How Nigerian Point of Sale (POS) Business Works and How to Make Money with It - 247Broadstreet.com

247Broadstreet
Google Playstore Books Amazon Books Apple iTunes Books

            Want Audible Audio Books? Start Listening Now, 30 Days Free
 

 

 

 

Helpful Articles

 

  

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

How Nigerian Point of Sale (POS) Business Works and How to Make Money with It

 

The Point of Sale (POS) business has emerged as one of Nigeria’s most lucrative and accessible entrepreneurial ventures, transforming the financial landscape by bringing banking services to the doorsteps of millions. With over 2.7 million POS terminals deployed across the country as of March 2024, the POS industry is a cornerstone of Nigeria’s push toward financial inclusion and a cashless economy.

 This article provides an in-depth exploration of how the POS business operates in Nigeria, its mechanics, requirements, profitability, and strategies for maximizing earnings. Whether you’re an aspiring entrepreneur or seeking a side hustle, this guide will equip you with the knowledge to start and succeed in the Nigerian POS business.

 

Understanding the Nigerian POS Business

 

What is a POS Business?

 A Point of Sale (POS) business in Nigeria involves providing financial services through portable electronic terminals that process transactions such as cash withdrawals, deposits, fund transfers, bill payments, and airtime purchases. Introduced by the Central Bank of Nigeria (CBN) in 2013 as part of the agent banking system, POS businesses act as a bridge between traditional banking and underserved communities, particularly in rural and semi-urban areas where access to banks and ATMs is limited.

 

POS agents operate under licensed financial institutions, such as commercial banks (e.g., First Bank, Zenith Bank, UBA) or fintech companies (e.g., Moniepoint, OPay, Paga). These agents use POS terminals to facilitate transactions for customers, charging a small fee for each service while earning commissions from their service providers. The business thrives due to high demand for convenient financial services, limited banking infrastructure, and Nigeria’s growing adoption of cashless transactions.

 

How Does a POS Business Work?

 The mechanics of a POS business are straightforward but require careful execution to ensure profitability and compliance.

 

 Here’s a step-by-step breakdown:

 Acquisition of a POS Terminal: Agents obtain a POS terminal from a bank, microfinance institution, or fintech company. Some providers, like OPay or Palmpay, offer free or subsidized terminals, while others charge between ₦20,000 and ₦100,000, depending on the device’s features (e.g., network support, receipt printing capabilities).

 Customer Transactions: Customers visit the POS agent for services such as:  

 Cash Withdrawals: Customers insert their debit cards, enter their PIN, and receive cash after the transaction is authorized. The agent charges a fee, typically 0.5% to 2% of the withdrawal amount.  

 Cash Deposits: Customers deposit cash into their bank accounts via the POS terminal.

 

 Fund Transfers: Agents facilitate transfers between bank accounts or to mobile money wallets.

 

 Bill Payments and Airtime Purchases: Customers pay utility bills (e.g., electricity, cable TV) or buy airtime for mobile phones.

 

 Other Services: Some platforms allow agents to offer BVN enrollment, account opening, or even solar product sales (e.g., FaziPay).

 

 Transaction Process: The agent inserts the customer’s debit card into the POS terminal, enters the transaction details, and the customer inputs their PIN. The terminal, connected to the internet (via mobile data or Wi-Fi), communicates with the bank or fintech platform to authenticate and complete the transaction. A receipt is printed (for traditional or Android POS devices) or displayed digitally (for mini POS devices).

 

 Revenue Generation: Agents earn money through:

 Customer Fees: Charged directly to customers, e.g., ₦100 for a ₦5,000 withdrawal.

 Commissions: A percentage of the fee shared with the agent by the service provider, typically 50–60% of the charged fee.

 Incentives: Some providers offer bonuses for high transaction volumes or loyalty programs.

 Record-Keeping and Compliance: Agents must maintain accurate transaction records, adhere to Know Your Customer (KYC) requirements, and report suspicious transactions to comply with CBN’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations.

 

Types of POS Terminals

 There are three main types of POS terminals used in Nigeria, each with distinct features:

 Mini POS: Small, calculator-like devices that connect to a smartphone via Bluetooth. They lack printers and require a mobile app for transactions. Cost: ₦8,500–₦30,000.

 Traditional POS: Larger devices with built-in printers and independent internet connectivity (2G/3G/4G). These are the most common and cost ₦20,000–₦75,000.

 Android POS: Smartphone-like devices with touchscreens, advanced features, and built-in printers. They are versatile but more expensive, ranging from ₦50,000 to ₦150,000.

 

Starting a POS Business in Nigeria

 

Requirements

 To launch a POS business, you’ll need to meet regulatory and operational requirements set by the CBN and your chosen service provider. 

 

Here’s what you need:

 Business Registration: Register your business with the Corporate Affairs Commission (CAC) to ensure compliance and credibility. This costs approximately ₦10,000–₦20,000.

 

 Valid Identification: Provide a national ID card, voter’s card, driver’s license, or international passport.  

 Bank Account: Open a business account with a bank or fintech provider. Some providers require regular transactions in the account before issuing a POS terminal.

 

 POS Terminal: Obtain a terminal from a licensed provider. Popular options include Moniepoint, OPay, Paga, Palmpay, and Firstmonie. Costs vary, with some providers offering free terminals upon meeting conditions (e.g., OPay requires KYC Level 3).

 

 Startup Capital: A minimum of ₦50,000–₦250,000 is needed to cover the POS machine, operating float (cash for transactions), kiosk setup, and marketing materials.

 

 Location: Choose a high-traffic area, such as markets, residential areas with limited bank access, or near malfunctioning ATMs. Avoid locations too close to banks or ATMs, as they reduce demand.

 

 KYC Compliance: Verify customer identities for large transactions to comply with CBN regulations.

 

Internet Connectivity: Ensure a stable network for transactions, either through mobile data or Wi-Fi. A backup power source (e.g., power bank or generator) is essential due to Nigeria’s unstable electricity.

 

Steps to Start

 

Conduct Market Research: Analyze your target audience (e.g., salaried workers, small businesses) and competitors. Identify gaps, such as areas with high demand but few POS outlets.

 Create a Business Plan: Outline your goals, estimated costs, and revenue projections. A simple plan can help you stay focused and attract funding if needed.

 Choose a POS Provider: Compare providers based on transaction fees, network stability, and support. For example, Moniepoint offers low fees (0.5% for withdrawals up to ₦20,000), while OPay provides free terminals for active agents.

 Register with a Provider: Submit required documents (ID, passport photos, proof of address) and sign an agent agreement. Some providers, like Moniepoint, assign a Relationship Manager to guide you.

 Secure a Location: Set up a kiosk, umbrella, or shop in a busy area. Use signage to advertise services like “Cash Withdrawal,” “Bill Payments,” or “Airtime Sales.”

 Acquire Equipment: Purchase or lease a POS terminal, ensure internet access, and maintain a float of ₦50,000–₦200,000 for transactions.

 Market Your Business: Use flyers, banners, social media, or word-of-mouth to attract customers. Offer incentives like discounts for first-time users.

 Train and Operate: Learn to use the POS terminal through provider manuals or training. Start processing transactions and maintain excellent customer service.

 

How to Make Money with a POS Business in Nigeria

 

Revenue Streams

 

POS agents earn money through multiple channels:

 

 Transaction Fees: Charge customers a fee for each transaction. Common rates include:

 

 Withdrawals: ₦100 for ₦5,000, ₦200 for ₦10,000, or 0.5–2% of the amount.

 

 Transfers: ₦10–₦50, depending on the amount.

 

 Bill Payments and Airtime: 2–5% commission or flat fees (e.g., ₦20 per transaction).

 

 Commissions: Providers share a portion of the fee with agents. For example, if you charge ₦200 for a ₦10,000 withdrawal and the provider takes ₦50, you keep ₦150.

 

 Value-Added Services: Offer additional services like airtime sales, bill payments, or phone charging to increase revenue.

 

 Incentives and Bonuses: Providers like Moniepoint offer cashback (e.g., ₦20 per withdrawal) or rewards for high transaction volumes.

 

Profitability Potential

 The profitability of a POS business depends on transaction volume, location, and operational efficiency. According to industry estimates, a single POS unit in a busy location can generate ₦5,000–₦30,000 daily in profit, translating to ₦150,000–₦900,000 monthly. 

 

For example:

 

 A ₦10,000 withdrawal with a ₦200 fee (provider takes ₦50) yields ₦150 profit.

 

 Handling 50 such transactions daily results in ₦7,500 profit.

 

 Additional services like airtime sales (2% commission) or bill payments (₦20–₦50 per transaction) can boost earnings.

 

Agents with multiple terminals in different locations can scale profits significantly, with some earning up to ₦1 million monthly.

 

Strategies to Maximize Profits

 

 Choose a High-Traffic Location: Operate in areas with high foot traffic, such as markets, motor parks, or near universities. Locations near faulty ATMs can also attract customers.

 

 Offer Diverse Services: Beyond withdrawals and deposits, provide bill payments, airtime sales, or phone charging to diversify income. For example, selling drinks or phone accessories alongside POS services can increase revenue.

 

 Maintain Adequate Float: Ensure you have enough cash or digital funds (₦50,000–₦200,000) to handle transactions without delays. Running out of float can deter customers.

 

 Provide Excellent Customer Service: Be courteous, transparent about fees, and resolve disputes professionally to build loyalty.

 

 Leverage Technology: Use cloud-based POS systems to track transactions and manage records efficiently. Regularly update software to avoid technical issues.

 

 Market Aggressively: Use social media, flyers, or referral bonuses to attract customers. For example, offering a ₦50 discount on the first transaction can draw new clients.

 

 Monitor Costs: Minimize expenses like internet data, electricity, or kiosk rent. Consider solar-powered devices for cost-effectiveness in areas with unstable power.

 

 Stay Compliant: Adhere to CBN’s KYC and AML/CFT regulations to avoid penalties. Keep detailed records for audits.

 

 Scale Operations: Once established, invest in additional terminals or hire sub-agents to cover more locations, increasing transaction volume.

 

 Partner with Reliable Providers: Choose providers like Moniepoint or OPay, known for stable networks and low fees, to ensure smooth operations and higher profits.

 

Challenges and Solutions

 

While lucrative, the POS business faces challenges:

 

 Network Issues: Unstable internet can disrupt transactions. Solution: Use providers with strong network coverage and have a backup data plan.

 

 Security Risks: Cash-heavy operations attract theft. Solution: Operate in visible areas, use secure storage, and limit cash on hand.

 

 Competition: Urban areas may have many POS agents. Solution: Differentiate with better service, additional offerings, or targeting underserved areas.

 

 Insufficient Float: Running out of cash frustrates customers. Solution: Maintain a robust float and establish a system to replenish funds quickly.

 

 Regulatory Compliance: Failure to follow CBN guidelines can lead to penalties. Solution: Stay updated on regulations and work with reputable providers.

 

Top POS Providers in Nigeria (2025)

 

Here are some leading POS platforms, based on reliability, fees, and features:

 

 Moniepoint: Known for low fees (0.5% for withdrawals up to ₦20,000, ₦100 flat rate above), stable network, and excellent support. Cost: ₦21,500 (includes caution and logistics fees).

 

 OPay: Offers free terminals for active agents, 0.5–1% withdrawal fees, and a user-friendly app. Cost: ₦8,500–₦35,000.

 

 Paga: Reliable for rural areas, costs ₦30,000.

 

 Palmpay: Free terminals with a ₦30,000 deposit, 0.5–1% fees.

 

 Firstmonie: Backed by First Bank, costs ₦5,000–₦10,000.

 

Conclusion

 The POS business in Nigeria is a low-barrier, high-potential venture that empowers entrepreneurs to meet the growing demand for financial services. By leveraging strategic locations, offering diverse services, and partnering with reliable providers, agents can earn consistent daily income, with the potential to scale into a multi-unit operation. Despite challenges like network issues and competition, careful planning, excellent customer service, and adherence to regulations can ensure success. 

As Nigeria’s cashless economy expands, the POS business remains a vital part of the financial ecosystem, offering a profitable opportunity for those ready to seize it. 

Start small, stay disciplined, and watch your POS venture grow into a sustainable source of wealth.

Featured books

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Browse my Google Playstore Books

 

 

Buy at Amazon


 

Want Audible Audio Books? Start Listening Now, 30 Days Free

 

 

 

 

 

 

 

 

 

Return to Home Page