POS agents exploitation attributed to Cashless Policy, Poor customer relations says Expert.

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The Executive Director, e-Business and Infrastructure, Inlaks Computers Limited, Tope Dare, has blamed the cashless situation faced by businesses and individuals, leading to exploitation by point-of-sale (POS) operators, on the poor implementation of the cashless policy and the inadequate handling of the situation by banks.

Speaking during a public lecture themed “The Cash War Between ATMs and POS Agents in Nigeria” on Friday, Dare argued that the cash shortages stem from regulatory policies rather than banking inefficiencies. He noted that despite the push towards a cashless society, cash remains a crucial part of Nigeria’s economy.

“The CBN’s cashless policy has created persistent cash shortages. People now prefer to hoard cash instead of depositing it in banks. The ATM withdrawal limits are there to ensure wider cash distribution,” Dare said.

He explained that many Nigerians depend on physical cash for their daily transactions, requiring a balanced approach to financial inclusion. Dare pointed out that POS agents have evolved from mere alternatives to traditional banking services into crucial intermediaries and first-choice service centers for cash supply.

However, Dare noted that the high fees imposed by POS agents have incentivized them to source cash through desperate and unethical means, such as withdrawing cash straight from ATMs to fulfill their demand for cash. This, he said, has defeated the purpose of the ATMs and left regular bank customers at a disadvantage due to congestion at ATMs and higher transaction costs.

Dare continued, “This dynamic has left regular bank customers at a disadvantage due to the resulting congestion at ATMs and higher transaction costs for everyday users. While we must acknowledge that these agents bridge the gap left by banking institutions, they often do so at a steep price for consumers.”

He added that the situation has created an unintended consequence: a parallel market for cash. Dare explained that “many POS operators now obtain cash through two major avenues: purchasing cash from businesses, where they collect physical cash from local businesses in exchange for digital transfers with a fee, creating an informal economy of cash distribution, and withdrawing directly from ATMs, as POS agents often drain ATMs by making multiple withdrawals with different debit cards issued by their numerous banks, further limiting access for regular bank customers.”

Dare cited a survey conducted on street users, which revealed a preference for POS withdrawals despite the high fees. 

He noted that “respondents cited factors such as proximity, speed, customer service, and cash availability as reasons for their choice. Many also noted that POS agents are more personable and relatable than traditional bank staff, despite their lack of formal customer care training. As of March 2024, Nigeria had approximately 2.7 million deployed POS terminals, compared to less than 21,500 ATMs, with over 63 million unique bank clients. This disparity highlights the growing reliance on POS machines. However, the ATM network in Nigeria faces several issues, such as

Low withdrawal limits: customers often cannot withdraw more than N5,000–N10,000 per transaction, leading to multiple withdrawals. This system is disproportionately affecting individuals who rely on cash, such as traders, transport workers, and elderly citizens who struggle with digital banking platforms.

As of March 2024, Nigeria had approximately 2.7 million deployed POS terminals, compared to less than 21,500 ATMs, with over 63 million unique bank clients. Dare highlighted the growing reliance on POS machines and the issues faced by the ATM network in Nigeria, including low withdrawal limits and multiple withdrawals.

However, Dare commended the Central Bank of Nigeria’s (CBN) moves to penalize banks that fail to ensure adequate cash availability, encourage customers to report ATM cash shortages for prompt action, increase oversight, and impose fines on underperforming financial institutions.

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