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Fraudsters dent Nigeria’s multi-billion-naira POS business

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THE Point of sale transaction (POS), also known as agent banking, has proven to be a huge relief to many Nigerians. 

The Central Bank of Nigeria (CBN) officially introduced the POS system in 2013 to achieve financial inclusion and develop a cashless economy.

For many Nigerians, the POS is convenient, time-saving and life-saving. Before its advent, Nigerians used to queue up in the banking hall for hours to withdraw money or carry out transactions. But this is no longer the case.


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Many Nigerians are involved in the POS business, raking in thousands and millions of naira daily, supporting their families and friends from proceeds from the business.

Data show business is good

Data obtained from the Nigeria Inter-Bank Settlement System (NIBSS) show that in 2018, the total PoS transaction was N2.3 trillion from 285.9 million transactions.

In 2019, it increased to 438.61 million transactions with a total value of N3. 21 trillion.  In 2020, transactions rose by 49.51 per cent to 655.75 million, with the total value rising to N4.73 trillion.

Further findings also showed that POS transactions carried out in the first eight months of 2021 stood at N4.06 trillion, representing a 45 per cent increase compared to N2.81 trillion recorded in the corresponding period of 2020.

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According to the data, POS transactions hit its highest levels for any eight-month period, increasing by 44.8 per cent and 108 per cent, compared to N2.81 trillion and N1.96 trillion recorded in the similar period of 2020 and 2019 respectively.

Similarly, the volume of POS transactions recorded between January and August 2021 stood at 619.3 million, increasing by 61.8 per cent, compared to 382.9 million recorded in the corresponding period of 2020. It is worth noting that a total of 686,577 POS terminals were deployed nationwide as of August 2021, representing an 84.4 per cent increase from 372,333 recorded in the same period of 2020.

The value of POS transactions in the country for the month of August 2021 stood at N504.88 billion, lower than N554.67 billion recorded in the previous month, while it rose marginally compared to N503.91 billion carried out in June 2021.

Also, the Nigeria Inter-Bank Settlement System (NIBSS) data show there were about 307,000 POS machines in Nigeria as of March 2021, but only 167,000 were active.

“This shows that a lot of transactions are done through these channels,” said a market analyst, Ike Ibeabuchi.

“It is big business and it creates jobs for many who would have been in the streets today.”

Operators share experience 

The POS operators said there was money in the business, but not without downsides.

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Some of the operators who spoke to the ICIR said the operating banks had pegged the amount to be charged (which is small), meaning that an operator could not charge above that.

They noted that being in a strategic spot for the business could multiply the profits.

Findings show there are parties involved in sharing the 0.5 per cent fee statutorily charged on each N1000 transaction. The 0.5 per cent is the Central Bank of Nigeria’s stipulated charge per N1000.

The 0.5 per cent is shared by several entities. The first is the issuer of the card who earns 30 per cent.   Next is the acquirer who earns 7.5 per cent and the payment terminal service provider who earns 25 per cent.

Also, the POS agent who interfaces with the clients charge slightly above 0.5 per cent so that he/she can earn and sustain his/ her business.

Further findings show that stamp duties are also paid for transactions above N10, 000. However, when operators perform transactions below N10, 000, stamp duty is not charged.

Ify Okorommadu, who spoke to our correspondent on the development, said understanding the business and possible risks associated with it would save operators a lot of resources.

“This business has been helping me a lot to grow my income,” she said. “This is because I was able to do some risk analysis before I commenced. I use the ‘O pay’ payment platform because of its strong network strength. The gain is very little, but if you stay in a strategic spot, your little gain will compound.”

Fraudsters prowling

She also told our correspondent that fraudsters were exploiting some loopholes in the system.

“There is a fake alert. When money is transferred to your account by customers, you may see the alert but it could be a fake one,” Okorommadu said.

“Once I am not deducted by my bank, I tell the clients to wait, even if they are deducted.  I refer them back to their banks. Some of them insist on your paying them, but such alerts are fake.”

Speaking on her experience with fraudsters, Okorommadu said she had stopped bank transfers, using only POS which would show at the back-end of the bank.

“Someone transferred N100 000 to me when I started newly in 2017. I saw the alert but never knew it was fake. When I was balancing my account after the daily work, I discovered it was not showing at the back-end of my banking app, despite having seen the alerts on my phone. The customer is a passer-by and cannot be possibly traced. I had to bear the brunt and learnt bitter lessons.”

Another POS operator, Gloria Anatogu, who spoke to our correspondent in Abuja, said despite recording appreciable success, she had had a nasty experience with fraudsters.

“Someone came and transferred N300 000 to me and got paid. My bank later called me and told me the guy was a fraudster, that he tapped into someone’s account and stole his money and had to resort to the POS to get the fund. That resulted in the suspension of my account for the business,” she said.

Kunle Alarapo, the head of the retail segment at the Wema Bank, who spoke on POS transactions, said the bank often used agent network management to track operations of terminal operators.

“If some POS agents are charging prices above specified amounts, it makes us less competitive. What we do is to ensure our terminal outlets do not charge above specified amounts not to dissuade our customers.

“We have an agent network manager who monitors the operators to dissuade arbitrary charges.”

According to Maryann Ayoola, a POS operator in Abuja, occasional encounters with fraudulent customers seemed to outweigh the benefits of the business.

“Some of them will come and make transfers and most times they are in a haste. They usually download an app that will show you the transfer is successful on their phones. When you tell them to wait so you can get an alert, they start pleading with you to trust them.

“Believing that the transaction was successful from their phone, we end up giving them the money,” she said.

She told The ICIR that she had experienced this repeatedly, with the most recent occurrence being just two months ago.

“The last one, the man came here neatly dressed and said he was the manager of this company,” she said, pointing towards a fuel station across the road.

“He said his wife was sick and in the hospital. He used that same app I am telling you about. Initially, I insisted on getting an alert before giving him any money, but he started begging and eventually dropped his number with me,” she said.

Maryann never got the money, and the number he gave never connected. She tried to trace him to the fuel station he claimed to manage, but nobody there had ever heard of his name.

There are losses from other ends

She also blamed bank network issues for making the business more difficult to run.

“Sometimes, I give a person money after a transfer and the bank reverses the money back to that customer. I lost over N40,000 to this recently, and they never refunded the money to me,” she said.

In Dutse, Dennis Ubong manages a POS business for his employer.

He sits under an umbrella attending to customers who require his services every day except Sundays and is paid N10 000 at the end of the month.

Ubong told The ICIR that he had recorded several losses as a result of his trust in some fraudulent customers.

“A woman that has been my customer for a long time came here and asked for N9000. I gave her and she said she would make the transfer as she was leaving. Because we were close, I let her. Till today, she hasn’t sent the money. It was deducted from my salary and I was paid only N1000 that month,” he said.

Lucrative, despite scams

Some POS operators have described the business as lucrative, with some making up to N120 000 monthly from it.

Maryann Ayoola resumes at her stand between 6.30 am – 7.00 am and closes by 9.30 pm.

She told The ICIR that she could make more than N5000 in a day from the business.

“I’ve made N5000 since morning, and it’s just four o’clock. And I’m not the only one on this line. Imagine if it was just me,” she said.

Adams Adewole, who runs the POS business at Ladipo Market in Lagos, said he always made up to N8,000 every day.

“It is a good business,” he said.

But he noted that a lot of people had flooded into the business, making it less lucrative.

“It is no longer the way it used to be two or three years ago when fewer people knew about it. Now, you can have up to 10 POS agents in every five-kilometre,” he said.

Author profile

Ijeoma Opara is a journalist with The ICIR. Reach her via vopara@icirnigeria.org

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