It has become a familiar sight across Nigeria for Nigerians to use Point of Sale (POS) terminals for most of their financial transactions. This shift emerged nearly two years after the nation’s severe cash crunch, which forced many Nigerians to seek alternative methods of accessing funds.
POS has risen to prominence in this evolving landscape. Although POS systems were in use before the cash shortage, they were often overshadowed for reasons such as Nigerians’ lack of trust and extra charges.
However, after the crisis, POS agents have rapidly transformed into main figures in the financial ecosystem. These agents have stepped into a pivotal role, facilitating money movement and ensuring that Nigerians can still access cash when needed.
The situation was not always like this. A corps member, Mr Ayanfe Taiwo, said he did not like using POS terminals until the cash crunch in 2023, which opened his eyes to the possibilities of POS.
According to him, POS has now become a better alternative for financial transactions, especially with regard to the new cash withdrawal policy of the Central Bank of Nigeria (CBN).
He said, “In fact, they were not rampant before the cash crunch. They were not common. But it became inevitable for me to use it after that period. Because if I did not use POS, what would I use? To go to the bank to collect money is like wanting to go and steal because it is too rigorous. Then the long queue is too long too. So I’ll just use the POS now, especially when the money’s not much.”
He expressed frustration with the unreliability of using POS (Point of Sale) systems for financial transactions, especially with failed transactions, where the money is deducted but not received.
“Countless times, I would use my card or make a transfer and it would yank. Now, they won’t be the ones to be responsible for that money, they instead direct you back to your bank, which is very, very tough but if I’m withdrawing through the bank directly, and that happens, then I am rest assured. I will resolve it immediately. But in POS, especially when it is money that you need urgently. I don’t have any backup for it. So it can put you in a tight corner,” he added.
A student, Ms. Endurance Samuel, said she used POS machines before the cash crunch primarily to collect cash.
While she appreciated the convenience of POS in avoiding trips to the bank, she condemned the significant increase in transaction fees. “Before the charges were minimal, maybe around 50 naira, but now, for withdrawals between 1,000 and 10,000 Naira, the charges can be as high as 300 naira.”
Ms. Samuel also revealed growing concern over the security of larger withdrawals, noting that she avoids withdrawing substantial sums from POS machines. “I don’t use POS for larger amounts because of concerns over exposing sensitive information.”
She, however, clamoured for the POS operators to reduce the charges placed on withdrawals, saying that’s the downside to using the POS machines.
A POS operator, Mrs. Yemisi Adeleke, noted that many customers continue to use the service, even with the associated fees. “Right now, the amount they get from POS, they can’t get it from the bank, and even if they do, it would cost them a lot of time,” she explained.
She, however, revealed that the two major challenges with POS operations are network instability and unpredictable charges, where some terminals charge more than expected, particularly for larger withdrawals.
“Sometimes, some of the banks’ networks go down, and at other times, there may be no network at all, which can create delays, and some POS terminals charge more than expected, particularly for larger transactions. For example, when withdrawing 20,000 Naira, the charge may be higher than what you anticipated,” she added.
Mrs. Adeleke also pointed out that many people are still unaware of the full range of services POS offers. “Some people don’t know that POS can be used to pay for electricity bills and recharge TV subscriptions, and it’s faster, just like mobile banking,” she noted. These additional services are making POS even more appealing to customers who seek quick and convenient solutions for their everyday needs.
The Future of POS
A business management officer with Moniepoint, Mr. Lincoln Olojugba, who said POS systems have evolved payment methods in the last 3 years, posited that they are central to driving the cashless policy in Nigeria.
“There has been a shift from traditional agency banking to businesses adopting Point of Sale (POS) systems to accept direct payments, allowing customers to pay using cards instead of withdrawing cash first,” he said.
While speaking on the future of POS in the country, Mr. Olojugba said there is a plan to introduce smaller, portable mobile POS systems (MPOS), which are expected to be deployed to small businesses like taxi drivers and petty traders, expanding the accessibility of cashless payments.
On the fears raised by customers about data invasion, he said customer information is protected, and the company takes strong measures to ensure security and even requires a court order to release any data.
“The company prioritises data protection, ensuring that even if a POS device is lost or stolen, the customer’s data remains secure. The only risk to funds would come from a compromised PIN, but overall, customer data is kept private and secure”
A financial expert, Mr Rotimi Ogunleye said POS technology has streamlined business transactions, especially for small business owners.
“The policy is incredibly effective because it directly impacts people’s lives. People no longer have to leave their homes or travel far to access these essential services,” the expert noted. “Additionally, the cost of using these services remains affordable, especially because POS machines are now readily available in local communities.”
Despite the success, the expert said formalizing businesses, allocating daily cash limits, and regulating ATM withdrawals are key suggestions to streamline operations and ensure seamless access to cash.
He also opined that reducing transaction costs, through proper cash allocation and setting limits on withdrawals, would improve the overall service delivery of POS systems, making it more accessible and efficient for users.
“Regulating ATM withdrawals is also crucial. Once a user withdraws a certain amount, they should not be able to withdraw again on the same card, allowing more people to access cash through POS systems at their locations,” he said.
The financial expert argues that these improvements would reduce transaction costs and increase the availability and accessibility of cash, further contributing to financial inclusion.
This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.
