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P0S transactions drop 16% on bank transfers, inflation – FDC

P0S transactions drop 16% on bank transfers, inflation – FDC

The value of Point of Sales (PoS) transactions in Nigeria dropped by 15.7 percent in one month, according to a report by Financial Derivatives Company Limited.

The report showed that the value declined to N728.7 billion in September 2023 from N864.6 billion.

“The POS transactions declined for the sixth consecutive month due to increased appetite for bank transactions as network issues waned and the increase in POS charges by the operators,” the report said.

It said the total value of transactions rose to an all-time high of N54.5 trillion in September from N54.4 trillion in August.

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“We expect the value of transactions to sustain an upward trend in the coming month due to the increased adoption of digital mode of payments,” she added.

In July, the Lagos Chapter of the Association of Mobile Money and Bank Agents In Nigeria increased the price of PoS transactions both for withdrawals and deposits as a result of the economic downtime experienced in the economy.

BusinessDay reported that the increase in PoS transactions may increase the use of other payment channels, according to experts.

Some of the other payment channels are Automated Teller Machines (ATMs), mobile banking apps and USSD (Unstructured Supplementary Service Data).

“I see this price revision leading to increased use of digital payment platforms. Firstly, we should acknowledge that an average Lagos resident is faced with inflationary pressure on basic goods and services following recent government policies,” Israel Odubola, a Lagos-based research economist, said.

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He said in Lagos, there are more banked individuals than the unbanked. “Apparently, this revision will propel people to embrace digital platforms more. Also, in areas where there is a high banking presence, the impact of the revision will be muted.”

Globally, agency banking is recognised by policymakers, researchers and development agencies as a financial inclusion initiative that has remained an integral tool in developing economies, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.

Over the past few years, the number of PoS agents, also known as mobile money agents or bank agents, has surged in Africa’s biggest economy, with the business serving as a means of livelihood for millions in urban and rural areas.

The agents, which are third-party retail outlets contracted by financial institutions to process clients’ transactions, are empowered to reduce reliance on over-the-counter transactions while providing convenient personalised services.

They are equipped to carry out services, which include account opening, cash deposits, airtime purchases, bill payment, withdrawals and money transfers. Many people prefer to visit PoS outlets to carry out transactions rather than banks as it saves them time and energy.

The opportunity to make an additional income is a major motivation for becoming an agent, according to a 2020 EFInA agent survey.

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“Agents surveyed are signed up by different principals/service providers. Nevertheless, First Bank (First Monie), OPay, QuickTeller, and MTN top the list of principals with a majority share of agents,” EFInA said.

Data from the Shared Agent Network Expansion Facilities show that the number of bank agents surged by 1,456.9 percent to 1.3 million in 2022 from 83,500 in 2018.

Apart from the data on the number of bank agents, a recent International Monetary Fund survey showed the number of bank agent outlets per 1,000 square meters increased by 380.2 percent to 680.9 in 2021 from 141.8 in 2020.

A recent report by the GSM Association (GSMA) shows that the number of registered agents in the West African region rose by 160 percent to 6.5 million in 2022 from 2.5 million in 2021.

Some of the key contributors to the growth of mobile money in the past few years have been regulatory changes in large markets, Mats Granryd, director general at GSMA, said.

“In Nigeria, for example, new licenses have seen many new mobile money players emerge, and with this a 41 percent growth in the number of registered agents,” he said.