The economy is predominantly cash based, reflecting the preference of economic agents and the weakness of the legal system to enforce contracts. The unintended social and economic cost are the risks and inconveniences associated with cash transactions such as armed robberies use of counterfeit banknotes as well as the inconvenience of carrying large quantities of currency notes. This study assessed the payments system in the central bank of Nigeria is undertaken to establish whether or not a relationship exist between payments system and economic development in Nigeria. It provides an overview, structure and development of the Nigeria payments system. It evaluates the role and highlights the problem of establishing an efficient payments system in Nigeria. This study administered survey questioners to the central bank officials. The findings of the study reveal that; the payment system has promote effective transaction in the banking system, the payment system tools such as ATM card, e-payment, debit note etc have promoted the economic growth in Nigeria, The payment system in Nigeria is easy to use (user friendly), the CBN regulates, monitors and enforces the payment system in the Nigerian banking sector, there are challenges facing the use of payment system in Nigeria, the CBN has made enough efforts in promoting effective use of payment system, there are uniform standards in banking sector for the use of payment system, the Federal government micro finance policies enhance the economic growth through the payment system, the payment system promotes economic growth through the use of IT and adequacy of electrical power supply promote the effectiveness of payment system. Based on the above findings, the study recommended that the Central Bank should continue to improve the use of ATM, improve the central payment system for more efficiency and encourage the populates on the use of ATM. In addition, more introduction of IT to the payment system in order to reach the local level.