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The report identifies significant barriers to digitising cash transfers in Nigeria, including regulatory restrictions on agent e-float, low recipient digital literacy, and a lack of economic incentive for financial service providers (FSPs) to serve poor, rural populations. While mobile phone penetration is relatively high, most recipients use basic feature phones and prefer cash due to ease of access and lack of network reliability. The document proposes segmenting recipients by 'digital payment readiness' and digitising community savings groups as entry points for financial inclusion. It also highlights the inefficiency of current 'virtual accounts' that require 100% cash-out, arguing for a transition toward permanent digital wallets and merchant payment systems to reduce liquidity burdens and fraud.