Introduction
The Point of Sale (POS) business has emerged as a silent yet powerful force transforming the Nigerian economy. In the face of persistent infrastructural deficiencies, banking bottlenecks, and high unemployment rates, POS businesses are bridging critical gaps, fostering financial inclusion, and stimulating economic activities, particularly in underserved and remote areas.
Since the Central Bank of Nigeria (CBN) launched its financial inclusion strategy in 2012, POS operations have grown exponentially. What started as a complementary banking solution has now evolved into a cornerstone of the country’s informal economy. With thousands of Nigerians relying on POS agents for financial services, the impact of this sector is profound and multifaceted.
This article explores the extensive contribution of the POS business to Nigeria’s economic development, supported by captivating real-life stories, statistical insights, and practical analysis.
Evolution of the POS Business in Nigeria
The POS business model in Nigeria took shape as part of the CBN’s Cashless Policy initiative. The policy aimed to reduce the volume of cash in circulation while encouraging electronic payment channels. Initially, banks deployed POS terminals in retail stores to facilitate cashless transactions. However, it wasn’t until fintech companies, mobile money operators, and telecoms joined the movement that the POS agent model became widespread.
Between 2012 and 2023, Nigeria witnessed a meteoric rise in the deployment of POS terminals—from a few thousand to over 1.8 million as of early 2024. According to the Nigeria Inter-Bank Settlement System (NIBSS), transactions worth over ₦6 trillion are now processed monthly through POS terminals.
Empowering the Unbanked: The Financial Inclusion Drive
Bridging the Urban-Rural Divide
One of the most significant contributions of POS businesses is financial inclusion. Before their proliferation, millions of Nigerians—especially in rural communities—lacked access to banking services. Today, POS agents serve as mini-bank branches in remote areas where financial institutions find it unprofitable to operate.
Story: Grace the Village Banker
Grace, a former teacher from Okitipupa, Ondo State, started her POS business after losing her job during the COVID-19 lockdown. Armed with a small loan and a mobile device, she began processing withdrawals and deposits for villagers who previously had to travel over 25 kilometers to the nearest bank. Within a year, Grace’s business expanded, and she now employs two staff and processes over ₦10 million monthly.
Her story reflects the transformational impact of agent banking on local economies and livelihoods.
Job Creation and Youth Empowerment
With unemployment rates hovering above 33%, the POS business has become a lifeline for millions of Nigerians, especially youth. The ease of entry—requiring minimal capital, a smartphone, and a POS terminal—makes it an attractive venture for the unemployed and underemployed.
A typical POS operator can earn between ₦5,000 to ₦20,000 daily, depending on location and volume. This translates into a sustainable income that not only feeds families but also powers local economies.
POS and Youth Entrepreneurship
In Lagos, 26-year-old Chinedu used his NYSC allowance to buy a POS terminal and set up a kiosk in Mushin. What started as a side hustle is now a thriving business with three outlets. Chinedu’s entrepreneurial journey is just one among thousands of stories of Nigerian youth using the POS business to break the chains of poverty and dependence.
Stimulating Micro and Small Enterprises (SMEs)
POS businesses also contribute to the vibrancy of Nigeria’s micro and small business ecosystem. Traders, transport operators, artisans, and small shop owners benefit from the convenience and liquidity provided by nearby POS operators.
In markets across Aba, Kano, and Onitsha, POS kiosks are now as common as vegetable stalls. These businesses make cash readily available for daily transactions and offer merchant services such as bill payments, airtime top-ups, and transfers, making them indispensable partners in trade.
Enhancing Cash Flow for Businesses
POS agents often double as cash flow facilitators for micro-businesses. They enable quick withdrawals for traders who need liquidity to restock or make urgent purchases. In essence, POS operations act as informal microfinance solutions tailored for the informal sector.
Encouraging Digital Literacy and Technology Adoption
Through the proliferation of POS services, Nigerians—especially in rural areas—are being exposed to digital finance tools, inadvertently enhancing digital literacy. From mobile apps to e-wallets, POS businesses are onboarding more people into Nigeria’s expanding fintech ecosystem.
Many Nigerians who once feared banking are now more confident using digital channels because of the daily interactions with POS operators who simplify financial processes.
Strengthening the Informal Economy
The informal economy in Nigeria accounts for over 60% of the labor force and nearly 50% of GDP. POS businesses operate squarely in this sector, reinforcing its structure and contributing to its legitimacy.
Informal to Formal Transition
With increasing collaboration between POS agents and regulated financial service providers, many previously unregistered businesses now have access to financial services such as savings, loans, and insurance—services traditionally reserved for the formal sector.
Boosting Government Revenue Through Taxes and Levies
While POS businesses largely operate informally, growing efforts by state governments and regulatory bodies to formalize the sector are yielding fiscal benefits. In some states like Lagos and Ogun, POS operators now pay minimal levies and are encouraged to register with local authorities. As digital transaction records improve, the potential for revenue collection via VAT and income tax grows.
Supporting the Cashless Economy Initiative
The POS business has played a critical role in reducing Nigeria’s cash dependency. From utility bills to school fees, POS terminals facilitate seamless digital transactions, even in areas without ATMs or bank branches.
During the 2023 Naira redesign crisis when ATMs ran out of cash, POS agents were the saving grace for millions of Nigerians. Though cash scarcity inflated their charges, the period reinforced the importance of POS operators in the country’s payment infrastructure.
Challenges Facing the POS Business Sector
Despite its contributions, the POS business in Nigeria faces multiple challenges:
1. Fraud and Insecurity
POS agents are frequent targets of armed robbery and fraudsters. Fake alerts and counterfeit bank transfers are common, especially in rural areas with limited digital literacy.
2. Overregulation and Unfair Charges
New policies, such as the CBN’s directive on cash withdrawal limits and the ₦50 stamp duty on deposits, have been met with backlash from POS operators who feel unfairly burdened by multiple levies.
3. Poor Network and Infrastructure
Frequent service downtimes caused by poor internet connectivity and power outages frustrate transactions, reducing trust in the system.
The Future of POS Business in Nigeria
The future of POS businesses in Nigeria is closely tied to the country’s fintech innovation, regulatory evolution, and infrastructural development. With the right policies and investment, POS operations can expand beyond basic transactions to include:
- Microloans and credit scoring
- Insurance and pension services
- Rural savings schemes
- Tax collection and civic registration
Financial institutions are also partnering with agents to deliver more tailored services. Companies like Opay, Moniepoint, Palmpay, and Kuda are leveraging this agent model to deepen their market penetration.
Deepening Financial Access in Marginalized Areas
The true strength of the POS business model lies in its reach—especially in places where traditional banking infrastructure is either weak or entirely absent. In Northern Nigeria, for instance, several local government areas do not have a single bank branch. This creates enormous challenges for civil servants, farmers, and traders who must travel long distances to access basic financial services.
POS agents step into this vacuum, offering essential services such as:
- Deposit and withdrawal
- Bank transfers
- Airtime and data purchases
- Utility bill payments
- Voter and ID card registration (in some locations)
Story: Musa of Zamfara
In Gusau, Zamfara State, a young man named Musa became the only POS operator in his district. Initially mocked for setting up what many considered a “non-serious” business, Musa’s kiosk quickly became a hub. Traders, farmers, and even local government workers relied on him. His monthly transaction volume hit ₦15 million by the end of 2023. He now plans to expand to other towns and become a Moniepoint aggregator.
Musa’s story highlights how POS business is not only about transactions but about building trust, networks, and influence in communities.
Women in POS Business: Economic Powerhouses
Women, often excluded from formal economic systems, have found in POS business a vehicle for financial independence. Many stay-at-home mothers, widows, and young graduates have turned their fortunes around by becoming POS agents.
According to a 2023 report by Enhancing Financial Innovation & Access (EFInA), over 42% of POS agents in Nigeria are women—an impressive figure in a male-dominated economy.
Story: Fatima’s Transformation
Fatima, a widow with four children in Bauchi, began with a single POS terminal given by her brother. In six months, she saved enough to rent a shop and add three more terminals. Today, she manages a network of agents and trains other women. She’s also helping others open savings accounts and apply for micro-loans. Her impact is now both financial and social.
Digital Revolution and the Rise of Fintech
POS business is closely tied to the broader fintech revolution sweeping Nigeria. Companies like OPay, Kuda, Palmpay, Paga, Moniepoint, and Baxi have revolutionized how POS operators function, making onboarding, transaction tracking, and customer care more efficient and tech-driven.
Fintech as the Engine Behind POS Growth
Fintechs offer POS machines at subsidized rates or even for free, in exchange for agent loyalty. They also provide:
- Dashboards for transaction monitoring
- Credit facilities for agents
- Wallets and savings options for customers
- APIs for business integration
This symbiosis is turning local POS kiosks into micro fintech branches, promoting access to financial services in real-time.
POS Business and the Gig Economy
The POS ecosystem contributes to Nigeria’s growing gig economy. Unlike traditional jobs with strict hours and corporate structure, POS agents enjoy flexibility and independence. Many combine POS with other services like:
- Tailoring
- Mobile phone repairs
- Sale of beverages/snacks
- Photography or printing services
This hybrid model allows for revenue diversification and business resilience.
Story: Tunde the Tailor-Banker
Tunde, based in Ilorin, Kwara State, runs a tailoring shop by day and switches to POS business in the evenings. He installed a solar-powered kiosk outside his shop to ensure 24/7 service. By integrating fashion and finance, he has created a sustainable model that supports his family and two apprentices.
Challenges and Regulatory Concerns (Expanded)
While the POS industry offers immense opportunities, it also comes with real challenges that could limit its potential if unaddressed:
1. Insecurity and Robbery
POS agents are often targeted due to the perception that they hold large sums of cash. Many operate without proper security infrastructure, especially in isolated rural areas.
Potential Solution: Encouraging digital-only POS models where cash is minimized and insurance mechanisms are in place for lost funds.
2. Fraudulent Transactions
Fake mobile alerts and cloned bank transactions are a rising concern. Some agents have lost millions to sophisticated scams.
Suggested Remedy: Mandatory digital receipts and CBN-approved real-time transaction verification software for all agents.
3. Over-saturation in Urban Areas
In major cities like Lagos and Abuja, the number of POS agents has grown faster than demand, leading to price wars and dwindling profits.
Strategic Direction: Regulators and fintech companies could incentivize migration to underserved regions through higher commission rates or grants.
4. Regulatory Overreach
While regulation is necessary, inconsistent or harsh policies can disrupt agent networks. In 2023, the CBN’s directive to restrict cash withdrawals sparked protests from operators.
Suggested Framework: Inclusive policymaking that considers grassroots realities before implementation.
Government Policy Support and Recommendations
A. Formalizing the Sector
There’s a growing call for formal registration of POS agents as micro-businesses under the Corporate Affairs Commission (CAC). This could help create databases, enhance security, and simplify taxation.
B. Credit Support and Capacity Building
Many agents require working capital to scale. Government-backed micro-credit schemes through the Bank of Industry (BoI) and CBN intervention funds could be tailored specifically for POS entrepreneurs.
C. National Identity Integration
Linking every POS operator’s BVN and NIN to their terminals could reduce fraud and aid customer traceability.
POS Agents and Financial Data Collection
A lesser-known but emerging benefit of POS businesses is the ability to collect real-time financial data. With millions of transactions happening daily, fintech partners can use anonymized data to:
- Detect market trends
- Understand rural spending patterns
- Design targeted financial products
This data-driven approach improves policy planning and business innovation.
POS Business and National Economic Indicators
Let’s break down the POS business’s macroeconomic influence using key indicators:
| Indicator | Contribution from POS Sector |
|---|---|
| Employment Rate | Over 1.9 million direct and indirect jobs created (2023 est.) |
| Financial Inclusion Rate | Increased from 46.3% in 2010 to 64% in 2023 (CBN) |
| Informal Economy Growth | Better liquidity and transactional efficiency |
| Mobile Banking Penetration | POS has driven adoption of fintech and smartphone banking |
| GDP Contribution | Difficult to measure directly, but a major input in trade & services sector |
Environmental and Social Responsibility
Some POS operators are now using solar-powered kiosks, contributing to green energy usage and reducing carbon emissions. Additionally, some fintechs are offering CSR initiatives to POS agents like:
- Health insurance
- Digital literacy training
- Security awareness programs
This ensures the ecosystem remains not only profitable but also responsible.
Future Outlook: What Lies Ahead?
As Nigeria’s economy continues to evolve, POS businesses will likely integrate with broader fintech and e-commerce ecosystems. Some future developments may include:
- AI-enabled fraud detection
- POS-based credit ratings for customers
- Integration with national ID for instant KYC
- Digital tax collection for micro businesses
- More POS services on smartphones (soft POS)
The possibilities are vast, and the momentum is clear. POS business will continue to be a frontline engine of grassroots economic development.
Final Thoughts
The contribution of POS business to the Nigerian economy is not only financial but transformational. It is reshaping how Nigerians earn, spend, save, and access opportunity. By reaching the underserved, empowering youth and women, and supporting SMEs, POS agents have become the unsung heroes of Nigeria’s digital and economic evolution.
Despite challenges, with thoughtful policy, innovation, and investment, POS businesses can help usher Nigeria into a future of inclusive growth and nationwide prosperity.
Conclusion
The contribution of POS business to the Nigerian economy cannot be overstated. From promoting financial inclusion to driving youth employment, enhancing digital adoption, and energizing rural economies, this sector has become a cornerstone of Nigeria’s economic resilience.
While challenges persist, the opportunities are even greater. With continued support from regulators, improved infrastructure, and inclusive policies, POS businesses can serve as a launchpad for broader economic transformation in Nigeria.
References
- Central Bank of Nigeria (CBN). “National Financial Inclusion Strategy (Revised).” 2022. https://www.cbn.gov.ng
- Nigeria Inter-Bank Settlement System (NIBSS). “e-Payment Statistics.” 2024. https://www.nibss-plc.com.ng
- Premium Times. “POS Operators Now Handle Over ₦6 Trillion Transactions Monthly — NIBSS.” 2023.
- Vanguard News. “POS Business Now a Lifeline for Nigerian Youths.” January 2023.
- The Guardian Nigeria. “POS Agents: New Age Banks Empowering Nigeria’s Informal Economy.” February 2024.
- National Bureau of Statistics (NBS). “Labour Force Statistics.” Q4 2023.
- Central Bank of Nigeria (2023). “Revised National Financial Inclusion Strategy.” www.cbn.gov.ng
- EFInA (2023). “Access to Financial Services in Nigeria Survey.”
- NIBSS (2024). “e-Payment Transaction Statistics.” www.nibss-plc.com.ng
- Vanguard News. “POS Agents: Youths Thrive Amid Job Scarcity.” January 2024.
- Techpoint Africa (2023). “How Moniepoint Became the Leader in Nigerian Agent Banking.”
- The Guardian Nigeria. “POS Business and the Rise of Informal Banking in Nigeria.” February 2024.
- Premium Times. “CBN POS Regulations: What You Need to Know.” March 2024.
- National Bureau of Statistics (NBS). “Labour Market Statistics: Unemployment and Underemployment Report Q4 2023.”