How to Start POS business in Nigeria

The introduction of the agent banking system in 2013 by the Central Bank of Nigeria brought the POS Business into Nigeria. Since then, the business has continued to grow and it is seen on virtually all streets in Nigeria. On daily basis, new individuals start POS businesses in the country.

 

One good reason why agency banking is gaining ground all over the country is that it has made it possible for financial-related services to reach unbanked regions of the country. The Point of Sale (POS) aside from helping to reach areas without banks in the country, has helped reduce queues in the banks.

 

The POS business has also helped to solve distance barriers. This is because the POS agents are seen on almost every street. Even people living in remote parts of the country do not need to transport themselves to cities any longer to access bank services as they can get the needed services from the POS agent.

In this article, we shall be learning more about the POS business and how you can successfully start your own.

What is POS

POS is an abbreviation for Point of Sale or service. A POS or point of sale is a device that is used to process transactions by retail customers. It is also a payment-processing system or terminal that allows users to perform several financial transactions.

It provides a kind of banking service that allows individuals with debit cards to make payments for goods and services or make withdrawals and deposits amongst other services.

Across several parts of Nigeria, those who solely run this enterprise are often seen in makeshift shops, kiosks and large shades or umbrellas. With the device, you can withdraw funds, make payments, and deposit money in your account without visiting a bank. A point-of-sale system also enables the operators to keep track of sales as cash registers in a store.

 

Services Offered by POS Businesses

There are numerous services offered by POS businesses to customers. Some of these services include;

1. Withdrawal of funds from a bank account

2. Opening a bank account

3. Funds deposit

4. Payment of bills such as electricity, TV subscription, airtime and others

5. Funds transfer

6. BVN enrolment

 

POS Providers in Nigeria

Before becoming a POS agent, you must choose a POS service company that you would want to work with/for. There are many POS providers in Nigeria that one can choose from. Below are some of the popular providers:

• Opay mobile bank
• Bankly POS
• Monie Point POS
• Kudi bank
• Paga
• First bank
• Wema Bank
• Zenith bank
• Access bank
• GTbank
• UBA
• Ecobank
• Quickteller
• Baxibox

To become a POS agent, you must open a bank account with the financial institution you want to work with or work under a bank you already have an account with.

 

How POS Business Works in Nigeria

A POS agent operates under a bank or financial technology company that provides POS services. This company authorizes the POS agents to render some financial services to customers on its behalf. The agents keep cash at hand which they give customers seeking cash for a fee. They also process bank deposits and other financial services for customers. Some of the businesses POS business/agents provide to customers include; withdrawals, transfers, deposits, bill payments, the opening of personal accounts and a lot more.

 

A POS device makes it possible for the POS agent to carry out these activities using the customer's debit card. To carry out the transaction, the customer’s debit card is inserted into the POS device and then the agent selects the transaction type, and the amount and then inputs the customer's four-digit pin. The GPRS network connects the financial company's server to approve the transaction. The transaction can be successful or not, but whichever one, prints a receipt notifying the customer of the transaction's status.

 

How POS Agents make Money

The POS agents make their money from the extra fee they charge their customers for performing transactions for them. It is estimated that a POS agent makes an average of 5,000 to 25,000 daily depending on the location where the business is located.

 

For every transaction performed by the customer, the agent collects a service charge of 100 NGN and above. Out of this fee, the POS provider collects some percentage. The bank or POS providers also pay the agent daily or weekly commission which is dependent on the number of transactions he carried out using their services.

 

In all, it can be said to be a very lucrative business and the amount of money an agent makes depends on the location where the business is located. If it is located in a highly populated area with less bank presence, it is likely that the profit will be high in such an area.

 

Reasons for Increase in POS Business in Nigeria

There is a continuous rise in the number of POS businesses in Nigeria and there are many factors responsible for that, and these factors include;

1.     Lack of bank presence

Banks in Nigeria often open their branches in cities and busy areas like markets and business areas. Thus making it difficult for rural dwellers and those in less populated areas to enjoy bank services. To check this problem, banks and other POS providers mobilize POS agents to render some services on their behalf.

2.     Need to prevent overcrowding in banking halls

Banks often times tries to avoid the banking halls from being overcrowded by customers and the need to decongest the banking hall is another factor that is responsible for the rise in the POS business.

3.     Need to bring banking services closer to the people

Before the introduction of the POS business, customers often drive for hours before they could get to cities where they can get their financial needs sorted. But with the POS business, such services are now available to these people in their locations even without a bank presence.

4.     Need to make extra income

This is another factor responsible for the rise in the POS business in Nigeria, as most individuals set it up to make profits and extra income for themselves.

 

Requirements for Starting a POS Business in Nigeria

Do you want to start a POS business in Nigeria, below are some of the requirements;

1.     1.   Start-up capital

If you want to start a POS business, the first thing you must have is start-up capital. The capital needed for the POS business is not expensive because you don’t need a lot to start the business. With 50,000 to 100,000 naira, you can start a POS business successfully.

 

2.     2.   Location

The next step is picking out a location for the business, somewhere with a need for POS business and where your business will flourish. Examples of such places are markets, parks, well-populated areas and others.

 

3.     3.   Documentation/Official requirements

The Central Bank of Nigeria has set some requirements that POS agents must meet before any financial organization approves them. You can get details of the requirements either by going to the bank you have chosen or by contacting their customer care. The CBN permits POS agents to work under various POS service providers, but you must provide the documents required by the provider that you want to work with. These documents may vary from one provider to another.

Below are some of these documents:

·      Valid means of identification like National ID Card, Voter’s ID Card, etc.

·        Passport photographs

·        Utility bill

·        Bank Verification Number (BVN)

·        Current Account references

·        Evidence of business registration (CAC Certificate)

·        Start-up funds/ capital and the amount varies from providers

·        Tax Identification Number (TIN)

Note that these requirements may be more or less depending on the provider but the above are the basic requirements.

Once the bank or provider approves your application, they will give you a POS machine which may be free or attached with a cautionary fee, so you can begin your POS business.

 

Advantages of Starting a POS Business

The POS business just like every other business has many advantages and some of these advantages are discussed below;

Affordable Capital: Unlike many other businesses that require an enormous sum of capital to set up, the POS business is not one of them. Having the sum of 50,000 NGN is enough for you to start the business, which you can raise within a short time.

 

2.     No Expensive Structure is Needed: renting a shop or an office for business as a start-up in Nigeria can be very difficult and expensive. But for the POS business, there is no need for a fancy structure, at least while starting. Most POS businesses use a simple wooden kiosk or even a large umbrella as the office of their business.

 

3.   Customer Traffic: For a business to flourish, it needs customers, and the POS business doesn’t lack customers. People always need to make transactions all through the day, and this brings in more profit for the agent. Even People living in places with Banks often patronize the POS centers because of the convenience it offers them.

 

4.    Side Hustle: Because of the ever-rising cost of living in Nigeria, most people need a side hustle to support their careers or other businesses. POS business is a perfect opportunity to do this. You can even employ someone to manage the shop while monitoring the number of transactions carried out through your wallet.

 

 

Disadvantages of Starting a POS Business

It is common to say that everything that has an advantage also has a disadvantage. So same also applies to the POS business. It has numerous pros and cons which you must consider before venturing into it. Some of the cons of starting a POS business in Nigeria include;

Fraud: Some bad characters patronize POS businesses to hide their identity in order to carry out fraudulent transactions. The scammers knowing that they could easily be tracked if they perform their fraud in the bank resort to POS centers where their faces and details may not be captured. So as a newbie in the business, you may need to get a few tips from others who have been in the business on how to spot a scam when you meet one.

 

Insecurity: The management of POS businesses requires handling a large sum of money, keeping the same at home or in shop locations and transporting it from the bank to your place of business. This makes POS agents and their businesses a target for robbery attacks from criminals. It is important to be security-conscious and alert at all times.

 

Unstable Electricity: POS machines need electricity to be charged and powered. Considering the unpredictable nature of electricity in Nigeria, it might affect business activities. So, as a POS agent, you might need to have an alternative source of power, like a small generator or inverter for backup.

 

Bank Networks: It’s never a pleasure being a victim of a bad network when performing a transaction, asides from delaying the customer, it also causes unwarranted debits from banks even if the money never got to the agent’s wallet. Because of this common problem, most POS agents use different POS machines. It is also necessary to do proper research to know which POS service provider has a reliable network.

 

In Conclusion

Starting a POS business in Nigeria can be profitable but it is important you carry out thorough research about the business, the location you want to use, and the best POS provider to use in order to scale through with ease in the business.