The past decade has seen massive socio economic growth in Nigeria. A lot of the sector’s growth emanates from the country’s finance and banking sector. In the turn of the new millennia, the Central Bank of Nigeria began to agitate for Nigerians to embrace a cashless society. That agitation for a cashless society has led to a handful of innovations each promising to lead to the nationwide adoption of a cashless society. One of these innovations is the Point of Service (POS) system. In Nigeria currently, a POS Agent can be found in almost every community in the country and have become an important part of the financial system in the country. Asides the POS systems found in a good number of shops, we all know a POS station and have utilized an Opay or MoniePoint agent at one time or another as recently as this morning for some people.
But some people may wonder, what is the history of POS points and agents in Nigeria? While some may argue that the POS system originated from the advent of the cash register or even the banking system digitalization, the POS system in Nigeria begun sometime after all these innovations. In 2013, the Central Bank of Nigeria introduced the Point of Sale (PoS) system and agent banking to achieve financial inclusion and develop a cashless society. The POS system enables customers pay for goods and services through their smartphones, tablets or other devices that can connect to the internet. The POS system has a wide array of functions some of which we are familiar with and may have used ourselves, such as cash withdrawal, cash deposits, payment of utility bills and bank account creation to name a few.
The obvious upside of the system is that it simplifies sales processes. The POS system has gone a long way to aid the effective management of inventory, reducing costs and improving customer services. In addition, the system enables the user to gather data on sales, inventory while facilitating effective sales calculation for the customers. It can be argued that the POS has not done to help the cashless society agenda because statistically, people have used the system as a way of gaining more access to their monies as cash withdrawals take a greater percentage of the transactions conducted by the POS machines.
The POS industry in Nigeria is a great business as it has proven to be very profitable due to rural populations being under banked and financially underserved with estimated profits to be around between 5,000 to 11, 000 Naira per day in an great location. However, the investors who would like to go into this business can be persuaded by low initial investment, limitless customers, low operational costs, high profit margins and the opportunity for growth. The high success rate of this payment system is also attributed to the fact that a lot of Nigerians have come to rely on the POS to get access to money faster than going to the bank or finding a working nearby ATM.
As great as it sounds, the POS system is not without the usual problems that plague the Nigerian financial system and its businesses. While the statistics on the growth of the POS system in Nigeria especially in the last four years published by NIBSS are really impressive, customers have expressed a few concerns. On one hand, some complain that bankers have neglected repairing and restocking the ATMs in favour of the POS some of which are owned by the bankers. Bankers have refuted these claims, countering that most customers prefer to use the ATMs instead because they would not have to pay the charges for engaging the POS services and will also prefer to deal directly with their own banks as opposed to a third party institution. Further, the epileptic banking network systems have also exacerbated customer complaints as some customers claimed to have lost their money due to botched transactions and others complain that some POS agents have tried to defraud them on several occasions.
While some customers have called for regulations from the Central Bank of Nigeria (CBN) to address the issues of the POS system, there is no doubt that the approach of the average Nigerian to the POS system is favourable. The POS system in Nigeria is viewed as a necessity that could use a little fine tuning to some people and a profitable SME to others. The need for caution is apparent, although that cautionary tale is prevalent for most Nigerian businesses especially in the financial sector. What has been your experience or opinion of the POS system in Nigeria so far?
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