E-BANKING CHANNEL TRANSACTION COST AND FINANCIAL INCLUSION IN NIGERIA

Abstract

This study examined the impact of e-banking transactions costs on financial inclusion in Nigeria between 2014Q1-2024Q1. Data were sourced from Central Bank of Nigerian statistical bulletin and the National Bureau of Statistics and analyses were conducted using OLS regression, Johansen cointegration, and Granger causality to evaluate short- and long-run dynamics. The findings revealed that the ATM and debit card prices had detrimental impact on financial inclusion and discouraged usage among low-income patrons, whereas POS, mobile payments, and web-based banking had positive impact that was highly significant, highlighting their contribution to deepening access to financial services. Long-run cointegration indicated that there was a stable relationship between financial inclusion and transaction costs and as a result of the causality findings, most digital channels had bidirectional causality with financial inclusion. The study concludes that while digital innovations contribute to financial inclusion, rising costs have the tendency to reverse the positive effects, thereby frustrating the efforts of achieving the goals of Nigerian monetary authorities in 2030. The study recommended reforms in pricing, cost-effective infrastructure, greater agent networks and tougher competition between providers to ensure affordability and sustainability