Lagos, Nigeria – The Central Bank of Nigeria (CBN) has introduced a new policy restricting Point of Sale (PoS) agents to a daily transaction limit of N1.2 million as part of its ongoing efforts to foster a cashless economy. The directive was announced in a circular titled “Circular on Cash-Out Limits for Agent Banking Transactions” released on Tuesday.
In the circular, the CBN stated that the decision is in line with its broader objective to enhance the adoption of electronic payment channels across the country. The policy intervention is aimed at improving agency banking operations, which have become vital in promoting financial inclusion, particularly for Nigerians without access to traditional banking services.
Details of the New Policy
The CBN has set several new restrictions under the policy:
- Cash Withdrawal Limits: Each customer is now restricted to a maximum of N500,000 per week for cash withdrawals, regardless of the transaction channel.
- PoS Agent Daily Limits: Each PoS agent is now limited to a cumulative transaction cash-out of N1.2 million daily, with individual customer transactions capped at N100,000 per day.
- Agent Banking Compliance: Agents are required to ensure that all daily transactions, including withdrawals and limits, are electronically reported to the Nigeria Interbank Settlement System (NIBSS), which will send these reports to the CBN. Furthermore, all PoS terminals must be connected to a Payment Terminal Service Aggregator (PTSA).
The CBN also emphasized that PoS agents’ activities must be clearly distinguished from merchant operations, with agents mandated to use the designated Agent Code 6010 for all banking-related transactions.
Impact on Agent Banking in Nigeria
The move highlights the significant role of agency banking, particularly PoS and mobile money services, in providing financial services to underserved populations. According to the Nigerian Financial Services Report, agency banking has become an essential channel for individuals in remote areas to access cash and make financial transactions. By July 2024, there were 3.05 million deployed PoS terminals and 4.06 million registered PoS terminals in Nigeria, according to data from the Nigeria Interbank Settlement System Plc (NIBSS).
Agency banking is increasingly seen as a key enabler of financial inclusion, particularly in rural areas where traditional banking infrastructure is limited. A recent report by Bloomberg underscored the growing importance of PoS agents in bridging the gap left by a shortage of Automated Teller Machines (ATMs) across the country. In fact, Nigeria now boasts more than two million mobile agents who help facilitate daily transactions for millions of Nigerians.
CBN’s Ongoing Efforts to Improve Financial Systems
In a broader context, the CBN has been actively working to limit cash transactions in favor of digital payment methods. This has been part of a nationwide drive to reduce the circulation of physical cash, curb inflation, and improve the efficiency of the financial system.
However, the CBN’s efforts have not been without controversy. In December 2023, the central bank threatened sanctions against banks that fail to adequately replenish their ATMs, amid concerns of cash shortages.
The new restrictions on PoS agents come at a time when fintech companies like Opay, Paga, and Moniepoint are playing an increasingly important role in Nigeria’s financial ecosystem. According to the International Monetary Fund, Nigeria has an average of about 1,600 agents within every square kilometer, further demonstrating the growth of agent-based financial services.
Conclusion
The CBN’s latest move to cap PoS agent transactions aims to further solidify Nigeria’s transition towards a cashless economy while enhancing the regulatory framework for agent banking services. As PoS agents continue to play a crucial role in ensuring access to financial services across the country, these new guidelines will likely have a significant impact on how they operate moving forward.
