After the recent directive from the Central Bank regarding cash disbursement limits for Point of Sale (POS) banking agents in Lagos, these agents are devising strategies to adjust to the changes, including raising withdrawal fees.
The Central Bank’s directive imposed a daily limit of ₦1.2 million per POS agent and capped customer withdrawals at ₦100,000. This move aims to regulate POS agents who have become crucial for cash access since a cash scarcity situation in 2023. The new regulations pose a challenge to the agent banking business model.
Some POS agents like Semiu Ajayi in Gbagada are considering increasing withdrawal fees in response to the new rules. Previously charging ₦4,000 for a ₦100,000 withdrawal, Ajayi plans to raise the fee to ₦6,000 or higher, indicating that the reduced business may result in higher costs for customers.
POS agents nationwide are encountering similar obstacles. These agents play a vital role in Nigeria’s financial inclusion efforts, especially as traditional banking channels like ATMs and over-the-counter services faced limitations. The increased demand for cash through POS agents stems from a currency redesign failure in 2023, leading to a prolonged cash shortage.
While these agents are essential in cash distribution, critics argue that they charge excessive fees and contribute to a cash-dependent economy, contradicting the CBN’s cashless vision.
The CBN’s new guidelines, affecting around 2 million agents, seem aimed at reducing the influence of POS agents. While supporters believe the policy will combat fraud and promote a cashless economy, many agents fear it will reduce customer transactions.
Shade Raheem, a POS agent in Ikeja, expresses concerns over the impact of the CBN’s policy changes, suggesting a push towards traditional banking channels.
Despite the challenges, many POS operators believe they can adapt to the new regulations by innovating their operations. For instance, Tade Oluwanisola in Ikorodu plans to acquire more terminals to manage increased demand and spread withdrawals across multiple terminals.
The CBN states that the revised withdrawal limits aim to address issues like fraud prevention, standardizing operations, and regulating the agency banking sector. The reliance on POS agents has prompted calls for stricter oversight, leading to a requirement for agents to register with the Corporate Affairs Commission by September 2024.
The CBN emphasizes oversight to ensure compliance with the directives, with penalties for breaches, including fines and sanctions.