B and P2P transactions by simply scanning to pay.

Generally, making QR codes more widely used will create another easier way for people to transact without cash, and cheaper for merchants to receive their money.

Mobile money

Nigeria still hasn’t fully hacked Mobile Money, despite the successes recorded in other countries across Africa. In 2021, CBN data shows Nigeria recorded 1.2 billion mobile money transactions with a value of N15 trillion (about $34 billion using official rates).

However, in Ghana, with a fraction of Nigeria’s population, the volume of transactions was 4.25 billion in 2021, with a value of GH¢ 978.32 billion (about $75 billion).

Let’s not even compare with Kenya or other African countries blazing the trail in mobile money. It is clear that this technology remains largely underexplored in Nigeria.

With the country’s large rural population and low internet penetration, mobile money offers those who would otherwise be disadvantaged a way to send and receive money electronically and with less sophistication required.

Digital wallets

iPhone users should be familiar with Apple Pay and their android contemporaries, Google Pay. But, whenever you are sceptical of inputting your card details on a website, has it occurred to you to use that Apple or Google pay function (which you already trust) on your device?

There are other options which PwC described in a report as ‘super-apps’ such as WeChat Pay and Alipay in China, and in different countries, local options abound with different names. While many people already use these platforms it is still not a widespread means of payment in Nigeria.

These digital wallets allow consumers to load and store payment methods and access funding sources, such as cards or accounts, on their mobile devices.

The use of digital wallet–based transactions grew globally by 7% in 2020, according to a report by FIS, a financial services technology group, which predicts that digital wallets will account for more than half of all e-commerce payments worldwide by 2024, as consumers shift from card-based to account- and QR code–based transactions.

Nothing stops the growing fintech industry in Nigeria from introducing similar platforms to take advantage of the immense opportunities.

Contactless payments

This has been referenced a few times earlier and it is one innovative way to not only get more people to go cashless, but also in a way that would excite them.

Imagine that you have finished shopping at a supermarket and the cashier tells you to simply hold your phone near theirs and with the tap of a button, payment is done.

This movement of money from you as a customer to the merchant happens through near-field communication (NFC) technology, a function you may have seen on your phone, never utilised and probably been curious as to what it does.

A Tappit article further explains that instead of swiping or inserting your bank card into a reader and typing a PIN, you simply ‘tap-and-go’ or ‘wave and pay’. To make a payment, you place your bank card or contactless-enabled mobile phone near the reader.

These technologies, in addition to other existing cashless payment methods like the regular bank transfers, card payments, can help drive Nigeria’s cashless economy further.

According to Fintech Magazine, Sweden is currently the most cashless economy in the world, with many Swedish banks no longer accepting cash deposits, 32 Automated Teller Machines (ATMs) per 100,000 people and cash accounting for only 1% of all transactions.

ALSO READ: FinTechs are Important to Reducing Cash in Circulation – FG

As a result of this, Riksbank, Sweden’s Central Bank, can adequately account for the amount of money in circulation. By going completely cashless, the transfer of funds is seamless across the country, the risk of cash theft is mitigated and there is overall transparency and accountability across Sweden.

The Central Bank of Nigeria (CBN) first issued the framework for its cashless policy in 2012, to reduce the amount of physical cash in circulation, deepening financial inclusion by driving digital payments, reducing fraud and curbing cash-aided crimes such as terrorism financing, kidnapping, extortion, blackmail, and so on.

Today, the maximum weekly withdrawal limits for individuals and corporates across all channels are N500,000 and N5,000,000 respectively.

In an event where cash withdrawal exceeds these limits, a processing fee of 3% and 5% will be incurred for individuals and corporates, respectively. In addition, third-party cheques exceeding the sum of N100,000 are not eligible for over-the-counter (OTC) payment.

On the surface, a cashless economy in itself does not seem like a bad policy. Anyone who has been paying attention to the global payments trend knows that a cashless world looms and that it is only a matter of time till hard notes become obsolete or close enough.

To support this, Bain and Company report that 67% of global payments will be done digitally by 2025. Already, we are experiencing digital-only banks (neo-banks) and contactless payments with the help of smartphones and super-fast networks. We are also experiencing emerging digital trends such as the use of cryptocurrency for payments and settlements, which has inspired some central banks to pick up the innovator hat.

In October 2021, Africa’s first Central Bank Digital Currency (CBDC), the E-Naira, was born as part of the strategic drive away from cash. We once used gold bars, barter, ivory shells and coins as modes of payment, remember? The use of cash as a medium of exchange has been declining gradually for years.

The drive for a cashless economy at all costs by the CBN is strategic, however, the execution and results have been described by many pundits as suicidal.

The new naira notes became legal tender on 15th December 2022, after being unveiled the previous month by President Muhammadu Buhari and CBN Governor, Godwin Emefiele.

In an announcement that would reverberate through the whole country, over 200 million Nigerians were given just under two months, until 10th February 2023, to get with the status quo, even after a series of backlash and expressions of displeasure by the public.

The cash swap is being driven on steroids. This may be perceived to signal insensitivity and a lack of consideration of key stakeholders by the apex bank. A cashless policy should bring about greater ease and convenience of payments, but is the opposite effect materializing in Nigeria today?

Challenges with execution may be leading to the erosion of trust in the banking system, with merchants asking for cash payments despite empty ATMs, digital channels increasingly overwhelmed and POS charges inching towards 50%. When the United Kingdom issued new £20 and £50 notes, both the old and new pound sterling notes co-existed for about eighteen (18) months until naturally, the old notes were no longer in circulation, as the case should be.

The current predicament facing Nigeria can be likened to what happened in November 2016, when India introduced its demonetization policy to reduce the circulation of high denomination rupees, as well as to tackle corruption, tax evasion and other illegal activities.

Similarly, cash withdrawals from banks were restricted to 10,000 rupees (US$150) daily and 20,000 rupees (US$300) weekly.

The policy made it near impossible for Indians to access their hard-earned money for a long time, resulting in many controversies, deflated trust in the Indian government and an overarching negative economic impact.

India’s cashless policy was not successful because the challenges and concerns of the people such as preferences, economic development and technological advancement, were not adequately addressed. The same situation is being experienced in Nigeria today, with empty ATMs and exorbitant POS charges.

Based on the points discussed thus far, let us examine some conditions necessary for a cashless policy to be successful:

One thing is clear. When adopting a cashless policy (or any other policy for that matter), it is more important to have a customer-centric approach rather than a technical one. The success of a cashless policy is directly linked to the incentives offered to encourage mainstream adoption.

For example, the Swedish government made sure that the cost of transacting with cash was more than the cost of making card payments. There is also a trust factor that needs to be considered when it comes to convincing people to go completely digital. Additionally, a key question needs to be asked: “can our current IT infrastructure handle the increase in transaction volumes if a significant chunk of the population moves towards digital payments?”. If the answer is yes, then half of the anticipated problems are gone already.

If the answer is no, then perhaps more efforts must be made to prepare a country with a large population like Nigeria to adopt a cashless policy. According to data released by the Nigeria Inter-Bank Settlement System (NIBSS), payments made via electronic channels hit an all-time high value of N42 trillion in December 2022.

This is a 52% year-on-year increase from December 2021. Similarly, the total volume of transactions processed by NIBSS also jumped from N3.4 billion in 2021 to N5.1 billion in 2022.

This represents a 50% increase year-on-year. This upward trend will not slow down anytime soon – does Nigeria have the right internet and IT infrastructure to handle the hyper surge in transaction volumes? Only time can tell.

The level of financial inclusion is a key factor to consider when pursuing a cashless strategy. The Guardian Newspaper tells us that Nigeria is one of the top three unbanked countries in the world, with 40% of its population without a bank account and out of the 59 million unbanked adults, 73% do not have the requisite documents to open a tier-three bank account. Furthermore, the unbanked population are characterised by low levels of education, extreme poverty and are usually concentrated in rural areas.

For instance, Kaduna is arguably the most modernised state in the north; yet, up to two local governments are still without bank branches.

In addition, POS machines are also ineffective due to a lack of a strong network in these areas, and residents would need to travel at least 200 kilometres to the nearest bank branch to deposit old notes, without knowing when to expect the new notes!

The cashless situation has led to ATM vandalism, the burning of banks, the threatening of bankers and violent protests across the entire country. As turmoil spreads across the nation, it has laid bare one inescapable fact – that the poor and disadvantaged are bearing the brunt of the collapsing economy.

There is a glimmer of hope, however, that the cashless strategy is not without its benefits to the Nigerian economy. For instance, a recent report by TechPoint Africa revealed that CBN could not account for N26.17 trillion in 2021.

In contrast, N1.9 trillion of unbanked currency has since been recovered and accounted for since the launch of the new naira notes. The CBN governor, Godwin Emefiele said that as of October 2022, more than 80% of the N3.2 trillion ($7.2 billion) in circulation in Nigeria was held privately, but 75% of that has now been deposited with financial institutions.

The cashless strategy, therefore, serves as a tool to control inflation, increase transparency and financial system stability which is the key mandate of the apex bank. Secondly, the timing of the policy around the upcoming presidential elections could make vote buying and bribes more difficult than ever before.

Finally, could this be the push we so desperately needed to achieve the goals of the National Financial Inclusion Strategy (NFIS) of 95% inclusion by 2025? In particular, the Shared Agent Network Expansion Facility (SANEF) initiative of the CBN and Bankers Committee must be commended for bringing financial access to remote areas and increasing the number of agents from just over 38,400 in December 2018, to 1.4 million agents in October 2022. It presents the possibility of a world where people living in remote areas would not need to travel long distances to carry out banking activities.

The rise of financial technology (FinTech) companies in Nigeria has revolutionised the way we perceive and consume financial services. Nigeria is now the third African country with the most progress in FinTech activity, following South Africa and Kenya.

Digitally-led banks and FinTechs with strong e-payment capabilities are leveraging the cashless strategy to drive further growth and focus on operational efficiency. The witnessed jump in transaction volumes will serve as a strong foundation to build more value-added services for different classes of consumers.

If done properly, FinTechs could win over the portion of the populace that was once sceptical about their services. Additionally, many banks are establishing standalone payment services to drive the efficacy of online transactions. As Nigeria transitions into a cashless economy, great prospects lie ahead for payment service providers in terms of a larger consumer base, a wider range of services offered and ultimately, revenue growth.

We are eager to hear your thoughts on this riveting subject. Is the drive for a cashless economy by CBN a strategic or a suicidal move?

How can FinTechs create viable and profitable solutions to address the situation? Drop a comment below to keep the conversation going!

God bless Nigeria.

Thought Leadership by FintechNGR

The policy is targeted at tackling some of the negative consequences associated with the usage of physical cash in the economy, including inconveniency and risk of theft and armed robbery.

Business to business transactions are much easier these days as retailers conveniently source fast moving goods from manufacturers and authorised dealers to sell to customers.

Alerzo, for instance, through its Alerzoshop, Alerzopay and PoS terminals provide retailers the means to order goods and make cashless payments. With the PoS machines, retailers can act as agents for customer deposits, withdrawals, utility bill payments, and others.

Through its Alerzopay PoS terminals, the firm said it is supporting the government‘s drive towards a cashless economy, as well as making lives easier for its customers and reducing their cash transactions. 

A retailer described how being on the Alerzo platform has brought her ease while increasing her profit margins.

“Doing business with Alerzo got much easier with the PoS payment. Ever since I have been using Alerzopay, customers find it much easier to use their ATM cards to pay for goods. I used the Alerzopay to make payment for the goods I purchased on Alerzoshop. 

“I have gained more customers in the sense that they do not need to go far to withdraw money. They use Alerzo PoS to make payment for goods. We have been using it to buy data, pay our electricity bill, Pay-tv subscriptions and life has been easy with Alerzo,” she said.

Buttressing this, Founder and Group CEO of Alerzo, a leading B2B e-commerce company, Adewale Opaleye, pointed out that the e-commerce firm, through technology, provides opportunities especially for retailers to maximize profits and grow. 

He said: “We built a financial tool like the POS terminal that accepts digital payment from retailers. 

They (retailers) can accept payment from our device called Alerzopay. On top of that, they can order products they need from Alerzoshop platform.”

However, as more Nigerians embrace digital payment solutions provided by ecommerce platforms, certainly the cord of the cashless economy policy will be strengthened.