(Bloomberg) -- Nigeria’s move to outlaw high-value notes is the best thing that’s happened to mobile-money operators in Africa’s biggest economy. 

In the two months since October, when the Central Bank of Nigeria said it will replace 200-, 500- and 1,000-naira notes with new ones, the value of mobile-money transactions has jumped by a quarter to 2.5 trillion naira ($5.4 billion), according to the Nigeria Inter-Bank Settlement System Plc.

Fintech firms are positioning for a sustained increase in demand. MTN Nigeria Communications Plc, a unit of Africa’s biggest mobile-phone company, is deploying 224,000 agents to encourage residents to open mobile wallets using the old currency. Startup Moniepoint Inc. is strengthening its digital infrastructure and will use thousands of contractors to add clients for its loans and payment solutions.

Mobile-money firms are best placed to benefit from the disruption. Just 40% of Nigerians have access to bank accounts, compared with mobile-phone penetration of 117% in the country, giving them the opportunity to expand rapidly. The trend in Africa’s most-populous nation mirrors the growth in India, which demonetized most of its currency in late 2016 and has seen a surge in digital transactions.

“The policy is a major driver for digitization this year,” Moniepoint Chief Executive Officer Tosin Eniolorunda said in an interview. “Quality of payments that consumers are expecting will be going higher, which means fintechs that are well equipped” will have an edge, he said

Cash in circulation in the West African nation plunged almost immediately following the announcement by the central bank in October, granting citizens initially six weeks to deposit their old notes in banks.

To encourage the shift to digital transactions amid a widespread shortage of cash, Nigeria’s central bank on Feb. 3 posted a video of a sugarcane vendor making sales with a point-of-sale terminal, instead of cash. In the video it posted on Twitter, the vendor positioned a POS machine on his wheelbarrow, while customers surrounded him, with one of them punching his pin into the machine. 

Meanwhile, the shortage of cash is hitting commuters, parishioners tithing at churches, drivers waiting hours at gas stations and merchants and customers across the $440 billion economy. 

While authorities are encouraging digital payments, the rush has overwhelmed systems with transactions taking hours to complete or failing outright.

“We have seen a lot of upside” to asking customers to use old notes to open mobile wallets, Eli Hini, chief executive officer for MoMo PSB, the mobile-payments unit of MTN Nigeria, said on an investor call.

The demonetization drive has resulted in 1.9 trillion naira of cash being returned to banks as of early February, before the regulator extended the deadline to Feb. 10 from Jan. 31. The nation’s Supreme Court on Wednesday halted the plan and will hear the case on Feb. 15.

In order to push most transactions online, the central bank limited cash withdrawal by an individual customer to 500,000 naira a week and 5 million naira for a corporate customer. It imposed a 3% processing fee on withdrawals above the limit by an individual customer and 5% for companies.

For MTN and Airtel Africa Plc, which got licenses to open payment banks last year, the cash crisis is an opportune moment to expand. Airtel is accelerating its plan to start its payment bank in the “next couple of quarters,” Airtel CEO Segun Ogunsanya said on a call.

“It’s a massive opportunity,” Ogunsanya said.

 

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