One PoS for 38 Nigerians fills ATM’s cash crunch

Point of Sales (PoS) terminals have become much more critical to financial services than automated teller machines (ATMs), according to new data from the Nigeria Inter-Bank Settlement System (NIBSS). The country now has one PoS terminal for 38 citizens, dwarfing the one ATM for every 12,923 Nigerians.

This highlights the growing reliance on PoS operators, who have repeatedly filled the void left by ATMs. NIBSS data show that deployed PoS terminals reached 5.56 million by the end of 2024, a 127.07 percent increase from 2023.

Based on the National Population Commission (NPC), Nigeria has a projected population of 216 million (a figure that the Nigerian Communications Commission bases its industry data on), indicating that the country now has one PoS terminal for every 38 citizens. There are 2.23 million registered but undeployed PoS terminals, bringing the total to 7.79 million.

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This growth of PoS terminals has been driven by fintech companies such as Opay, Paga, PalmPay and Moniepoint, with the country boasting over two million agents. According to the International Monetary Fund (IMF), the country has about 1,600 PoS operators per square kilometer.

Meanwhile, the number of active ATMs stood at 16,714 in the first half (H1) of 2024, a 3.82 percent decrease from 17,377 in the second half (H2) of 2023, according to the Central Bank of Nigeria (CBN)’s most recent data, equating to one ATM per 12,923 Nigerians. The IMF notes that Nigeria has just 14 ATMs per 100,000 adults, compared to 31 in Egypt.

Since their introduction in 2013, PoS terminals have become a preferred payment method, gaining prominence during the 2023 cash crunch when agents provided cash access for a fee.

Between 2023 and 2024, PoS transaction value through the NIBSS surged by 69.01 percent to N18.15 trillion from N10.74 trillion. However, CBN data indicate that the total value of PoS transactions stood at N85.914 trillion in HI of 2024 from N61.902 trillion in the corresponding period of 2023.

In contrast, ATM transaction value declined by 10 percent to N12.21 trillion from N13.58 trillion. PoS accounted for 5.51 percent of total electronic transactions, while ATM was 0.78 percent.

The CBN attributes the rise in PoS usage to convenience and speed while changing consumer behaviour and banks’ focus on digital services have led to the decline in ATM use.

“I have not used an ATM since 2023 because of the queues, and you are never really sure if there is cash in the machine,” said Faith Masodi, a civil servant in Lagos. The Nigerian Financial Services Report noted that PoS has become a primary method for cash access for many.

This growth in PoS services is deepening financial inclusion, which reached 64 percent in 2023, according to Enhancing Financial Innovation and Access (EFInA).

“POS technology has played a pivotal role in improving financial inclusion in Nigeria. With the widespread adoption of POS systems, financial services have become more accessible to people in rural areas, underserved communities, and informal markets,” Light Frank and Adeoye Adedemeji said in a study titled, ‘Evolution of POS Technology in Nigeria’s Banking Sector.’

Oluwatomi Eromosele, general manager and research manager at EFInA, said that PoS agents are “extending formal financial services to about 11 million Nigerians who are not banked but are actively engaged in financial offerings. This tells us the power of technology to reach the excluded underserved.”

However, concerns are rising that PoS operators hoard cash, limit liquidity in the formal banking system, and complicate inflation control.

“All that cash that would have come into the system for us to process and re-issue are being held by these POS operators. We discovered it and are working on it,” said Olayemi Solaja, the CBN’s acting director of currency operations.

A CBN policy capping daily ATM and PoS withdrawals at N20,000 per individual in 2022 reduced currency in circulation from N3.23 trillion in September 2022 to N982.1 billion in February 2023.

However, with the relaxation of this policy and the rise of PoS terminals from 1.68 million in February 2023 to 4.87 million in October 2024, currency in circulation rebounded to N4.5 trillion that month, with 93 percent of it outside the banking system.

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“Excess cash outside the banking system would render impotent policy issues on the cash reserve ratio and lending rate,” said Ijeoma Kalu, professor of economics at the University of Port Harcourt.

However, regulators are treading gently. “We can’t jeopardise our financial inclusion advocacy,” Solaja of CBN noted. To curtail excesses in the space, the CBN has imposed a N1.2 million daily cash restriction on PoS agents and a N100,000 daily transaction limit on customers, while mandating banks to ensure that their ATMs always have cash.

“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.

Despite these regulatory efforts, banks’ rising costs for handling cash will continue to accelerate ATMs’ decline and further solidify PoS dominance, another industry expert observed.