According to data released by the Nigeria Inter-Bank Settlement System (NIBSS), it revealed that Point of Sales (PoS) transactions in Nigeria hit a record all-time yearly record.
The total volume of transactions conducted via the channel rose to N18 trillion in 2024, marking the highest annual record to date. This figure represents a 69% increase from the N10.7 trillion recorded in 2023.
The surge in PoS transactions is attributed to several factors, with the persistent shortage of cash in ATMs emerging as the primary reason. Also, the aggressive deployment of PoS terminals by Fintech companies has led to the increase of transactions on the channel.
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The number of PoS terminals in Nigeria more than doubled in 2024, driven largely by the entry of fintech companies into the market. 2024 data by NIBSS revealed that the number of PoS terminals deployed across the country witnessed a massive 129 percent rise to 5.5 million from 2.4 million recorded as of December 2023.
Fintech companies are leading this charge. Moniepoint for example, has deployed over 800,000 PoS terminals across the country and is developing innovative all-in-one devices that integrate payment processing, inventory management, and transaction reconciliation. Also, OPay, another major player, boasts a network of over 500,000 PoS agents.
Notably, about 4.3 million new PoS machines were also registered last year. This is more than the 3.5 million recorded at the end of 2023, pushing the total number of machines to 7.8 million as of December 2024. This increase has made it easier for businesses and individuals to accept and make cashless payments.
According to experts, PoS transactions have become a norm among individuals and businesses, due to factors such as the increasing difficulty in accessing cash through banking mediums, and the unavailability of cash in ATM machines alongside frequent queues. The Central Bank of Nigeria (CBN), revealed that in 2024 PoS transactions surpassed ATM usage by 603%.
Nigerians made transactions worth N85.91tn through point-of-sale terminals in the first half of 2024, a figure that is over seven times the N12.21tn recorded for ATM transactions within the same period. When compared to 2023, the value of POS transactions saw a 77 per cent increase, rising from N48.44tn to N85,91tn, while the volume of transactions grew by 31 per cent, from 4.87 billion to 6.39 billion.
“The rapid growth of POS is not just an avenue for payment, but also withdrawals have filled a gap for many Nigerians who struggle to access cash through banking channels such as ATM or teller withdrawals. It has also helped in bringing the banking services closer to the rural areas, which do not have as many banks accessible to them,” Lagos-based financial analyst, Mr. Adewale Adeoye.
It is worth noting that the surge in PoS transactions continues to increase, despite the arbitrary increase in charges. PoS operators across Nigeria have increased withdrawal charges from N100 to N150 for every N5,000 transaction. The operators attribute the hike to the N50 electronic money transfer levy imposed by the Central Bank of Nigeria (CBN) on financial technology (fintechs) companies.
Economic Impact of PoS Transactions
The surge in PoS transactions has no doubt had a significant economic impact in Nigeria, contributing to the growth and development of the financial sector and the broader economy.
Some of the key impacts include:
• Increased financial inclusion: PoS terminals have made financial services more accessible to previously underserved populations, particularly in rural areas where traditional banking infrastructure is limited. This has led to increased participation in the formal financial system and greater economic empowerment.
• Reduced cash reliance: PoS transactions have helped to reduce the reliance on cash for everyday transactions, promoting a more cashless economy. This has several benefits, including reduced risk of theft and robbery, increased transparency in financial transactions, and improved efficiency in the payment system.
•Stimulated economic activity: The convenience and accessibility of PoS transactions have facilitated increased economic activity, particularly for small and medium-sized enterprises (SMES). Businesses can now accept electronic payments easily, expanding their customer base and increasing sales.
Overall, PoS transactions have had a positive economic impact in Nigeria, promoting financial inclusion, reducing cash reliance, stimulating economic activity, creating jobs, improving data collection, and potentially increasing tax revenue.
As technology continues to evolve and adoption rates increase, the economic impact of POS transactions is expected to grow even further in the future.