The news:
- Reports indicate that point-of-sale (PoS) operators must now register with the Corporate Affairs Commission (CAC) following a new directive by the federal government of Nigeria to reduce fraud and encourage transparency.
- This means that all of Nigeria’s 1.9 million PoS agents, who intend to continue doing business in the country, must comply.
- The new directive follows a fraud report by the Nigeria Inter-Bank Settlement System Plc (NIBSS) that revealed that PoS terminals accounted for 26.37% of fraud incidents in 2023, indicating fraud incidents involving POS terminals are on the rise.
Very few financial technologies have had as much impact on the Nigerian financial sector as PoS terminals.
In 2013, the Central Bank of Nigeria (CBN) launched agent banking and point-of-sale systems to increase financial inclusion in the country.
PoS agents were charged to offer last-mile financial services to the public as traditional banks couldn’t open branches fast enough to adequately cater to the country’s growing population.
Boasting over 1.8 million PoS agents in 2022 alone, creating hundreds of thousands of jobs, and giving rise to fintechs like Opay, Moniepoint, and Palmpay, the initiative has been hailed as successful.
However, the unprecedented progress of this initiative hasn’t been without its problems, chief of which is the growing rate of fraud incidents.
On March 9, 2024, the CBN issued a circular to banks, other financial institutions, and payment service providers to regulate agent banking and protect customers' funds.
Earlier in the year, a publication reported that the CBN, through the Nigerian Electronic Fraud Forum (NeFF), will be collaborating with the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) to launch a new feature on PoS terminals to flag fraudulent transactions.
Given how simple it is to start a PoS business in Nigeria and its popularity as an additional source of income, there are many PoS agents, numbering at least 1.9 million. The new requirement to register as a business may complicate the simple onboarding process that made being an agent appealing.
In Nigeria, business registration is not always a straightforward tedious and might even require many to rely on CAC agents, making it difficult for banks to onboard PoS agents.
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In February, Moniepoint was reported to have partnered with the CAC to help simplify the process, allowing over 2 million small businesses to apply for CAC registration right on the Moniepoint app.”
Similarly, PalmPay partnered with CAC to facilitate the registration of 219,000 small businesses. Consequently, more partnerships like this may be required to allow fintechs to remain in business and sign up more agents who drive their business models.
