ATM queues disappear as PoS withdrawals surge 77%

Faith Masodi has not used an Automated Teller Machine (ATM) to withdraw cash since 2023 when she was in her final year at Pan-Atlantic University.

“We had an ATM in school, so it made withdrawal easy,” she said.

Since then, she has not used an ATM outside the campus because of long queues and uncertainty of getting cash from what once gave Nigerians quick access to cash.

“I just use a Point of Sale (PoS) terminal if I need cash,” she said.

Faith is one of many Nigerians who have embraced PoS terminals as their primary sources of cash. According to new data from the Central Bank of Nigeria (CBN), the total value of ATM transactions fell by 19.87 percent year-on-year (y-o-y) to N12.21 trillion between January and June 2024, from N14.63 trillion in the corresponding period of 2023.

On the other hand, the value of PoS transactions (merchant and withdrawal) rose by 77.35 percent to N85.92 trillion.

Within this time, the total number of registered PoS terminals increased from 3.22 million to 3.97 million, with deployed terminals rising from 2.29 million to 2.94 million, driven by the growth of fintech companies such as Opay, Paga, and Moniepoint.

According to the International Monetary Fund (IMF), Nigeria has about 1,600 PoS operators every square kilometer. Meanwhile, it has 14 ATMs per 100,000 adults, compared to 31 in Egypt.

In 2022, McKinsey noted that there were over 700 mobile money and banking agents for every 100,000 Nigerian adults, with 43 agents for each ATM in the country. This shortfall has led to a dependence on the country’s over two million PoS operators for cash, especially after a cash shortage crisis in 2023 underscored the relevance of agents who always had cash.

Read also: Nigeria’s Dying ATMs Leave a Cash-Shaped Hole Filled by Agents

“I have not used an ATM since the cash crunch of 2023,” Anthony Richard, a Nigerian businessman, stated. “Only my mum still uses ATMs, and it is more of the concern of fraud from PoS operators,” Remilekun Ogunsanya, a Lagos-based trader, noted.

According to the Nigerian Financial Services Report, PoS is one of the major ways people without bank accounts get access to money. Since 2022, the CBN’s cashless and withdrawal policy, PoS operators have been pivotal as they have bridged the cash gap left by banks and ATMs.

Under the policy, daily ATM and PoS withdrawals were capped at N20,000 per individual, pushing customers toward internet banking, mobile apps, USSD, and PoS channels. Following the implementation, currency in circulation fell from N3.23 trillion in September 2022 to N1.39 trillion in January 2023 and N982.1 billion in February.

It later rose to N1.68 trillion in March, coinciding with the relaxation of the policy. Cashless transactions, meanwhile, grew by 44.84 percent, reaching N126.73 trillion in the first quarter (Q1) of 2023, compared to N87.49 trillion in the same period of 2022.

Since then, however, currency in circulation has soared. It reached N4.5 trillion as of October 2024, prompting the CBN to introduce new measures targeting agent banking.

On December 3, 2024, it threatened to sanction banks if they didn’t fill their ATMs. Later in December, it put a N1.2 million daily cash restriction on PoS agents and a N100,000 daily transaction limit on customers. There is a general belief that PoS agents have contributed to the explosion of cash in circulation.

“At the heart of the policy is the will to stem the liquidity crisis that we are in. PoS agents have been the scapegoat all the while. This is an attempt to impose some order on that chaos. I do not think it will work because we are not addressing the fundamentals,” one finance industry expert explained.

However, handling cash is expensive for many banks, leading to the slow death of ATMs, another industry expert highlighted. Despite the prominent role PoS operators play in the economy, they have been accused of colluding with market traders and fuel stations to mop up cash before it enters the formal banking system, leading to calls for tighter oversight.

Also, they have been accused of hoarding cash and mopping it from ATMs.

According to Oluwagunwa Ibirogba, chairman of the Lagos Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), the CBN aims to clean up the space with its new policies, which aim to push more transactions online.

“Cash hoarders within the space will lose incentive, as large cash withdrawals will move online,” he said.