EFFECTS OF CASHLESS TRANSACTIONS ON THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA (2010-2023)

Abstract

This study examined the effect of cashless transactions on the financial performance of Deposit Money Banks in Nigeria. Specifically, the study sought to determine the effect of automated teller machine, point of sale terminals, internet banking (e-banking) and mobile banking transactions outlets on the financial performance of Deposit Money Banks in Nigeria. The study adopted Ex-post facto research design while data generated from the Central Bank of Nigeria statistical Bulletin and individual bank annual reports for the period 2010-2023 were analyzed using Generalized Method of Moments technique for panel data analysis. The study found that automated  teller machine (ATM) transaction has positive and significant effect on the financial performance of Deposit Money Banks in Nigeria,  point of sale cashless transaction was found to have positive and significant effect on the financial performance of Deposit Money Banks in Nigeria, internet banking cashless transaction was revealed to have positive  and significant effect on the financial performance of Deposit Money Banks in Nigeria and  mobile banking cashless transaction outlets had no significant effect on financial performance of Deposit Money Banks in Nigeria. The implications of significant and positive effects of automated teller machine outlets, point of sale terminals and internet banking is that the cashless policy is effective in promoting bank profitability and operational efficiency. The no significant effect of mobile banking highlights a need for policy intervention to address the specific challenges facing this channel. The study concluded that automated teller machine transactions, point of sale terminals and internet banking are significant drivers of profitability, primarily through cost reduction and increased non-interest income. The study recommended that banks should continue to strategically deploy ATMs, especially in high-traffic commercial areas, residential hubs and underserved regions, to maximize transaction volume and fee-based income; policymakers should introduce incentives, such as tax breaks or subsidies, for banks and merchants to deploy more POS terminals and for banks to enhance their internet banking  platforms, the government in collaboration with telecommunication companies, should prioritize investments in improving internet infrastructure and network stability and the Central Bank of Nigeria should create a more supportive regulatory framework to address the challenges of mobile banking.