Around two decades ago, a trend began to take shape across Nigeria. It was the advent of GSM communications in the country, and SIM cards, sold for as much as N20,000, were far beyond the reach of most Nigerians. Payphones emerged as a quick response.
Small kiosks—typically comprising a branded table and an umbrella—were sprouting on street corners and in neighbourhoods, like mushrooms on a harmattan morning. At a minimal fee of N20, a single mother could stay in touch with her adult son in Lagos just as an Nnewi-based dealer in spare parts could communicate with his partners in Lagos.
In time payphones faded from popularity as SIM cards became accessible and ridiculously cheap. But a modern version of that street-corner convenience may have emerged in the present day. Under the same minimalist plastic-table-and-umbrella setup, a banner reads: “POS available.”
The Central Bank of Nigeria’s cashless policy, introduced in 2012, aimed to broaden traditional banking services, part of which involved agency banking, thereby creating employment for many.
In 2020, when the pandemic ground banking operations to a slow pace, point-of-sale terminals filled the gap. For a small commission, these outlets provided an easy alternative for Nigerians to obtain cash.
They would gain greater sway, however, during the cash crunch ahead of the 2023 general elections.
POS terminals exploded in popularity around this time. While banks struggled to dispense cash, POS agents sold it—often at inflated charges—with impunity. This, perhaps, was the first major blow to the CBN’s vision of expanding financial inclusion.
Despite the public ire it inspired, this sped up Nigeria’s journey to a cashless society. More and more businesses began accepting transfer payments. Neobanks, with their fast transactions and low charges, saw a boom in sign-ups. Although the new government would rescind the deadline for old cash notes, a cashless society was already in progress.
While bank transfer remains a relatively popular payment method among shoppers, POS terminals remain in vogue. Abraham Osahon, a Lagos-based financial analyst, attributes this surge to a confluence of factors.
Cash shortages have persisted over the years, and ATMs have become empty across the country.
POS terminals are especially crucial in rural areas, where traditional bank branches are few and far between. They serve as accessible cash points for communities otherwise cut off from formal financial infrastructure.
Beyond logistical gaps, Osahon contends, “pure mediocrity from the government” has contributed to the widespread adoption of POS solutions.
Fewer Nigerians are using ATMs—not just due to cash shortages but also the bureaucratic hassles of acquiring an ATM card.
Meanwhile, digital transactions are rising fast. In 2024, electronic payments surged by 79% from the previous year, with Internet transfers being the most dominant payment method, according to the CBN. Not only are they swift and easy, but transfers are also more secure than debit cards, which are susceptible to fraud.
Nevertheless, many more POS terminals continue to pop up in streets and neighbourhoods. “It’s what is trending,” acknowledges Osahon. Nigerians rely heavily on cash for daily transactions—market shopping, transport and small expenses. In contrast to 22,600 available ATMs, there were 7.8 million registered POS terminals across Nigeria in 2024.
As happened with the payphones of the early 2000s, will POS agents be eventually phased out by Nigeria’s drive towards a cashless society? “They’ll be crushed along the way,” Osahon predicts.
When that revolution will arrive is unclear. As cash remains king in Nigeria, POS agents can continue to reign supreme.
Around two decades ago, GSM communications began in Nigeria, sparking a trend where SIM cards initially sold for N20,000, making them inaccessible to many. Payphones rose in popularity, allowing people to communicate affordably. As SIM cards later became cheap, payphones faded, but a modern equivalent emerged with POS terminals under plastic-table-and-umbrella setups, especially after the Central Bank of Nigeria's 2012 cashless policy aimed to broaden banking services.
POS terminals gained prominence during Nigeria's cash shortages, notably before the 2023 elections when banks struggled to dispense cash, and agents, though often inflating charges, provided an alternative. Despite challenges, this accelerated the move towards a cashless society with more businesses accepting transfers and a surge in neobank sign-ups. However, cash and POS transactions remain vital, particularly in rural areas lacking bank facilities.
Digital transactions are on the rise, as seen by a 79% increase in electronic payments in 2024 compared to the previous year, driven by the convenience and security of internet transfers. Despite this, the existence of only 22,600 ATMs compared to 7.8 million POS terminals indicates the prevalence of cash and POS use for daily transactions. While a full transition to a cashless society is uncertain, for now, POS agents continue to play a crucial role in Nigeria's financial landscape.
