How Do Nigerian Bank Transfers Work?

In Nigeria, sending money online typically takes less than 60 seconds. While the process looks seamless for the customer, a lot goes on in the background within those 60 seconds.

Online bank transfers have changed how we send and receive money today.

It started when Western Union pioneered this service as a telegram transfer from one person to another. Typically, the telegram station would send a telegram instructing the receiving bank to pay the specified amount to the person on their end. With the introduction of technology, this process has become seamless, with bank transfers only taking seconds or 2–3 days in some countries.

Now, you enter the requested bank information of the recipient into your online or mobile banking app, and the money gets transferred immediately. On top of this, banks now advocate for contactless online banking services rather than in-branch services, making it a great and faster way to deliver money where it is needed.

How Did Bank Transfers Start?

Money transfers started with the trade by the barter system and evolved into the money-transfer system we have today, all thanks to technology.

Western Union launched the first money transfer service in 1872, and by 1877, the service was processing almost $2.5million each year using a telegraph network.

Even though this was an upgrade, sending money was still time-consuming and expensive. Then came the bank with over-the-counter services where you can send money without owning a bank account. The bank transferred the money electronically, and despite issues around transparency, the demand continued.

Between then and now, more people have had access to online money transfers, and the future looks good for banks and customers.

How Do I Make a Bank Transfer in Nigeria?

Let's say 'Ade' has just received his salary and needs to make several payments. 15 years ago, Ade would have had to take a trip to the bank to make this happen. Today, Ade has up to 3 ways to send money via bank transfer. They are:

  1. Online bank transfers: Ade can send money online simply by using his smartphone, tablet, or personal computer. It’s fast, almost free, and allows him to do his tasks, such as paying bills and transferring money, without having to visit or call his bank.
  1. Mobile banking transfers: He can complete a financial transaction from a mobile app, SMS banking, and USSD. He can send money, pay bills, and check bank account statements anywhere.
  1. In-branch transfers: Ade can actually step into one of the bank branches to make deposits, cash withdrawals, and pay his bills. This depends on what Ade wants.

As compared to in-branch transfers, where Ade would have to make a physical trip to the bank to make a bank transfer, with digital banking, all Ade needs to complete a bank transfer online are:

  • His recipient’s account number and full name.
  • The exact amount he is sending.
  • A reference or message for his recipient to see.

Bank transfer methods

Some Known Facts about Bank Transfers in Nigeria

Before you make a bank transfer, these are some of the things you should know:

  • You need a wallet or a bank account to transfer money to another bank.
  • It only takes a few minutes to complete a bank transfer as bank transfers are generally fast but may not be instant. While these transfers seem easy and flexible on the surface, structures behind the scenes ensure they are carried out seamlessly. Payment gateways make quick fraud checks to ensure card details are legitimate, and interbank transfers use NIBSS to ensure quick processing and settlements.
  • You can complete a bank transfer with a mobile device via an app, a USSD code, or online via an internet connection, depending on the banking service provider.
  • You can send money as low as 10 Naira through mobile banking.
  • The number of times you can transfer money in a day is limited by the number of transactions your banking provider allows. You can also change your limit by requesting to increase your limit or upgrading your KYC Tier.
  • Depending on the amount you’re sending, you may be charged a small fee for making an online or mobile money transfer.

What Happens When You Transfer Money

In Nigeria, sending money online typically takes less than 60 seconds. While the process looks seamless for the customer, a lot goes on in the background within those 60 seconds. This is where we talk about the role of NIBSS and NIP when you send money.

The Nigerian Interbank Settlement System (NIBBS), is an online real-time banking infrastructure that ensures the smooth settlement and transfer of funds from one bank to another. NIP (NIBSS Instant Pay) helps beneficiaries receive their funds immediately after processing the transaction.

Why Do Bank Transfers Fail?

Bank transfers can fail for many reasons, even though the most common cause might be the bank having insufficient information to deliver your funds into the beneficiary’s account. Your internet provider can also be another reason your transaction did not go through. In light of this, it is essential to contact your bank directly to ask why your bank transfer failed.

Another reason is NIBSS downtime. Whenever NIBSS is experiencing technical difficulty, you may not be able to perform any bank transfer action on any app nationwide. Whenever this happens, all you need to do is to wait for it to be rectified and try again. If you encounter any problems during downtime, you should contact your bank to fix them.

Things To Know About Nigerian Bank Transfers

Before you complete a bank transfer in Nigeria, here are some things you should be aware of:

1. Have enough funds

You must be sure you have the right amount of money in your account before making a transaction. If not, your transaction will not be successful.

2. Double-check recipient details

You can lose money during a bank transfer if you input the wrong information. For instance, if Ade wants to send money through his mobile app to his friend, 'Sholape'. Ade must verify that Sholape’s bank details are correct because once the money leaves, it would be almost difficult to reverse the transaction.

In a case where a transfer is made to the wrong recipient, he would have to make an appeal physically at a branch of his bank, allow his bank to confirm from the recipient bank that it was indeed an error and wait between 5–7 working days for his money to be reversed. The best way to avoid losing money to incorrect recipient information is to double-check the details.

3. Cost

Generally speaking, domestic bank transfers are relatively cheap and sometimes even free, depending on the bank. These charges are regulated by the Central Bank of Nigeria and vary from bank to bank or the size of the amount being transferred.

4. Security

Each time you transact, the virtual platform you use most likely stores your banking information, opening you to risk if a security breach happens. To ensure your money is safe, security measures like biometrics and 2-Factor Authentication are implemented by your banking partner’s security experts to guard your online banking activities.

However, because of unprecedented situations, it is essential you prioritize using a trusted banking platform that takes safety measures seriously when sending money.

5. Fraud

To date, people still fall victim to online banking fraud, and the most common are direct calls from people posing as your bank representative. It often occurs as an unknown number placing a call to inform you about a problem with your bank account, after which they go ahead to ask for details like your Bank Verification Number (BVN), mobile banking password, the first 4 and last 6 digits of your ATM card and your One Time Password (OTP).

If you unsuspectingly hand over these details to them over the phone, what follows is a series of debit alerts, as you would have most likely fallen victim to their scam.

To avoid issues like these happening to customers, banks warn against providing such information over a call, noting that no bank official would ever ask for their PIN or password or any sensitive details that may give them access to their bank accounts. Other forms of banking fraud you should know include card swipe scams or individuals impersonating your bank support channel on social media.

Bottom Line

Since the turn of the century, the financial services industry has witnessed remarkable changes due to the internet and financial technology. Today, we don’t have to rely on physically going to a bank branch to send or receive money. We now have a wide range of options, such as agency banking, mobile wallets, digital banks, etc., that are now available for everyday users.

FinTech has made life easier for everyone through great partnerships between financial networks, especially financially excluded people.

For companies looking to embed bank transfers into their product, Bloc’s got you covered. With our Virtual Accounts and Transfers APIs, you can easily build and launch in the market faster. We have the infrastructure and the right bank partnerships to make it easy to provide these financial solutions to your customers.

Joshua Owolabi