The Central Bank of Nigeria’s (CBN) cashless policy, coupled with poor customer service from banks, is driving the exploitation of Nigerians by Point-of-Sale (POS) agents, according to Tope Dare, Executive Director of e-Business and Infrastructure at Inlaks Computers Limited. Speaking at a public lecture he organized, Dare argued that cash shortages stem from regulatory policies and banks’ handling of the cashless initiative, rather than any inherent inefficiency in the banking system itself.
Dare explained that the CBN’s policy has inadvertently led to cash hoarding, ATM withdrawal limits, and the rise of POS agents as essential intermediaries for cash access. However, these agents often charge exorbitant fees, incentivizing them to acquire cash through unethical means, such as bulk withdrawals from ATMs, further exacerbating cash shortages for regular bank customers. This has created a parallel cash market, with POS operators sourcing cash from businesses and draining ATMs, he added.
Despite the high fees, a survey revealed that many Nigerians prefer POS transactions due to proximity, speed, personalized service, and cash availability. Dare highlighted the stark contrast between the approximately 2.7 million deployed POS terminals and the less than 21,500 ATMs in Nigeria, emphasizing the growing reliance on POS services. He also pointed out the challenges faced by the ATM network, including low withdrawal limits, which force customers to make multiple transactions.
Dare commended the CBN’s recent efforts to address the cash shortage issue, including penalizing banks for inadequate cash availability, encouraging customer reporting of ATM shortages, increasing oversight, and fining underperforming financial institutions. He stressed the need for a balanced approach to financial inclusion, acknowledging the continued importance of cash in the Nigerian economy while working towards a more efficient and accessible cashless system.
