Nigeria’s growing PoS agents’ face regulatory roadblock

…Operators say over 1m jobs lost in 12 months

…Agents call for more simplified process

Nigeria’s Point of Sale (PoS) agent network has experienced remarkable growth in recent years, expanding financial inclusion and facilitating transactions in underserved areas. However, this growth is now facing a regulatory roadblock, threatening the progress made in the recent past.

The Central Bank of Nigeria (CBN) has introduced new guidelines requiring PoS agents to register with the Corporate Affairs Commission (CAC) and obtain a license from the CBN.

While the intention is to ensure accountability and stability, the requirements pose significant challenges for the majority of PoS agents who are micro businesses.

The mandatory CAC registration for PoS operators in Nigeria has significant implications for PoS operators, financial inclusion, and the economy as a whole.

For many of these agents, the cost implication of registration and licensing fees are prohibitively high, as many agents operate on thin margins.

While challenges exist, the benefits of registration according to some operators who spoke with BusinessDay Sunday outweigh the costs.

They are of the opinion that with proper education, support, and simplification of the registration process, Nigeria can enhance financial inclusion and economic stability.

Read also: CAC extends registration deadline for PoS operators to Sept

“We have employed all our communication channels such as weekly phone calls, email, SMS, and videoconference platforms to sensitise, encourage, and guide on the registration process. At the top of the list is PalmPay which was able to integrate the CAC registration platform on the PalmPay business app to make it easier for agents to register for a token fee of N19, 500,” Enakeno Umuteme, head, marketing and communications, PalmPay, told BDSunday.

He further said that the platform pushed out press releases in June to sensitise PoS agents on its platform. According to him, the platform has been reaching out to the different stakeholder groups in different states to sensitise their members on the need to register with CAC.

“Last month, we hosted the Lagos Chapter of the Association of Mobile Money and Bank Agents of Nigeria (AMMBAN) where we urged them to speak to their members. We have a dedicated 24/7 CS and BD team that has been available to attend to agents even during weekends,” Emuteme said.

Read also: Group decries mandatory CAC registration for PoS agents

However, another agent told BusinessDay that she considered the cost to be high. She said that her PoS business was meant to support her hairdressing business.

“I only operate one PoS machine with Baxi; so, paying N19, 500 for CAC registration will eat into my small capital,” Baxi Kafayat said.

According to Kafayat, registering her business for CAC will affect the day-to-day operation of the business. She disclosed that many of the PoS agents around her area have a way of swapping money among themselves to meet customers’ requests.

Enobong Wisdom of F-Class Ventures told BD Sunday that he did not have to register afresh because he had to upload the CAC certificate of his other business interest on the PoS portal.

“I uploaded the certificate for my music studio and it shows success. But my guy that wanted to help in registering the PoS told me they will calculate all the taxes I have not been paying; that is my own fear now.”

Similarly, another operator in Amuwo-Odofin, Lagos, told BD Sunday that he did not have to register his PoS business because he has an existing registered business with the CAC. He said that his CAC certificate for Ifeanyi Communications was uploaded to cover for his PoS business.

Modupe Oni, Smod Ventures, disclosed to BD Sunday that she could not register her business name with PoS service provider because of the caveat attached on the registration portal. She said that all the requirements for the registration have been met on the Moniepoint portal but decided to disengage her registration because of the terms and condition: “Moniepoint will not be liable as a third party should anything happen to the registration.”

Oni said that she decided to engage someone else for the registration because of the added benefit that came with it. “She offered to do my CAC for N25, 000 and also added that she will also include my tax pin, which the other registration did not provide.”

According to her, regulators and operators should provide support mechanisms for small-scale PoS operators who may struggle with registration fees and other requirements. She said that registration of PoS agents enhances economic stability of their various localities by reducing the risk of illegal activities. “Formalised PoS operators can create more jobs, contributing to economic growth.”

However, speaking on the challenges faced by PoS agents, Ifeanyi said that many agents are unaware of the new requirements, leading to non-compliance. According to him, inadequate infrastructure in some rural areas where PoS agents are most active, often lack the necessary infrastructure to support their registration process.

He said further that the removal of non-compliant agents will reduce access to financial services in underserved areas. According to him, PoS agent network contributes significantly to Nigeria’s economy; hence a decline in the number of agents across the country will have far-reaching economic consequences on Nigeria and Nigerians.

AMMBAN decries mandatory CAC registration for PoS agents

The Association of Mobile Money and Bank Agents of Nigeria (AMMBAN) earlier in the year decried the Central Bank of Nigeria (CBN) directive mandating all Point of Sale (PoS) agents to register with the Corporate Affairs Commission (CAC).

AMMBAN stated then that the reason tendered by the regulator that the registration was to curb crime in the fintech space was not tenable, maintaining that it was purely a revenue-driven agenda. “AMMBAN strongly disagrees with the recent directive by the Corporate Affairs Commission (CAC) that all PoS agents must register with it, regardless of their status as individuals or non-individuals.”

The body disclosed that it believed the directive was unnecessary, contradictory to existing laws, and amounts to a mere revenue generation move to further tax hapless Nigerians. “We know the implications of most of these policies that are not well thought out and their impacts on the economy generally. We have lost over 1.5 million jobs in the last one year,” Fasasi Sarafadeen Atanda, chairman, AMMBAN, stated.

According to him, Nigeria currently has over 3.7 million PoS in circulation. However, service providers were only able to deploy 2.7 million, leaving the gap of one million PoS amounting to a loss of about one million jobs in Nigeria.

AMMBAN stated that it had made and would still make spirited efforts in combating the issue of crimes within the Nigerian fintech ecosystem and condemned the insistence of CAC to deploy the police to execute the directive against those who fail to register their business before the speculated deadline.

Implications for PoS operators

Formalization of business registration with CAC provides a sense of legitimacy and credibility. It will also help micro, small and medium enterprises (MSMEs) position for business grants by providing access to credit. Accordingly, registered businesses can access credit facilities from financial institutions, to enable them expand their business operations.

Similarly, business registration ensures tax compliance, which will reduce the risk of penalties and fines in the long run. Also, registration with CAC will help in protecting their business name, and prevent other businesses from using their business name.

Beyond the implication of business registration with CAC, there are other financial inclusion implications for PoS agents on the back of increased access to financial services. Furthermore, registered PoS agents can offer more financial services to enhance financial inclusion of their localities.

Similarly, the registration of their business with the CAC will help to ease the migration of the business from the informal to formal sector, which is also another way of positioning the business to access more capital.

Accordingly, registering with the CAC will lead to improved financial stability as registered PoS agents will be able to contribute to financial stability by operating within regulatory frameworks, which will also contribute to increased revenue for the government; because registered PoS agents will be able to pay taxes, and generate revenue for the government.

Way forward

Stakeholders said that there is a need for the regulator to simplify the registration process to accommodate PoS agents in rural areas by streamlining the registration process to reduce costs and complexity.

Ifeanyi said further that there is a need for the regulator and operators to deepen support for rural agents. According to him, providing infrastructure support and incentives for rural agents will help to ensure continued operation.

He also disclosed that the implementation can be phased to allow agents more time to comply with the CAC directive. He said further that regulators should conduct nationwide awareness campaigns to educate agents on the requirements and benefits of registering their business with CAC.

It is believed that Nigeria’s growing PoS agent network faces a regulatory roadblock that threatens the progress made in financial inclusion. While the CBN’s guidelines aim to ensure accountability, it is crucial to address the challenges faced by agents and find a balance between regulation and growth.

By simplifying the registration process, increasing awareness, supporting rural agents, and implementing the guidelines in phases, Nigeria can ensure the continued expansion of its PoS agent network and maintain momentum in financial inclusion.