The Point of Sales (PoS) business in Nigeria has increasingly become popular ever since the CBN’s intention for a cashless economy in 2013. This money business has become a relevant and lucrative business because of the ease and convenience it provides. It is a low cost, high reward kind of business where profit is seen in cumulative form, over a medium period of time.
Lack of access to banks within some communities especially rural ones, is also what the emergence of PoS is resolving, which has helped increase its relevance since inception. More so, the scarcity of Automated Teller Machines (ATMs) even in developed places, the long queues people experience at ATMs, as well as the high rate of unemployment have led to a rise in PoS business in Nigeria.
Lately , the shortage of cash in banks due to the introduction of new Naira notes in 2022, has contributed to the massive demand for the patronage of PoS agents who are seen almost in every corner on the streets. It must also be noted that Nigeria is a cash-based economy, so access to cash without having to experience rigours and time wastage in banks and long ATM Queues, has helped with the rise of this hot-selling business.
How Does The PoS Business Work?
A PoS agent operates under a PoS service provider – banks, Microfinance banks, and Fintech companies such as Opay, FirstMonie, etc. They are more like banks’ representatives in small shops. These agents offer customers a variety of financial transactions such as cash withdrawal, money transfer, bill payment (airtime, data, electricity), and opening a personal bank account.
After showing interest and meeting certain requirements, these banks supply the agents with a PoS device. This PoS device makes it possible for the agent to carry out all cash transactions with the customer’s debit card. The agent selects the transaction type on the PoS device and the amount to be debited. The debit card is inputted and the customer’s four-digit pin consecutively.
Furthermore, in case customers aren’t with their ATM cards, a transfer can be made to the agent’s registered bank account and once confirmation of successful transaction is done, the agent gives the customer the required cash transferred. For these cash withdrawal, PoS agents keep cash at hand for exchange and this comes with a fee.
This is also applicable for bill payment, and money transfer to a third party account.
How PoS Agents Make Money?
PoS businesses can make a daily return of between 5,000 NGN and more, depending majorly on patronage due to location of the business. A PoS agent located at a place where ATMs aren’t concentrated will have more patronage than in places concentrated with ATMs. Access to funds is the main tool here.
PoS agents make their profits from the charge fee on every transaction performed by the customers, from withdrawals to airtime buying. For example, when a customer comes to withdraw N5,000, they’ll charge N100 for the transaction and share it with the POS Providers, sometimes on a 60% to 40% share ratio respectively.
However, the recent shortage of Naira in 2023 has seen PoS agents charge exorbitant fees for cash transactions. For example, in some places, for N1000 withdrawal, PoS agents charge N200-N400. Some charge N1000-N1500 for N5000 withdrawal and as much as N4000 – N6000 for N20000. At this rate, in a day, PoS agents can make up to N50000 – N10000 in profit.
How Much Does POS Companies Charge PoS Agents on Transactions?
Transaction charges vary from financial institutions to the other. They all have their terms and conditions and it is important for prospective agents to know this before deciding with service to use.
Let’s have some examples PosS Charges:
Paga: Paga charges 0.55% on withdrawal and N30 flat on every deposit of any amount. Paga also charges N5.5 on every N1000 a customer withdraws and N30 to transfer any amount on the POS or the app.
Baxi Box: Baxibox POS charges N30 flat for cash deposits and 0.55% on a single withdrawal transaction of N1 – N20,000. The percentage goes slightly higher as the withdrawal amount increases.
Where to Get PoS Machines
POS machines can only be gotten from banks and other registered financial institutions in Nigeria. Some of the popular ones in Nigeria are Opay, Palmpay, Paga, Monie Point, GTBank, Quickteller Paypoint, Firstmonie POS (First Bank), CLOSA agent (Access Bank), UBA, Zenith Bank, Ecobank Xpress point, Baxi Box, Nomba (formerly Kudi) and Bankly.
How much does it cost to start a PoS business?
There is no fixed amount for a PoS business start up capital. However, this doesn’t mean that a substantial amount as capital shouldn’t be set aside. Just like any other business, the PoS business should have a starting capital. These are essentially needed for getting a shop/Kiosk, a POS machine, Electricity source like a generator, and for performing daily transactions too.
Location
Whether the location to be used will be a shop, a kiosk, or an umbrella stand, the cost of this has to be in budget. The PoS prospect would have to make inquiries and find out how much it’ll cost to the space where you want to operate your POS business from. You also need to consider the safety factor when settling for a particular location for your POS business. This is because your business activity involves cash handling, and you may want to spend some time researching the crime rate of your intended business location.
A PoS device
There is no fixed price for POS terminals in Nigeria. The cost of a POS machine in Nigeria is dependent on the bank or fintech providing the PoS service. Overall, the prices of these machines can range from N7,000 to N200,000, depending on the specifications of the POS machine. Also, you need to determine if the PoS device allows all kinds of ATM cards.
Type of PoS Machines.
The mobile PoS machine – mini, traditional and android is the most common type of PoS machine. However, there are other types like countertop PoS and Tablet PC-based PoS machines. These types can be more expensive to acquire and are commonly used in big supermarkets. The mini PoS are the cheapest in the market.
Requirements for starting a POS business
For every business, feasible studies have to be done before embarking on starting the business. As earlier mentioned, one of the important things is capital. The capital needed for the POS business is not expensive which makes the barrier of entry into the business is low. Other requirements are:
Location -The place the business will be set up will determine how much patronage the agent will get. One of the things to consider are well-populated areas like markets, parks, etc. where customers that need such services can easily be gotten.
Furthermore, a place concentrated by banks might not be a good option because people would prefer using the ATM than a service where they will be charged. However, positioning your POS business point close to existing ATM points is not bad. If you notice that ATMs in a location are not dispensing cash, you can go there to advertise your service.
More so, it isn’t advisable to also start where there is lots of competition – PoS agents.
Official requirements – The CBN as well as banks and fintechs who offer PoS services, have set some requirements that POS agents must meet before being approved. It is important to know the requirements from banks and other PoS service providers before embarking on the business.
Below are some common required documents:
- Valid means of identification like National ID Card, Voter’s ID Card, etc.
- Passport photographs
- Bank Verification Number (BVN)
- Current Account references
- Utility Bills
- Evidence of business registration (CAC Certificate)
- Start-up funds/ capital minimum (often at least N50,000)
- Tax Identification Number (TIN)
- Memorandum and Article of Association.
Popular PoS Service provider
Some of the popular banks and financial institutions to get a PoS machine from in Nigeria are OPay, GTB, Nomba, Palmpay, Baxi, Moniepoint, Pay force, Firstmonie, Bankly, Paga, Zenith Bank mobile money agent, Access Bank CLOSA agent, Quickteller, Ecobank Xpress point, UBA POS.
A Wrap Up
The PoS business in Nigeria is a lucrative venture anyone can start with minimal capital, make profit and continue to expand. You just have to follow the right steps and you would be able to earn a decent living from the business.
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