The total number of Point of Sale (PoS) terminals deployed in the country increased by 87.4 per cent to 638,983 at the end of June this year from 340,960 in the corresponding period of last year, latest data released by the Nigeria Interbank Settlement System (NIBSS) shows. New Telegraph’s analysis of the NIBSS’ data also shows that the number of terminals registered between the end of June 2020 and June 30 this year rose by 86.6 per cent to 976, 898.
This means that the gap between the number of registered and deployed terminals in the country stood at 337,915 at the end of June this year. The Central Bank of Nigeria (CBN)’s guidelines state that only institutions licensed by the apex bank to serve as merchant acquirers can own PoS terminals, “but shall only deploy and support PoS terminals through a CBN licensed Payment Terminal Services Provider (PTSP).” Further analysis of the NIBSS’ data indicates that while there is a significant gap between the number of registered and deployed PoS terminals, there has been a steady increase in the number of terminals in the country in the last five years.
For instance, according to NIBSS data, the number of the electronic tools that were deployed and registered rose from 112,847 and 131,839 respectively in 2016 to 155,462 and 182,806 in 2017. It further increased to 217,283 and 258,443 in 2018, surged to 303,162 and 446,453 in 2019 and then jumped to 459,285 and 690,070 in 2020. In its bid to boost financial inclusion by increasing access to financial services, the CBN introduced the agent banking system in 2013, under which financial institutions and mobile money opera-tors could appoint third parties as agents, equipped with PoS terminals, to provide financial services on their behalf to members of the public.
In the wake of restrictions imposed by the authorities last year to curb the spread of COVID-19, the banking agents saw their business grow rapidly, leading to Tier 1 lenders such as First Bank of Nigeria Ltd, Zenith Bank and Access Bank, reportedly placing orders for a total of 100,000 PoS terminals for their agent banking business. Indeed, latest NIBSS’ data shows that the value of transactions through PoS terminals across the country in the first six months of this year stood at N3.01 trillion, representing an increase of 50.02 per cent compared with the N2.03 trillion recorded value of transactions through PoS terminals in the first half of 2020.
However, the data indicates that the value of PoS transactions dropped for the third consecutive month to stand at N503.91 billion in June this year. Specifically, from N531.38 billion in March (the highest recorded so far this year) the value of PoS transactions fell to N507.86 billion and N503.96 billion in April and May respectively. Furthermore, NIBSS data shows that from a peak of N574.37 billion in December last year, the value of PoS transactions dropped to N489.24 billion and N468.9 billion in January and February respectively.
New Telegraph learnt that the decline in the value of PoS transactions in the last three months was due to the impact of the tough economy as well as an increasing number of customers preferring to use mobile banking applications for their transactions instead of PoS terminals.
In a chat with New Telegraph, the Head of Operations at a Tier 2 bank, who did not want to be named, blamed the decline in the value of PoS transactions in recent months to the tough economic conditions in the country. The bank official said: “The high rate of inflation has drastically affected purchasing power, so the average Nigerian is cautious about expenses and this affects the amount that is transferred or withdrawn through electronic payment channels such as PoS terminals, Automated Teller Machines (ATMs) and mobile banking apps. “Besides, many Nigerians have either lost their jobs or have been forced by their employers to accept pay cuts. With limited or no income at all, people would definitely cut down on making transfers and withdrawals through electronic payment channels.” Apart from the tough economy, there are indications that the activities of fraudsters are forcing many to shun PoS for other channels such as mobile banking apps, Unstructured Supplementary Service Data (USSD) and online banking.