CEM REPORT, ECONOMY| Nigeria’s Point of Sale (PoS) landscape is experiencing a boom, with the number of deployed terminals reaching 2.7 million in March 2024, according to the latest data from the Nigeria Inter-Bank Settlement System (NIBSS). This signifies a significant 50% year-on-year increase compared to the 1.8 million terminals deployed in March 2023.
The NIBSS data reveals a staggering 864,753 new PoS terminals deployed in the last year alone. This rapid expansion suggests a growing appetite for cashless transactions across the country. However, despite the surge in deployments, a gap remains between deployed and registered terminals.
Transaction Value Decline
While the number of PoS terminals is on the rise, the value of transactions processed through these terminals has seen a decline. NIBSS data indicates that PoS transaction value in March 2024 stood at N961.8 billion, reflecting a 16.5% decrease compared to the N1.15 trillion recorded in March 2023.
Financial experts believe this decline can be attributed to the unusual cash scarcity experienced in Nigeria last year. The cash crunch forced many Nigerians to rely heavily on electronic transactions, leading to an inflated transaction value in March 2023.
“The decline in transaction value this year is likely a temporary correction following the exceptional circumstances of the 2023 cash scarcity,” commented Dr. Opubor.
“The long-term trend for PoS transactions is still positive, driven by factors like increased merchant adoption and the convenience of PoS withdrawals, which effectively addresses the shortage of ATMs across the country.”
Unutilized PoS Terminals and Registration Hurdles
As of March 2024, NIBSS data shows a total of 3.73 million PoS machines registered nationwide. This implies that over 1.04 million terminals are either yet to be deployed or have become inactive. Reasons for this discrepancy could include logistical challenges in deploying terminals to remote areas or a lack of awareness among some merchants about the benefits of PoS systems.
Meanwhile, a recent directive issued by the Corporate Affairs Commission (CAC) requiring PoS operators to register their businesses by July 7, 2024, has caused anxiety among many operators, particularly small businesses.
“The CAC registration requirement places an unnecessary burden on our small businesses, many of whom are just trying to make a living,” expressed Elegbede Oluwasegun, National General Secretary of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN). “We believe this directive needs to be reviewed to ensure it fosters a more inclusive environment for PoS operations.”
However, the CAC Registrar-General, Hussaini Magaji, maintains that the registration is essential for compliance with legal requirements and directives from the Central Bank of Nigeria (CBN).
“The registration process is designed to safeguard the businesses of both fintech companies and customers, while also strengthening the overall financial ecosystem,” Magaji explained. He cited Section 863, Subsection 1 of the Companies and Allied Matters Act (CAMA) 2020 and the 2013 CBN guidelines on agent banking as the legal basis for the directive.
A Cashless Future for Nigeria?
The rapid growth in PoS deployments and the increasing acceptance of electronic payments by businesses and consumers paint a promising picture for Nigeria’s cashless future. However, addressing the challenges faced by PoS operators, such as the recent CAC registration requirement, and ensuring wider accessibility of PoS terminals in remote areas will be crucial in sustaining this positive momentum.
The ongoing debate surrounding the CAC registration directive highlights the need for a collaborative approach between regulators, financial institutions, and PoS operator associations to establish a framework that fosters financial inclusion while maintaining regulatory compliance. As Nigeria’s cashless journey progresses, navigating these challenges will be key to unlocking the full potential of PoS technology and driving financial digitization across the nation.
