The Central Bank of Nigeria’s Vision 2020, released in 2007, was a calculated move by the apex bank to create a robust financial framework and promote a cashless economy in the country.
The CBN launched the programme officially in September of 2013 as its response to the growing financial pressures on the banking systems, leading to a more financially inclusive system for individuals at the grassroots level.
However, the proliferation of PoS was initially frowned at by major cardholders, especially at the rural level. There was also a general feeling by certain quarters of the society in terms of the credibility of technology in facilitating safe/secure business transactions. But as the COVID-19 pandemic disorganised the cash flow system, more individuals turned to the alternative offered by PoS.
According to the Nigeria Inter-Bank Settlement System, PoS operations recorded an 86 per cent increase of N1.5tn in the first quarter of 2022 when compared to the 45 per cent increase of N958.19bn in January 2021.
With the above statistics, one could say, with a high level of certainty, that PoS has come to stay in Nigeria. This alternative payment system has driven banks to leverage the opportunities in the digital banking space amid rising competition from fintech companies.
PoS in urban areas
Initially, the CBN established mobile banking and PoS systems to drive its cashless policy. But the PoS dominance has grown in leaps and bounds, with shops at every nook and cranny, catering to customers’ needs in the areas of withdrawals, money transfers, and deposits. As a matter of fact, some of these PoS operators could be said to be operating mini-banks in their own right.
More urban and rural dwellers have turned to this system because, during the pandemic, banking institutions were not always available to customers amid raging complaints of failed transactions, insufficient funds at Automated Teller Machines, cards being swallowed and other frustrating incidents. Of course, PoS at this point offered a viable alternative to carry out cash-related transactions.
Contributions PoS rise
Many factors have contributed to the success of the PoS payment system, especially in urban areas. As mentioned earlier, It initially gained acceptance with a wide spectrum of users during the pandemic and has continued to flourish ever since. Apart from the issues of faulty ATM cards, paucity of funds at the Automated Teller Machines and the downtime caused by queuing up for hours have provided bad experiences for customers. Issues such as the insufficient number of ATMs in the country and the failure to dispense cash sometimes on public holidays and weekends remain sources of headache for customers.
Customers are the major determinants of the success or failure of any business. Convenience is a mantra that dominates the heart of every individual and if it comes at a cost, it is considered fair when viewed against the stress of going to the bank.
A trader, who identified herself as Mrs Romoke Jaiyeola, in a chat with our correspondent, said, “PoS saves you the time of going to line up in the bank. Many ATM points usually have long queues. When it gets to your turn, some of the machines may reject your ATM.
At times, cash gets finished in the ATM. In fact, the machine can swallow up your card and you know how stressful it is to get a new one, especially if it’s not your bank.
“But with PoS, they collect your debit card easily and there’s no problem or issuance,” she said.
A retail consultant, Mrs Angela Sanni, reiterated that convenience had played a big role in her usage of Pos for withdrawals.
“You queue at the ATM points and after standing for long hours, it is out of service. It may swallow your card or show a dispensing error. It can be frustrating, honestly, unlike PoS, where there are no hassles of card or other ATM-related issues.”
A UNILAG undergraduate and an entrepreneur, Mercy Oladapo, cited proximity as a major consideration for having a preference for PoS over ATM.
“PoS shops are closer to my house. In fact, in one street you can have about four to five operators. I can just take a stroll and withdraw rather than take a bus or motorcycle to the ATM before performing a transaction.
Oladapo explained that even the charges by the PoS operators had not deterred customers from patronising them due to the obvious ease that they offered.
“If you are being reasonable, their charges are not overboard like that, but it is minimal. Maybe they charge you N100 for withdrawals of N1,000 to N5, 000. If you calculate your current location from the nearest ATM, you might need to take transport and if you put that against the time spent, anyone can see that PoS is a lot better.”
Another factor influencing the boom in PoS in the neighbourhoods is that more youths are taking up the business. It has become a lifesaver for some unemployed youths in the country amid a high unemployment rate, which currently stands at 33.3 per cent, according to the National Bureau of Statistics.
In return, it has provided an alternative for the growing population of Nigerians.
A PoS operator, Ms Damola James, admitted that she decided to venture into the business because she was unemployed.
“I was not doing anything before getting into this business and I don’t want to be keeping my money in the bank. If I do, the money will be reduced through bank charges. That’s why I decided to put the money into the business. At least, I can still profit from the money rather than keep it at home or in the bank.”
Mr Bukola Adebisi, a supermarket owner, said he turned to PoS “to augment my income and I get an average of 20 customers that withdraw using my PoS machine.”
Yinka Oluwamorode, an undergraduate, noted that he decided to venture into the business to keep himself busy while making money.
“This business has many opportunities to make money, but it requires patience, consistency, and prayers.”
Also, a kiosk operator, Alao, admitted that she went into the business to aid payment for goods as most customers were card holders.
Operators’ challenges, risks
Despite the boom and corresponding ease offered by the PoS system to both operators and customers, there have been serious downsides associated with it that have cost unsuspecting members of the public serious harm. According to a national daily report, some POS operators fraudulently charge exorbitant amounts of money from their customers’ bank accounts or retain vital information from customers’ ATM cards in the course of making financial transactions.
No doubt, these problems exist but operators are also on the receiving end of public backlash for any problem that occurs in the process of performing transactions.
According to a full-time PoS operator, Taiwo John, “There are certain times, especially during the end of the month, that every bank has an account balancing update. During this period, the network is usually bad. There is often a decline in transactions and customers are debited, yet I won’t get credited. This causes some quarrels.
“The customer will request I give them the money but I have not received anything. If by goodwill I release the funds, I will run at a loss. The problem here is that sometimes the bank reverses the customer’s cash and most of them don’t come back to give me the money. That is another challenge we often face. Then some customers do fake alerts. It’s always good to check your credit log before you let them go.
“At times, it can get as bad as these bad boys pulling a gun at you and you have no choice but to submit all your money. One of my colleagues in the business was robbed by such people and they carted away N400,000. Honestly, this business is lucrative, I make as much as N150,000, which is good money for someone who used to earn N 80,000 from my teaching and bus driving jobs.”
Another PoS operator, Bukola, noted that there were risks of being given fake naira notes, “most especially huge amounts, like N100,000. PoS is very lucrative but these problems can dampen one’s spirit,” he said.
Further speaking on the high risk of falling prey to dubious individuals posing as customers, Oluranti Alao, an operator, disclosed that “these bad people have started creating fake ATM cards. These cards function like normal cards but they are just dummies. After you carry out the transaction, it will show you that the transaction was successful but if you don’t take the time to check your credit log, you won’t know that you have been duped.
“There are also issues with people bringing stolen cards and other vices. Only God will help us in this business,” Alao added.
A finance expert, who teaches at the Pan-Atlantic University, Lagos, Olusegun Vincent, said the growing cases of fraudulent activities were an issue of vital concern.
According to Vincent, “CBN has the necessary machinery in place but more often than not, people don’t pursue this complaint to a logical conclusion. We like the fast approach in this part of the world. If there is a case of fraudulent activities on your card or other vices, have you reported it? Everyone must play their part by reporting to the appropriate authority. These activities of crime with PoS are not peculiar to Nigeria.
Way to go
Being a brainchild of Nigeria’s apex bank, the PoS system, which is laden with certain inherent flaws, undoubtedly, requires close monitoring and evaluation by the regulators for a sustainable framework to guide its continued usage, according to experts.
However, there have been several concerns raised by the Nigerian public that the CBN has not done enough to checkmate the extortions and fraudulent activities that have been attributed to the PoS system.
When contacted, CBN’s spokesperson, Mr Osita Nwanisobi, declined to comment on measures the CBN had floated to curb this menace.
But a market and financial analyst, Ike Ibeabuchi, called for the re-training of security officers to understand various ways in which frauds were being perpetrated.