The Pains and Gains of POS Business in Nigeria

Nelson Uguwagbo, Abuja

POS services now place an active role in the day to day routine of Nigerians. Their operators are in every nook and cranny of Nigerian localities making it easier for individuals to carry out financial services.

The central bank of Nigeria (CBN) in 2013 introduced the agent banking system in a move to extend financial services and push Nigerians towards a cashless economy.

Agent or POS banking opened up a new portal for banks and other financial institutions to reach a wide range of customers including those in remote or unbanked places.

They extend the services offered by these financial institutions to make financial transactions more convenient for customers.

In 2020, the Nigerian Inter-Bank Settlement System (NIBSS) recorded that POS merchants processed over 650 million POS transactions valued at 4.7 trillion naira. A 50% increase from 2019.

This was partly due to the lockdown which made it impossible for individuals to visit banks.

The services offered by POS merchants include: withdrawing money, deposit and transfer of cash, paying utility bills, opening bank accounts etcetera.

An enormous advantage of POS is the role it has played in Job creation and curbing unemployment especially among young people in Nigeria.

A brief survey of most communities in Nigeria shows that POS merchants are almost at a stone throw from one another.

The requirements to become a licensed POS operator is easy to meet. Some banks even give POS machines for free to interested individuals who have a stipulated amount of money in their account (often less that 150,000 naira).
Most Nigerians have taken that advantage to open POS shops at various locations.

These owners also employ various sales girls and boys to manage their POS shops.

In Dape, a community in Abuja, Nigeria, there are over 30 POS shops that employ lots of sales persons. These persons would have otherwise not been gainfully employed. This scenario is the same in various communities, markets and roadsides across Nigeria.

Advantages of POS business are:

1) Financial Inclusion: POS business in various localities means more Nigerians can be included in financial services.
POS agents help Nigerians open accounts, pay bills, deposit, withdraw and transfer cash among other services.

Many people who were previously unbanked can now carryout financial transactions with the aid of POS services.

Also, since banks and ATM’s are mostly located in urban areas, POS comes as a means to include everyone to bridge the gap and include everyone.

2) Convenience: POS businesses offers financial convenience to their customers. Instead of going to queue up inside a bank or ATM, an individual can just go to one of the numerous POS outlets in his or her locality and carry out the transaction.

Also unlike banks that only work Monday to Friday and close by 3pm, most POS agents work 7 days a week and are available up till 11pm.

However POS business is not without it’s disadvantages. While customers enjoy the convenience that comes with POS services and business owners enjoy the profits, it is necessary to discuss some factors that pose as a risk factor to POS transactions.

1) Network Issues and Failed Transactions

One main disadvantage of POS business is that it is vulnerable to network issues.
4 out of 5 Nigerians have experienced the frustration that comes with having a POS transaction declined due to poor Network.

This poor networks leads to money hanging in transit that can only be gotten back weeks after the customers goes to lay a formal complain at the bank.

2) Exposed Customer Information:
Private details of a customers can easily be stolen by a fraudulent POS operator.

The pins and card details of customers when stolen are used to scam people of their money.
Also names are address of customers available to POS agents can be sold to criminals who might want to harm them. This factor has led a lot of people to be weary and skeptical of POS agents.

3) Theft and Scamming: In an unsecured community or location, the POS agent is not safe as he is susceptible to attack by people who wish to steal the money on them.
Since it is common knowledge that POS agents always have bulk cash at hand, many criminals target them so are to forcibly collect the money.

Also, scammers or Yahoo boys normally extort money from POS agents by using fake alerts to deceive them.

This high rate of crime has led some POS businesses to go bankrupt, worse is that it can lead to injury or death of the POS agent who resists.

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