Bank agents may have been instrumental to the transformation and spread of Point-of-Sale (PoS) technology in the financial services industry, but they would not be part of its future, according to experts and reports on the market.
Nigeria has about 2 million mobile money and bank agents across the country providing mostly cash services to millions of Nigerians. A report from the Nigerian Inter-Bank Settlement System (NIBSS) in March 2023 noted that the PoS terminals across the country recorded N1.15 trillion in transactions. Experts project that the industry is set to beat previous records like the N6.4 trillion transaction value set in 2021.
The agents face an increasing battle to remain relevant despite the growing demand for cash-based transactions and investments in the PoS market.
“I think that it is inevitable, maybe not in the immediate term because cash is still very much in society, especially for smaller transactions,” said Tosin Eniolorunda, CEO of Moniepoint. “So there is still the use of agents. But I think it is certainly not the future. It is more and more digital payment, which should be expected to dominate. It is not like we should expect cash to die any time now.”
Moniepoint claims leadership of the market with over 600,000 agents compared with OPay at a little above 560,000 agents and Palmpay with 500,000 agents. Moniepoint, however, says it has seen merchants overtake agents in the PoS market. Currently, there are over 1.3 million merchants using PoS on the Moniepoint platform and providing the same cash service while selling other products as well.
Chidi Dire, team lead at Parkway Projects, made the point that merchants and agents are mostly still serving different customers at the moment. Hence, agents are going to be around for much longer as long as internet penetration and banking infrastructure do not cover the entirety of the Nigerian population, he said.
However, demand for PoS agents is gradually reducing due to the laws of demand and supply. Consumers are gravitating towards merchants’ PoS, not for cash, but to pay for goods and services with cards. Also, doing so helps them avoid the increased charges on PoS cash transactions imposed by the agents.
“It also has to do with what happened during the election with the cash crunch policy in place. PoS agents were charging more because of the cash scarcity to serve the customers,” Dire said.
Eniolorunda sees the merchants accelerating the exit of the agents but the future of PoS technology will not be merely because of merchants taking over.
Globally, the retail industry’s adoption of PoS systems is considered the primary reason for the growth of the PoS market. A recent report projected that PoS terminal size will grow from $80.8 billion in 2018 to $155.6 billion in 2028, at a compound annual growth rate of 8.2 percent. While the retail industry is the biggest user, other industries such as hospitality, healthcare, and transportation also use PoS systems.
The PoS technology has undergone significant transformation, which is already being deployed in different countries. For example, mobile PoS devices, such as tablets and smartphones can complete the handheld terminals enabling businesses to accept payment, process orders, manage inventory, and interact with customers from anywhere within their store or location.
There is also the rise of contactless PoS systems, which experts believe will play a major role in the future of payment. Contactless payments enable customers to pay using cards, phones, or wearables without touching the PoS device or entering a PIN. They offer convenience and speed. They also enhance customer satisfaction, reduce transaction time, and minimse the risk of fraud and errors. The COVID-19 pandemic is believed to have accelerated the utility of contactless PoS systems. Adoption continues to grow in the post-COVID era. A recent report by Mastercard on PoS trends found that 74 percent of customers will continue using contactless payments even after the pandemic.
Experts also say the adoption of cloud-hosted PoS solutions is expected to gain traction over the coming years. A cloud-based PoS ties all the payment portals together and having payment portals on multiple platforms means customers can shop how and where they want. Cloud-based PoS systems also allow tracking of inventory on an omnichannel level, viewing exact merchandise counts to ensure products are available and not oversold.
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Mobile money companies may also be anticipating the change in the future of the PoS market as they are starting to expand beyond agent services to introduce new services. Moniepoint, for example, introduced its credit business in July. Opay has also announced a rebrand, which will lead to the expansion of product offerings on the platform. Opay says it currently serves 40 million users whom it enables to link their cards to their wallets, making payments easier.
Adedeji Olowe, CEO of Lendsqr, said the days of “umbrella agents” could be remaining five years, but before that would happen, the payment market would need to see a few upgrades. These include transactions being completed in less than 5 seconds. Also, the quality of support from banks and fintechs would need to be “superb”. The market must also address the issue of fraud once and for all, and transfers have to be free of charge.
