POS Business: The New Goldmine in Nigeria?

My case study for this research was Miss Abimbola Oladimeji, a 27-year-old POS operator in Ajah, a neighbourhood in the Lekki part of Lagos. During a discussion with the enterprising lady, Abimbola shared some insights into her business. Bimbo, as she is fondly called, said that she has been doing the POS business for nearly four years. She also disclosed that her daily transactions range from?N300,000 ($500) to?N700,000 ($1,100), depending on the level of patronage. The boisterous agent also stated that she was glad to quit her job as a bank teller in one of the new generation banks to start up the business with her savings and financial support from family and friends.

Abimbola’s story is similar to those of thousands of Nigerians in both urban and rural centres using the proceeds from their POS businesses to eke out a decent living. From Lagos to Abuja, Port Harcourt to Kano, Enugu to Jos, these POS agents are seen all over the nooks and crannies of Nigeria, helping every day people meet their financial needs. Today, you can find ten POS agents in every 5-kilometre distance. More often than not, POS agents operate on the streets, in the markets, near restaurants and supermarkets, and even close to worship centres. As a result, people often wonder, “What’s so attractive about the POS business in Nigeria?” “Is the POS business the new goldmine in Nigeria?” Well, this informative piece will provide satisfactory answers to those mind-boggling questions and the overall impact of the booming business on the Nigerian economy.

What is a POS System?

Sometimes called Point of Purchase, POS (Point of Sale) is a payment-processing system or terminal that allows users to perform several financial transactions. Across several parts of Nigeria, those who solely run this enterprise are often seen in makeshift shops, kiosks and big shades or umbrellas. With the device, you can withdraw funds, make payments, and deposit money in your account without visiting a bank. A point-of-sale system also enables the operators to keep track of sales as cash registers in a store.

Depending on what you want to achieve with the system, its setup can differ. Modern, internet-enabled POS systems allow users to do much more like clocking in and out. To authorize and perform transactions using the channel, the operator would require you to insert your readable ATM card and key in your password. Afterwards, the system processes the payment and you will be charged a certain fee, depending on the nature of the transaction.

Is POS Business a Goldmine in Nigeria?

It would be recalled that POS enterprises took an interesting dimension in Nigeria when the Central Bank of Nigeria (CBN) began enforcing its agency banking policy in 2013. The apex bank introduced a cashless policy the past year as a way of reducing the amount of cash that circulates in the country and encouraging Nigerians to embrace digital payment solutions. With the move, a new channel for reaching bank customers was established. In other words, POS enterprises serve as the intermediary between traditional brick-and-mortar banks and their customers, as these banks issue and power them. While automated teller machines (ATMs) provide similar services as POS terminals, ATMs may not have cash all the time, may have a software issue or may not be available at certain locations at all.

According to Nigeria Inter-Bank Settlement System (NIBSS), the number of registered POS terminals in Nigeria increased from 523,488 in 2020 to 976,898 in June 2021. Of the registered POS terminals, about 638,983 have been deployed and are in use. The outbreak of COVID-19, which led to a nationwide lockdown in 2020, contributed to the growth of POS enterprises across the country. The alarming spread of the deadly respiratory virus would see the number of customers using the payment channel rocket from 4 million in 2018 to 26 million in 2020, according to Enhancing Financial Innovation & Access (EFInA), a Nigerian think-tank that promotes financial inclusion.

Today, people are wondering why POS businesses are springing up every day. As you know, making a profit is often the motive behind profit-oriented businesses. According to Abimbola, her profit depends on several factors, including turnover, network stability, weather, etc. Transaction on these channels attracts fees and these charges vary from one financial institution to another. Findings show that Audi charges 0.6% on withdrawal and?N150 for transactions above?N50,000. In a similar vein, First Bank, Zenith and GTB charge 0.75% per transaction and Baxi box bills 0.55% from?N?1000 –?N20,000 and?N30 flat rate for transfers above?N20,000.Bimbo also revealed that she makes aboutN10,000($17) -N15,000 ($25) every day after bank deductions – a figure she loosely translated to?N300,000 ($500) -N450,000 ($750)per month.The agent also said that she enjoys the business due to financial freedom, flexibility and the joy of being her boss. However, Bimbo frowned at the competition in the business, adding that it has negatively affected her earnings over the years.

The Importance of POS Business to the Nigerian Economy

The role of POS terminals in facilitating transactions around the country cannot be overemphasized. With ATMs always having issues and bank branches miles away, accessing cash and making payments have become a herculean task. As a result, POS terminals serve to provide useful support in closing up the widening transactional chasm. Needless to say that this channel is convenient, time-saving and life-saving. Data curled from NIBSS indicates that those terminals successfully processed?N4.6 trillion ($7.6 billion) in the first seven months of 2022 as opposed to?N3.56 trillion ($5.93 billion) recorded in the same months in 2021. This represents about a 30% increase in the total number of transactions processed by the channels.

Furthermore, POS enterprises create jobs for hundreds of thousands of Nigerians all over the country. In the face of worsening employment woes, the federal government trained 1850 youths in POS business in October 2021. The government added the new number to the existing agents as a way of creating jobs for teeming unemployed Nigerians. For a country bedevilled with a 40% unemployment rate (Source: African Development Bank), all efforts must be geared towards creating jobs – an economic challenge the government is already addressing using POS enterprises.

POS business is also crucial in improving financial inclusion figures. For instance, EFINA stated that Nigeria’s financial inclusion statistics grew from 63.2% in 2018 to 64.1% in 2020. With more and more POS terminals making their way into the streets and markets across the country, this will boost financial inclusion stats. This is primarily because POS terminals can be sited in rural areas where traditional banks are nonexistent. No doubt, financial experts have also shown that financial inclusion helps to reduce abject penury.

Sustaining the POS Goldmine in Nigeria

Without mincing words, it is crystal clear that the POS business has become a goldmine among many Nigerian youths grappling with unemployment. To sustain the growth in the burgeoning subindustry, a need exists for relevant security agencies to protect the users as POS-related frauds are increasingly threatening the business. A flip through the crime section of Nigerian dailies shows that there are several reports of customers falling prey to criminal elements who extract users' account details to perpetuate financial frauds on their accounts. Findings show that some fraudulent POS agents installed chips that read and copy users’ account information and use them to have unauthorized access to their accounts. To avert this,?WayaPos?has a QR code scanning feature that save users the stress of having to exchange cash at all. Customers must also hide their card verification number (CVV), permanent account number (PAN) and card expiration date from POS agents. Also, users should only patronize known agents in their neighbourhood, not constantly moving operators.

Furthermore, POS regulation is poor as there are no visible regulatory frameworks yet to govern how the enterprise should operate in the country.?WayaBank?would take responsibility by doing its due diligence and background checks on prospective agents before releasing such sensitive devices to them. This way, they won't jeopardize this promising business that has created jobs for lots of Nigerians. However, the government can step in to stiffen the penalties of POS frauds to discourage such thefts and protect unsuspecting customers.?