INVESTIGATION: PoS transactions from 307,000 machines hit 15.67trn in 4 years in Nigeria

Transactions on Point of Sale (PoS) in Nigeria have hit N15.67 trillion in the last five fiscal years, Blueprint can authoritatively report.

The Central Bank of Nigeria (CBN) introduced the PoS system and agent banking in 2013 to achieve financial inclusion and develop a cashless economy.

However, this novel system of business transactions was not well embraced until recently when Nigerians troop to the PoS points to facilitate their businesses.


Blueprint gathered that over 146.3 million transactions were made in 2017, with N1.4 trillion as total transactions.  In 2018, the worth of PoS transaction rose to N2.3 trillion after a total of 285.9 million transactions were recorded. In 2019, PoS transactions increased by 53.42 per cent to 438.61 million transactions with the total value increasing by 37.97 per cent to N3. 21 trillion.  In 2020, transactions rose  by 49.51 per cent to 655.75 million as the total value increased by 47.50 per cent to N4.73 trillion.  

Available data has also shown that point of sale transactions carried out in the first eight months of 2021 stood at N4.06 trillion, representing a 45% increase compared to N2.81 trillion recorded in the corresponding period of 2020. This is based on data obtained from the Nigeria Inter-Bank Settlement System (NIBSS).

According to the data, PoS transactions hit its highest levels for any eight-month period, increasing by 44.8% and 108% compared to N2.81 trillion and N1.96 trillion recorded in the similar period of 2020 and 2019 respectively.

Similarly, the volume of PoS transactions recorded between January and August 2021 stood at 619.3 million, increasing by 61.8% compared to 382.9 million recorded in the corresponding period of 2020. It is worth noting that a total of 686,577 PoS terminals were deployed nationwide as of August 2021, representing an 84.4% increase compared to 372,333 recorded as of the same period of 2020.

The value of POS transactions in the country for the month of August 2021 stood at N504.88 billion, lower than N554.67 billion recorded in the previous month, while it rose marginally compared to N503.91 billion carried out in June 2021.

A total of N4.06 trillion worth of POS transactions have been carried out so far in this year, making a grand total of N15.67 trillion.

In terms of volume, 146.27 million, 285.89 million, 438.61 million, and 655.75 million transactions were carried out in 2017, 2018, 2019 and 2020 respectively, while 619.28 million transactions have so far been recorded by August in the current fiscal year.

The figures indicate an increased interest in the use of PoS as a transaction method.

307,000 PoS machines

Although the Nigeria Inter-Bank Settlement System (NIBSS) data shows there were about 307,000 PoS machines in Nigeria as at March 2021, only167,000 are active.

Similarly, there are 30,000 Automated Teller Machines (ATMs) and over 6,000 bank branches, according to the organization.

While agent banking promotes financial inclusion, it might not usher the nation into a cashless economy, experts have noted.

Ironically, a random survey of several PoS points shows cash withdrawals make up 90% of their daily transactions.

Digital banking  

Digital banking is the new route that financial service providers and regulators are travelling to achieve better results, increase transaction speed and security.

Today’s reality demands that real-time payments and banking capabilities should be available whenever and wherever they are needed by customers.

The road to seamless digital banking and improved access to financial services is long and challenging in Nigeria no doubt.

Improving financial inclusion, access to credit and getting transactions done at the lowest possible cost are challenges banks and other financial institutions are grappling with.

Still, banks and other financial institutions with eyes on the future are taking advantage of digital banking that is defining the sector’s successes and reach.

Rise in PoS transactions

Bank customers are also not left behind, as majority are now thinking and acting digital.

There has been rise in PoS, ATM,  mobile and internet banking activation and usage across different segments of the economy, including among the unbanked at the base of the society.

However, there are still challenges facing the sector, some of which the PoS payment agents have eased when customers don’t get paid at the ATM points.

The PoS became handy for Nigerians, especially during  the coronavirus pandemic era, where they needed to reduce the number of people gathering in the banking halls.

It is even more convenient for people to use the PoS by paying service fee, which people considered as being in order when viewed against the backdrop of the cost of going to the banks to transact similar business.

 The good side  

On the good side of it, some financial experts said it has created jobs for a lot of people, and also liberalised the banking sector by ensuring people no longer gather in the banking halls which often results in waste of man-hours.

Despite the fact that the ATMs were still working, some customers still use the PoS, depending on the sense of urgency of their need and services.

Insecurity may also be responsible for the proliferation of the PoS business as explained by Mr. Tunde Mabawonku, the chief financial officer of Wema Bank.

He said: “The insecurity in the country has its own challenges. Since 2018, we had almost six robbery attacks. In Iju-Itaogbolu, Osun state. we were burgled; we suffered major loss. For us, the money lost was not the problem, but the loss of lives, where they killed staff; killed customers. This is what you can’t get back. Some of the locations where we have closed down, once there is a business justification, we will go back.

“For example, Igbara Oke, we are reopening it; we suffered robbery attack but we are going back. Iyin Ekiti, we also had robbery attack, we are going back. Okuku in Osun state, we had robbery attack. We had a meeting. We said, let things calm down a bit. So, we take justification, look at it and determine when to go back.

“One of the things we try to do is turn to technology through agency banking, through other means, that, at least, get the community transacting pending when we see that the business is justified, then we will come and rebuild the branch.”

Preference over ATM

Many bank customers across the country have complained of the difficulty in trying to withdraw cash from the ATMs.

In some cases, they said the machines often come up to say they were empty and had no money to dispense.

Timothy Alkali, a civil servant, lamented that due to the inefficiency of the ATM platform, he recently lost N25,000 as he attempted to use the PoS machine around his abode in Nyanya.

 Alkali said he was debited while the cash was not given to him and that he had to visit his bank to retrieve his cash.

He further said, up till date, he was yet to be credited  one month after.

Another ATM user, Stanley Egbodo in Aso Pada, who spoke on his experience,  complained that “if one is not careful, the card may be compromised because some PoS operators can easily copy a customer’s details in the process of one trying to withdraw cash. I narrowly escaped being swindled.”.

But in their separate reactions, some ATM users namely, Abiodun and Mohammed said, the ATMs were being starved of fund by bankers to the advantage of  PoS because ”the bankers  are behind the  PoS.”

Abiodun said: “The bankers are not fair to us. The ATM charges low while PoS, though convenient, charges higher. The bank staff do this so they can get their profit from the pay centres.”

Sharing similar view, Mohammed said “the bankers are ripping us off. They are making a lot of money from PoS, and it is therefore convenient for them to starve the ATMs of fund.”     

             Conspiracy theory

            Frustrated, many customers blamed the proliferation of agent banking as responsible for this, while others alleged conspiracy between the banks and its regulator, the Central Bank of Nigeria (CBN).

          But dismissing the allegation, its Director, Corporate Communications, Mr. Osita Nwanisobi, described the conspiracy theory as preposterous.

He said: “It is highly preposterous for anyone to say that CBN connived with banks to deprive people of their money. The primary purpose for which ATMs were introduced is to ease the sufferings of Nigerians and to make banking easier and convenient.”

However, the apex bank  said it was still investigating the matter and the results would be made known.  

Banker faults CBN’s claim

But contrary to the CBN’s position, a banker with one of the new generation banks in the country, who pleaded anonymity, disclosed that it was a way to make extra income for bankers and others.

He said: “It is not a secret, the bank I work for is aware, they offer me cash and I, in turn, make money for myself and the bank. We noticed people these days don’t have patience to queue at the ATM, they prefer the PoS, which is fast and easy; that is why we get assistance from our banks. They(banks)  make profit from every transaction.”

‘It’s for convenience’

Experts in the nation’s financial Industry have said the increase in PoS patronage was due to convenience and the frustration experienced by customers at ATM points. 

Chief Research Officer Investdata Consulting Ltd, Lagos, Ambrose Omorodion said the use of PoS seems to be more attractive or convenience for Nigerians because it promotes the cashless policy of the CBN.

He said with the use of genuine PoS, bank customers were less exposed to robbery attack and misplacement of money.

He said: “ATM is good for quick cash but its exposure to attack is high, even at the point of withdrawals. Though  there are some fraudulent activities carried out by PoS operators or their owners when customers withdraw money, but those frauds can be checked or control.”

 Admitting that no system is perfect, he said with the advent of technology, CBN can further put measures in place to track the fraudulent activities among PoS operators.

 A financial analyst, Mr Chudi Okagbue, said bank customers patronised PoS regularly because they were faced with the ATM challenges of not being been able to dispense cash.

 He said:“As you want to withdraw money through ATM in some cases, the machines will signal no money to dispense or there is no network.”

“The issue of  no money or no network while using ATM is frustrating, especially for those that do not have alternative means to get cash or if it happened in an area where you will not have access to banking halls.

 “It is better for one to do transaction with PoS as their  operators are staying within the environment we live, so going to the bank or ATM  is another stress and waste of time because the way PoS is booming, some financial  institutions acquire the PoS machine and engage vendors to work for them and remit to the managers.”

 He stated that apart from banks, there were so many outlets whose business it is to acquire many PoS machines and give out to willing vendors to operate and bring returns.

“If the acquisition of POS is from banks alone, it might not be everywhere as it is today,” he added.

Like ATMs, Okagbue said, PoS operators also faced challenge of network services, “but because most of their customers are people they know one-on-one, they can do the transaction later.”

On PoS  locations

However, in Abuja, most PoS operators said they avoid situating their kiosks close to any ATM machine because many bank customers actually prefer using the ATM to patronising them (PoS operators) because of their higher charges.

Yohana Sadiq, a PoS operator in Kubwa area of Abuja, said: “When you withdraw N10,000 using your ATM card on my PoS, I’ll charge you N150 for that transaction.

“Some customers would say it’s too high but the banks also charge us on many fronts. The profit margin is extremely low. Most times, I don’t keep more than N300,000 cash with me at any given time because of security and demand.”

Monday Akpan, another PoS operator, said most people now dread ATMs because their cards could be swallowed by faulty machines and they also risk being attacked by thieves.

“These days, some ATMs do not have sufficient cash. We are now hot cakes,” he said.

For Moses Akin, many PoS operators were funded by bank staff: “I’m aware of about three owned by bankers. They ensure they never run out of cash. But this business is really not lucrative, especially if you’re not in a environment.”

Downtown Mararaba in Nasarawa state, Priscilla Ayuba, a PoS operator in Aso Kucha, told Blueprint that getting funds from the bank is not difficult because she is an agent.

While saying  the business is very competitive, she noted that  “you either gain or lose, depending on how you handle it. Sometimes, you do transfer and you may get fake alert and pay the customer, but you may never get credited or when you overpay a customer you lose as well.”

She pointed out that most PoS were not owned or funded by the banks to starve the ATM platforms, but rather “PoS is taking banking nearer to the people and boosting financial inclusion policy of the CBN.”

 Ayuba, however, said “some operators were less knowledgeable about the system and how it works, such persons lose money often times and would subsequently close shop.”

‘CBN should regulate’

On his part, Mr. Festus Ogwu, a legal expert, said: “I see that part of these PoS operators is the extension of the private business of the bankers. It is a sort of bringing double interest in the banking transactions.

“And in that circumstance, loyalty becomes a question here. Even if anything like that is to be done, it should be properly organised. The CBN has directives, orders and regulations. But it has not taken time to look at that level of operation. The CBN should regulate what goes on in the PoS vendors’ operations. I doubt if CBN has a data of PoS operators in this country.” 

On his part, Elvis Paul, a PoS operator, admitted some bank staff operate PoS business but that they have no right to stock money and starve ATM machines.

“For the question, yes, some banks’ staff really have PoS stands but that’s not to say they have the right to stock money for their PoS and allow the ATM machines of their banks to be starved of funds. It’s totally false and wrong notion for anyone to have that belief.”

‘We don’t starve ATMs’

Dismissing the allegations, Head, Corporate Communications of Unity Bank, Matthew Obiazikwor, told Blueprint it’s unfounded to say banks starved ATMs of fund to meet PoS’ needs.

“There is no mechanism or operational process for that to happen. All of them are alternate channels through which customers can access financial services of banks. So, it is not true. They’re not operational reality,” Obiazikwor said.  

Obiazikwor said  the number of customers using the ATM was more, and that the pressure exerted by customers on the  cash in the machines, especially at weekends when staffers of the bank won’t be there to reload cash into the machines.

Explaining customers’ preference for ATM, he said,  “90 per cent customers will choose the ATM over the PoS because with the ATM you’re dealing directly with your bank and there may be no charges. ATM penetration is somewhat overwhelmed by the population. What is happening is that the uptake of the ATM channel is responsible for the shortage in service rendered.”

Some other bankers believed there could be a conspiracy where those who were supposed to load the ATM machines lodged the cash with their PoS cronies at a fee.

Some even alleged that such funds were always in mint which they sprayed on celebrants at wedding, birthday ceremonies or other forms of celebration as the case may be.