In an effort to cut costs whilst reaching out to their customers, commercial banks in Nigeria have resorted to agent banking, a trend that seems to be taking over the traditional roles of Automated Teller Machines (ATMs) installed by the banks. However, analysts say despite its popularity, it does not have enough to drive ATMs into extinction.
In 2019, the Central Bank of Nigeria (CBN) and the Bankers Committee jointly launched the Shared Agent Network Expansion Facilities (SANEF) with the aim of accelerating financial inclusion in the country. SANEF is empowered to deepen financial inclusion in Nigeria through a robust ecosystem with strong regulatory oversight, consumer protection and interoperable system.
SANEF was created to address this and with the involvement of some fintech companies, financial services have been taken to almost all parts of the country with a target of 500,000 agents by 2020. For banks, using the POS agents to reach areas where they cannot afford to go due to the cost of operating in such an environment is much cheaper.
This is because they do not have to bear the cost of putting up a physical branch with all the accompanying infrastructure or an ATM as well as the electricity supply and security that has to be constant.
Also, with the insecurity that abounds in the country, banks are wary of putting up too much infrastructure in remote places where such can be prone to vandalism; so they rely on the services of point of sale (POS) agents in setting financial footprints where they cannot go.
POS points have over the years increased in number, gaining more grounds with the effects of the 2020 COVID-19 pandemic. POS points can now be found on every street in urban areas whilst bringing a sense of banking presence in the rural areas.
Despite the challenges of POS points, their proximity and availability has made it the choice for many Nigerians who cannot spare the time to stay in queues at the ATM or in banking halls. As at the end of 2018, the number of ATMs in the country, according to data by the Nigeria Inter Bank Settlement System stood at 18,615.
The volume of transactions on the ATM channel as at the end of 2018 also stood at 875 million with a value of N6.5 trillion. However, the number of functioning ATMs in the country has declined to 17,518 while volume reduced slightly to 839.8 million as value remained at N6.5 trillion.
Contrary to the trajectory of the ATM channel, the POS volume has been facing north. The number of deployed POS terminals as at the end of 2018 stood at 217,283 as a volume of 285.9 million transactions valued at N2.3 trillion was recorded.
By the end of 2019, the number of POS in circulation had risen to 303,162 with transaction volume rising to 438.6 million as value of transactions stood at N3.2 trillion. By the end of 2021 according to NIBSS data, the number of deployed POS terminals had jumped from 459,285 in 2020 to 915,519.
Similarly, the volume of transactions done via POS terminals had risen to 982.77 million while the value of transactions stood at N6.4 trillion. Latest data on the volume of transactions on ATM was however not provided.
POS operators can now be found on every street in almost every part of the country; they are in every market and bus parks handling deposits and withdrawals for bank customers and taking the burden of large crowds at the banking halls.
Some are also strategically located in front of banks to provide relief for customers not willing to endure the strain of being in a queue. Some have also been sighted within hospital premises, providing instant cash to relatives in need of cash to pay for drugs or medical supplies.
On whether the prevalence of POS points is enough to make the ATM extinct, head of Financial Institutions Ratings at Agusto&Co, Ayokunle Olubunmi said there is no indication that ATMs would be going out of circulation soon.
According to him, despite its popularity, POS points in the country are not strong enough to drive ATMs into extinction. “It has been an ongoing argument but while POS has come to stay, it cannot take over the ATM. This is because the trust issue is still there.
“People don’t really know who is who, and there have been instances where people’s cards have been cloned as well as other forms of fraud being perpetrated through some of these POS points. Also, there is the security issue because armed robbers target these POS points.
“Contrary to the belief that they are everywhere, the POS points are actually not everywhere. There are places where they do not have a presence. The ATM is not going anywhere because there have been substantial investments in it. What we may however see is more people moving towards non cash transactions. But the POS is not strong enough to kill ATMs.”
On his part, former president of the Chartered Institute of Bankers of Nigeria (CIBN) and a practicing lawyer, Mazi Okechukwu Unegbu noted that the trust issue will continue to haunt POS points as some of them are scam centres, thus making ATMs continuously relevant.
Noting that many of the POS points are owned by bankers, Unegbu said many customers have several times been directed to the POS points by bankers. “When you go to the ATMs, many of them don’t have cash and it will even be the bankers that will tell you to go across the road to the POS points who are always having cash.
“It is a good business but some of them steal card details and scam people. In saner climes, ATMs are cash points but it is different in Nigeria. The CBN and the Bankers Committee need to do more in ensuring that due diligence is carried out before handing these POS to anyone.”
Mrs. Obadina, a civil servant told NATIONAL ECONOMY that she rarely goes to the bank and has not used an ATM in a while as she patronizes the POS point opposite her house. “If I have to use the ATM or go and make a deposit at the bank, I still have to take a vehicle to go there; so why not just use the POS in front of my house.
“What the POS girl charges me is sometimes less than what I have to spend on transport if I have to go to the bank or the ATM where I will still spend a lot of time.” Another footwear trader in Oshodi whose stall is beside a POS point who simply identified herself as Abike said she is yet to be comfortable with bank transfers due to the risk of “fake transfer.”
Thus, she urged her customers who do not have cash to pay to use the POS point beside her to get cash. Asked about the nearest ATM, she said many customers do not have the patience to queue at the ATM and there is the risk of having the card stuck in the ATM or lack of cash at the ATM.
With the increased popularity of the POS points also comes the inherent danger as there have been increasing reports of POS operators being robbed at gunpoint with many of such incidents ending fatally. Some POS operators who spoke with NATIONAL ECONOMY explained that they take extra caution to ensure that they do not become targets of armed robbers.
Johnson, a POS operator in Iyana-Ipaja area of Lagos who spoke with NATIONAL ECONOMY said before he started, he ensured that his shop is located in a secure area even though it is in prominent bus stop with high traffic. “We are safe here because we have lots of people around us here. Also, we don’t keep lots of cash, and when we do, it is kept securely where no one can know,”he said.
Looking at his location, he can go about his business safely as he has two commercial banks, one microfinance bank and a filling station close to his shop. Another POS operator, Omolola Alade, who operates out of a kiosk along another bus stop, told NATIONAL ECONOMY that she makes friends with the garage touts who in return look out for the safety of her life and that of her business.
Some others who spoke with NATIONAL ECONOMY, said they have been able to keep safe by not keeping a lot of cash, opening late and closing quite early as most get robbed either early in the morning or towards the evening.
Also with the rising cases of stolen funds through mobile apps on stolen phones, many of the POS operators have begun to decline to take transfers, insisting that only card transactions are allowed for withdrawals.
Mrs. Shade Alade who operates a POS point at Onipanu bustop told NATIONAL ECONOMY that some operators have run into problems with transfers. She explained that a fellow operator within the vicinity had taken a transfer from a passerby, not knowing that it was done from a stolen phone. The fund was traced to the operator and “it has now become a police case. I don’t like wahala so I don’t transfers. I only take it from people that I know very well and trust.”
For customers using the POS points, there has also been a rising risk as some fraudsters posing as POS agents copy card details of customers to later use the funds of unsuspecting customers for “card not present” transactions.
Some customers who spoke with NATIONAL ECONOMY said they are cautious when using POS points and most said they have a separate card account which they use on the POS terminals to avoid being defrauded.
A bank customer, Simon David noted that despite the risks of using the POS points, they are inevitable as “the bank will rarely load cash on their ATMs and there is always a long queue on the few that have cash in them.
“I know POS has its flaws but it has blessed thousands of Nigerian youths and made financial transactions more convenient and easier. To avoid fraud I tell people, just get a separate card for POS transactions and transfer whatever you need from your main account; that works for me.”
