A Point of Sales (POS) Terminal is a portable machine used to accept bank cards of payments for goods and services. It allows you, as a cardholder, to have real-time online access to funds and information in your bank account through debit or cash cards.
The Central Bank of Nigeria (CBN) introduced the PoS system in 2012 to further drive home its cashless policy for enhancing Nigeria’s payment system. The initiative since its introduction has recorded remarkable success; with 146 million transactions in 2017 worth N1.41 trillion conducted on about 155,462 active terminals that had been made available to retailers by mobile money merchants. The statistics made available by Nigerian Bureau of Statistics indicated that this was the highest value recorded since it was introduced.
According to the statistics, PoS transactions rose by 85.75 % from N758 billion the country recorded in 2016 and this payment system was used 146 million times, a 130% rise from 64 million transactions in 2016. while the lowest payment of N91.29 billion on the PoS was done in January, the highest transaction valued at N167.58 billion was recorded in December.
While PoS transaction is growing in the country, an informal Roadside PoS Terminal cash withdrawal industry is also growing. These service providers make money by selling mainly convenience to people who don’t want to pass through the unnecessary and avoidable stressful process of accessing a Human Teller or Automated Teller Machine (ATM) common with Nigerian Banks.
This business came to life when small businesses who already use PoS machine to accept bank cards of payments for goods and services, started using their PoS terminals to debit customers account in exchange for the equivalent cash and a fee. This way the small business reduces the risk of having too much cash to worry about and at the same time make money from the transaction.
Currently, there are standalone businesses offering this service and even more: you can make cash withdrawals from your bank account using a PoS machine and make a cash deposit into any bank account using the traditional mobile banking app, which serves as the source of cash for the withdrawals.
These businesses are mostly found around markets making them very convenient for traders in the market who no longer have to go far from their shops or spend a long time on queues to use any of these services in an actual Bank.
To access the services of a roadside `banks` in Karimo Market in a poor suburb of Abuja, I paid N200 to withdraw N5000 cash using my Debit Card on a PoS and N200 to make a deposit in my account (or one’s account).
This is good business as POS terminals are free with a fee per transaction typically 0.25% with a cap or N1,200. On the deposit service, which is actually the business person transferring money from his own account to mine using a bank mobile app, it costs him as low as N52.50 if he uses a First Bank account.
Comparing this PoS transaction to an ATM transaction which attract a fee of ₦65/withdrawal Banks charge after three withdrawals in a month on other banks’ ATM cards and ₦100 charge per interbank transfers; remoteness of ATMs and long queues at ATMs galleries (mostly under the sun) on a daily basis due to the insufficient number of ATM in the country; dispensation of mostly large currency denominations and failure to dispense cash when they are most needed — on public holidays and weekends; and other factors like trust issues; most low-income and rural dwellers in Nigerians would agree with me that it is more convenient and most times cheaper to deal with a Roadside PoS Terminal person.
Since its 1989 debut in Nigeria, ATM penetration has grown, although obviously nowhere near where it should be. According to the Nigeria Interbank Systems (NIBSS), as of March 2017, there were 17,594 ATMs across Nigeria servicing a population of about 30 million people. This small number would have increased considerably if there were more independent ATM deployers in the country.
Note: The total number of bank accounts was 95 million as of November 2016. But the total active bank accounts were 64.13 million as at November so I assumed an individual has an average of 3 accounts.
Nigerians as usual are being innovative taking advantage of the inability of CBN and Nigerian banks to satisfy the financial needs of a large population of Nigerians but what is the security implication especially as this Roadside Banks are not registered with, and the model not approved by CBN?
According to a Punch News article, there is already concern among stakeholders that the amount lost to fraud in the country increased as the adoption of e-payment rose in Nigeria.
While acknowledging the significant growth of the PoS payment system in Nigeria, the Director, Banking and Payments System, Central Bank of Nigeria, Mr. Dipo Fatokun, urged banks to carry out risk ratings on prospective merchants.
He said, “It is essential that we continue to conduct necessary due diligence on any merchant to be extended a PoS terminal. Banks must know the businesses of their respective merchants and carry out proper risk ratings, while acquirers and issuers must add fraud monitoring tools on both issuing and acquiring sites of their businesses.”