Nigerians frustrated as swarm of POS agents takes over banks

The inability of commercial banks’ Automated Teller Machines (ATMs) to dispense money has recently caused stir in Ibadan, the capital city of Oyo State, Southwest Nigeria as the residents bemoaned the increase of Point-of-Sale (PoS) Agents in front of banks. 

In a tour conducted by Who Owns Africa at a number of significant locations, including Mokola, Dugbe, Iwo Road/Gate, Agodi Secretariat and Challenge, residents spoke to this reporter and had stories to tell.

Sodiq Babatunde, a factory worker, received his April’s salary in his Globus bank account. He opted to utilise the ATMs of the surrounding banks to settle his debt with the local retailers before the end of the month. 

Upon reaching the First Bank at the Mokola Roundabout, he observed that several PoS Operators were erecting umbrellas with their terminals and that unhappy customers were departing the ATM area without cash. He tried, in vain, to operate the vacant machines as well.

According to a recent report from the Nigeria Inter-Bank Settlement System (NIBSS) released in March 2024, Nigeria saw a sharp increase in the number of Point of Sales (PoS) machines deployed by merchants and individuals to 2.7 million, which represents 50% rise from 1.8million terminal in 2023.

“When I did not receive cash from the machine, those operators waved at me to come in and do business with them. I did not respond to them. I visited the ATM at Wema Bank, which is located next to First Bank, but it was also empty” he said during a conversation with Who Owns Africa.

Babatunde made the decision to return to those operators to verify their charges after strolling the streets. But when he learned about the exorbitant fee per thousands of naira, he was shocked and left empty-handed. As at March, PoS transactions in Nigeria were valued at over ₦961.8 billion.

Not only Babatunde facing this challenge, also affected Mrs. Ajani Mutiyat known as Iya Alata. For two weeks now, she has been visiting the Union Bank at Agodi Secretariat to withdraw money directly inside the banking hall after several attempts to use ATMs outside.

The security guards delayed her and the other customers, informing them that there was no network available for transactions. After experiencing frustration, she vowed to close her bank account. She had plans to travel and buy a new market with the money.

“Though I did notice those PoS operators close to the bank and post office. It would be illogical for me to demand payment of ₦200,000 from them” Ajani told Who-Owns-Africa, “I just need to wait patiently for the network to arrive.”

Operators’ Effect on Inflation

Tunde Faleye, a customer of a commercial bank (which he didn’t want to mention) at Dugbe, expressed that both the banks and PoS agents contribute more to the consistent hike in inflation. Stating that whenever he goes to the bank to withdraw from the counter, they always give nothing more than ₦10,000.00 as cash withdrawal limit per day and he had to step outside to patronise PoS agents.

Faleye, who is also a small-business owner himself, stated that he plans to inflate the prices of his products in order to recover all of the charges collected by these agents. Recognizing that PoS agents had to increase their transaction fees due to the lack of cash in ATMs, which had a detrimental impact on the cost of goods and services and increased the financial burden on customers.

“We are using money to buy money which didn’t happen in the last two years. PoS agents will give you conditions and there is nothing we can do since banks don’t give us money. So, what cannot be cute must be endure” he said.

This reporter accosted Raheem Oyejide, a Civil Servant at Gate/Iwo road axis, and he had something to say on this.

Raheem alleged that the majority of PoS agents were in league with bank security officers and officials; whenever the banks loaded money into their ATMs, these agents would have taken all of the money out before customers showed up. He believed that if there was no collaboration between the parties, the agents would not possess a lot of cash at hands.

“I withdraw from PoS agents every day because I need to spend money. However, this causes me problems because the bank will charge for SMS, and PoS agents will also charge you,” he explained.

Scam and Security Concerns

Oladiran Anthony, a self-employed man, has not entered commercial banks in the past two years because of cash withdrawal limitations. Few months ago, he accompanied one of his brothers to help get some cash from a particular bank (which he did not want to mention) at University College Hospital (UCH). They were unable to get funds at ATM stands, a particular person who claimed to be a bank staff pointed a nearby PoS Agent to them.

When they were withdrawing money from the terminal, they had no idea that the agent had committed some of the card’s private numbers and Personal Identification Number (PIN) to memory. After a few hours, his brother’s phone started to ring with multiple debit alerts.

“Let me tell you something, when there’s fraudulent practice, some of these bank officials know about it, and there’s nothing we can do. We reported to them. They said there’s nothing coming back” Oladiran told this reporter “We don’t trust them. We don’t trust anybody now. How many people are going to the bank to put their money? The money you have at hand, the cash, is not even sufficient for you to spend. How can I put my money in the bank now?,”

He disclosed that an average Nigerian citizen does not even know the functions of the commercial banks and Central Bank; saying that the solution to this problem rests on the Federal Government through the apex bank.

“If you go to all these markets or any functions, you will see PoS agents holding new Naira notes around. Where did they get it from? Is it not from the banks?” he asked angrily and shouted 

EFCC Stance

After several petitions were received from the public as regards the operations of the commercial banks, the anti-graft agency, Economic and Financial Crimes Commission (EFCC) held a stakeholders’ meeting with Compliance Officers of Banks in Oyo State, on May 7, 2024.

The agency said in a statement posted that same day on its X (previously Twitter) account that complaints about frauds received from the banking sector were unhealthy. It warned the commercial banks that illegal dealings and trading in naira with the Point-of-sale (POS) operators must stop.

According to the Commission, “What we notice and see around lately is that Nigerians can only withdraw a small amount of their money with the banks in Automated Teller Machine (ATMs) but POS operators evidently go around with huge amounts of money gotten from the banks. This is not fair to Nigerians and we must fight it head-on”

They called on the relevant stakeholders to join hands together with the commission to fight against economic and financial crimes.

Spread of POS Operators

The Point of Sale (PoS) system was established under Section 863 (1/20) of the Companies and Allied Matters Act, CAMA 2013 by the Central Bank of Nigeria (CBN) to achieve financial inclusion and develop a cashless economy. 

Findings show that, during the COVID-19 era, banks reduced in-person services and left customers to seek other options for their transactions, which gave little rise to PoS Operators within the banking areas. 

There was an 859% increase in the volume of PoS transactions during the lockdown between March and April 2020, according to the Shared Agent Network Expansion Facilities (SANEF), a CBN initiative to supervise agency banking in Nigeria and promote financial inclusion. 

The operation of PoS skyrocketed thirty (30) months ago with the previous administration’s implementation of the Naira Redesigning and Cash Policy. Certain commercial banks and fintech companies, such as Opay, Palmpay, and Moneypoint, have appropriated the right to use their PoS operators to increase internal General Revenue at the expense of the customers.

A 2023 report noted that the Chinese-owned fintech, OPay, had the most PoS Agents with 563,252 units with 37.17% share, followed by Moniepoint as the second-highest agency banking network at 303,946 — 20.06%. It also revealed that the First Bank Plc had 160,740 PoS agents in the country, giving it a 10.60% share of the total number of PoS agents in the country. It was reported that Firstmonie PoS agents had processed transactions worth N22 trillion 2 years ago.

Access Bank with a 2.34 percent market share, has 26,013 PoS agents. Ecobank has a 1.24 percent market share with 18,879 PoS agents countrywide. Union Bank of nigeria employs 2,936 Point of Sale (PoS) personnel, which accounts for 0.19 percent of the country’s agency banking networks. First City Monument Bank (FCMB) owns 2,028 PoS agents with 0.08 percent. And the Keystone Bank has 1,163 PoS agents (0.1%), which is the lowest among them.

The goal was to reduce reliance on over-the-counter transactions by granting agents the ability to handle deposits, withdrawals, and money transfers. Meanwhile, First Bank’s Firstmonie Agents operate in all 774 Local Government Areas nationwide. However, nobody knows among those PoS agents in front of the banks owned by the bank itself.

“I still wonder why PoS Operators are allowed to swarm in front of First Bank Mokola’s gate,” Babatunde said.

Experts’ perspectives

Prof. Sheriffdeen Tella, an economist at Olabisi Onabanjo University in Ago Iwoye, stated that if bank officers do not collaborate with PoS Agents, the latter will have no business around the banks.  Saying further that banks create artificial scarcity of funds so that customers are forced to patronise the operators at some charges and costs to customers.

“The presence and use of PoS is supposed to aid financial inclusion but this practice and exploitative charges can make people hate patronising PoS operators.” he said.

In contrary to Sheriffdeen’s perspectives, Dennis Adesanoye, a Deputy Manager of Statistics at a Federal Agency and former Editor at Nairametrics, stated that PoS agent should not be blamed for swarming around commercial banks; faulting that the banks have failed to make cash available to customers both on the counter and ATMs. Noting that there is no way to restrict the agents in front of the banks to meet their target customers.

“They (PoS Agents) are a source of suppliers in the economy. The banks fail to perform their duties, and I do not believe they collaborate. These PoS people always come in the morning to withdraw money from the ATMs, and it is the banks’ responsibility to load more money there.” Adesanoye said.

In terms of inflationary pressure, Adesanoye believed that the charges of PoS agents can only affect micro scale businesses and low income earners. Saying that small enterprise owners withdrawing from the PoS may increase final product price.

He added that, “there are people in local areas where banks don’t exist but the PoS agents making cash available to them rather than wasting transport fares to the banks in the cities”.

Giving the underlying reasons for the frequent unavailability of cash in ATMs, Dr. Adeyemi Temilola, an associate member of the Chartered Institute of Bankers of Nigeria (CIBN), and an Associate Chartered Stockbroker (ACS), mentioned that banks shifting towards digital transactions and redesign of Naira notes caused temporary disruption in cash supply in the machines.

Adeyemi saw PoS agents as a double-edged sword in the lack of funds over the counter; affirming that the elevated transaction costs imposed by PoS agents in contrast to ATMs may exacerbate financial strain on consumers and possibly exacerbate inflationary pressures.

On measures to mitigate fraudulent activities of PoS Operators, she considered  Card skimming as the main problem, where agents steal customer card details by using a device to copy information swiped through their machines. Noting that PoS agents may manipulate cash, possibly defrauding customers during withdrawals or even abusing the system by using strategies like fictitious transactions.

In her words, “Multiple steps can be taken to reduce these risks. Enforcing background checks and mandatory agent registration can guarantee that only trustworthy people are using PoS terminals. People can be empowered to recognize and report suspicious activity by raising customer awareness about PoS scams through public education campaigns and conspicuous signage at PoS terminals. Last but not least, regulatory agencies can be extremely important by setting precise rules, carrying out frequent checks, and applying sanctions for dishonest behaviour.”

“Make safety your top priority and pick your PoS agent carefully if you rely on them to handle cash withdrawals in Nigeria. During a transaction, never let your card fall out of your sight. Notice if someone is attempting to divert your attention while your card is being processed.  Steer clear of PoS terminals that have questionable modifications or antiquated technology. When entering your PIN, choose agents who have fingerprint readers or chip and pin readers for increased security.

Prior to confirming, always check the transaction details shown on the PoS terminal.  Make sure the amount shown corresponds to the withdrawal amount you requested.  Obtain a receipt for your transaction so you can keep track of it and report any inconsistencies.”

Policy and Regulations

On May 8th, Who-Owns-Africa reported that the Corporate Affairs Commission (CAC) has directed PoS Operators to register their business names with the Federal Government. According to the report, the commission issued July 7, 2024 as a deadline for all agents to do so.

This new development was initiated by the Central Bank of Nigeria (CBN) to monitor the activities of the certified PoS agents nationwide.

The Registrar-General of the CAC, Hussaini Magaji, declared that the registrations met the regulatory requirements and guidelines set forth by the CBN.

He went on to say that the registration is meant to safeguard the operations of fintech companies, safeguard the interests of consumers, and strengthen the economy.

PoS agents are required to conduct Know-Your-Customer procedures for their clients, just like banks are. This aids in the suppression of fraud and money laundering.

But according to Elegbede Oluwasegun, National General Secretary of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), PoS operators have opted to sue to challenge the legality of the regulation.

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