People who use Point-of-Sale (POS) agents for cash withdrawals in Nigeria can brace for yet another price hike with the Central Bank of Nigeria’s (CBN) latest increase in Automated Teller Machine (ATM) withdrawal fees.

POS operators who spoke to Techpoint Africa said they must raise their charges to cover additional costs.

Adijat, a POS agent in Abeokuta, believes that while the convenience of using POS terminals will keep customers coming, the ATM withdrawal fees and the electronic money transfer levy will inevitably increase withdrawal fees.

“The use of POS saves one the stress or trip to the bank, which in a way justifies the charges experienced by the customers, so customers find it easier to use the POS,” she said.

However, she adds, “As a merchant, the ATM withdrawal fee will influence [my business] negatively. As a result of the CBN regulations on withdrawal charges, the POS withdrawal fee will increase. Merchants experience more charges on transactions that are ₦10,000 and above and will also experience charges while using the ATM.”

Ruth, an operator in Lagos, shares the same sentiments, adding that additional charges mean that POS operators must increase their fees to maintain their profit margins.

“Anything that affects ATMs will definitely affect POS prices. With this ATM increase, we don’t know whether ₦10,000 will be ₦500. But people don’t understand; they think POS agents are the problem in Nigeria.”

POS agents have become a significant part of Nigeria’s financial ecosystem. Many argue they are the heroes of financial inclusion, providing access to financial services in even the most remote communities. However, in recent months, the convenience of POS services has become increasingly costly. And with the most recent review of ATM transaction fees by the CBN, another unwanted increase may be looming.

The cost of using POS agents for withdrawals and transfers has seen an upward review in the past few months, with charges which were previously ₦100 for the maximum withdrawal of ₦5,000 now ranging between ₦150 to ₦200 for withdrawals of ₦5,000 or less. 

POS operators often have to rely on ATM withdrawals as an alternative to purchasing cash from businesses or withdrawing from the bank, where they can get a maximum of ₦10,000. With extra charges on ATM withdrawals, the added cost may be passed on to end users.

David Abiodun, Chairman of the Lagos Chapter of the Association of Mobile Money & Bank Agents of Nigeria (AMBANN), told Techpoint Africa that POS operators have no choice but to increase their charges.

“The new ATM fees will naturally affect the POS charges because, as we know, every provider has left the agents on their own. In the past, every terminal came with a preloaded SIM card and data, and the agent would work and receive a commission, but that is no more. Now, they have to provide everything for themselves.”

“The ATM fees will affect POS operators in two ways: POS charges will go up, and customers will prefer to go to ATMs, thereby making PoS unprofitable,” Abiodun added.

Abiodun further notes that the association is looking into the ATM fees as they significantly affect POS operators, adding that the CBN implemented the new fees without consulting the association.

While the preferred option for Nigerians to access cash remains to be seen, it is unlikely that ATM withdrawals could take over the use of POS agents. As of March 2024, Nigeria had approximately 2.7 million deployed POS terminals, compared to less than 21,500 ATMs. This means there were approximately 44 Nigerians for every POS agent, compared to 5,581 for every ATM.

Nigeria’s ATM deployment is insufficient for its population; it continues to perform less than some other African countries with incomparable populations, like South Africa, which boasts over 33,000 ATMs for its population of 64 million, and Egypt with over 23,000 ATMs serving a population of 117 million.

As POS withdrawal charges continue to rise and ATM outlets remain scarce, there aren’t many affordable options for accessing cash. The increasing cost of cash transactions raises a bigger question: is it time to fully embrace digital payments? Meanwhile, for millions who still rely on cash for daily transactions, the impact of these rising fees will be hard to ignore.