Rising Costs and Inflation Drive Banking Agents to Increase PoS Charges in Nigeria

In Nigeria, more than a million banking agents who have embraced Point of Sale (PoS) terminals provided by operators like OPay, PalmPay, and Moniepoint are facing challenges due to the rising cost of operations.

As a result, these agents have made the decision to increase PoS charges in Lagos, with other states such as Ogun, Edo, and Oyo following suit. Victor Olojo, the president of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), confirmed the price adjustments.

The recent increase in PoS charges can be attributed to the removal of petrol subsidies and the floating of the naira, which has led to skyrocketing prices of goods and services across the country.

Also, transportation costs have reached record highs in almost all Nigerian cities while for banking agents, particularly those residing in rural communities with limited access to banks, transportation is a critical cost component.

With only 5,000 branches spread across Nigeria’s 33 licensed commercial banks, most of which are concentrated in cities like Lagos, many locations, especially in remote areas, lack access to banking services. In certain regions, such as Kano, over 20 local governments do not have any bank branches at all.

This situation forces banking agents to travel long distances, sometimes up to 100 kilometers, to obtain cash for their businesses. The convenience offered by mobile money agents mitigates this cost for customers who would otherwise have to visit a bank or ATM, making it an essential service.

Apart from transportation costs, banking agents are also burdened by terminal fees. Operators like OPay and Moniepoint recently raised their terminal charges to account for the impact of rising inflation on their operations. As a result, the fee for a N10,000 transaction increased from N50 to N60. Consequently, an agent charging N200 for this type of transaction would earn N140.

OPay currently boasts the largest network of agents, with 563,262, followed by PalmPay with 500,000 agents and Moniepoint with 322,266 agents.

These operators have gained traction by providing terminals and reliable service support, ensuring smooth transactions. PalmPay even allows agents to facilitate withdrawals through their agent app, eliminating the need for a PoS. This feature is particularly appealing to customers who are comfortable using mobile apps and prefer a faster and more convenient method of withdrawing funds.

Moniepoint has also adopted an agent network model, leveraging the potential of agency networks and categorizing agents into different tiers. This approach has facilitated rapid growth in the number of agents, eliminating the need for field staff.

Augustina Alabere, an agent with OPay, highlighted the increasing cost of PoS paper as a significant concern, as the price has risen from N1,200 for a roll of 10 to N2,000.

She also mentioned rising shop rents as a pressure point on her revenue, as landlords adjust rates to combat inflation.