The rapid expansion of Point of Sales (PoS) expansion has outgrown Automated Teller Machines (ATMs) in Nigeria, overtaking the latter as the primary financial access point. Data from the Nigeria Inter-Bank Settlement System (NIBSS) revealed that there is presently one PoS terminal for every 38 individuals. In contrast, ATMs are much less accessible, with only one available for every 12,923 individuals. This shift reflects a substantial transformation in Nigeria’s financial sector, driven by convenience, technology, and changing customer behavior.
ATMs, which require heavy Infrastructure and regular cash replenishment, have struggled to meet the needs of the growing population. PoS terminals stepped in to fill this gap, providing banking services in areas where ATMs and bank branches are scarce. These devices, which were once a rarity, have now become ubiquitous, surpassing Automated Teller Machines to become the go-to solution for withdrawals, transfers, and even everyday payments. Explosion and high adoption rates of Fintech companies like Opay, Paga, PalmPay, and Moniepoint have been driving this expansion, with the country boasting over two million PoS agents.
Surge in PoS transactions amid decline in ATM usage.
Recent data from The Central Bank of Nigeria (CBN) shows that between January and June 2024, the total amount of ATM transactions dropped by 19.87 percent year-over-year (y-o-y) to ₦12.21 trillion from ₦14.63 trillion during the same period in 2023. Conversely, PoS transactions (withdrawals and merchants) increased in value by 77.35 percent to ₦85.92 trillion. Due to the expansion of fintech organizations, the total number of registered PoS terminals climbed from 3.22 million to 3.97 million during this period, and the number of deployed terminals increased from 2.29 million to 2.94 million.
An estimate by the International Monetary Fund (IMF) shows that there are 1,600 PoS operators in Nigeria for every square kilometer, whereas there are 14 ATMs for every 100,000 adults, far below Egypt’s 31. Naira scarcity brought on by the Central Bank of Nigeria’s redesign and cash withdrawal policy pushed Point of Sale transactions to reach ₦807.16 billion in January 2023. This represents a 40.69 percent growth year over year when compared to the ₦573.72 billion in transactions completed in January 2022.
CBN policies and cash shortages accelerate PoS adoption.
Total value of PoS transactions increased from N61.902 trillion in the first half of 2023 to N85.914 trillion in the first half of 2024. Currently, PoS makes up 5.51% of all electronic transactions, compared to just 0.78% for ATMs. According to Enhancing Financial Innovation and Access (EFInA), the growth of PoS services has been a major factor in financial inclusion, which reached 64% in 2023. Millions of Nigerians who were previously unbanked now have better access to financial services thanks to PoS networks, especially in rural and underdeveloped areas, according to studies.
This dramatic growth highlights the nation’s growing use of digital payment systems, which are being fueled by policies meant to lessen the need for cash transactions. While PoS transactions were already gaining traction in some stores and urban areas, the unprecedented spike in their adoption was largely driven by the Central Bank of Nigeria’s (CBN) Naira redesign policy and cash withdrawal limits. Nigerians were compelled to look for alternate ways to get and transfer money as a result of these policies, which caused acute cash shortages across the nation at the period. At the same time, the growing need for financial inclusion played a crucial role in cementing PoS as a dominant financial access point.
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Point of Sales operators, once viewed as optional service providers, have evolved into crucial middlemen between banks and their clients. Their ability to provide cash withdrawals at a time when banks and ATMs could not meet demand made them indispensable. As a result, the number of PoS agents nationwide skyrocketed, and many businesspeople jumped at the chance to get into the industry. PoS is becoming a commonplace financial access point for millions of people, rather than merely an alternative, owing to the confluence of necessity, opportunity, and financial inclusion.