New Telegraph

PoS transactions drop by N3.9bn in May

The value of transactions through Point of Sale (PoS) terminals dropped marginally by 0.76 per cent (N3.9 billion) to N503.96 billion in May 2021 from N507.86 billion in the previous month, latest data from the Nigeria Interbank Settlement System Plc (NIBSS) shows. New Telegraph’s analysis of NIBSS’ data indicates that the drop in the value of transactions in May comes on the back of the 4.6 per cent decline in such transactions to N507.86 billion in April compared with the N531.38 billion recorded for the month of March.

In fact, with NIBSS’ numbers showing that PoS transactions dropped to N468.9 billion in February from N489.24 billion in the previous month, it means that a decline in the transactions has been recorded for three out of the first five months of the year. This is despite recent reports, which show that more Nigerians are embracing the electronic payment channel. For instance, citing NIBSS’ data, New Telegraph recently reported that the total number of PoS terminals deployed in the country increased by 67.1 per cent to 510,773 at the end of March this year, from 305,725 in the corresponding period of last year.

The data also indicates that the total number of registered PoS terminals as at the end of March 2021 stood at 783,136 compared with 470,122 in the same period of last year. Also, further review of NIBSS’ data by New Telegraph reveals that the value of POS transactions has maintained an upward trend in the last three years.

Specifically, the value of transactions through the terminal increased from N2.32 trillion in 2018 to N3.20 trillion and N4.7 trillion in 2019 and 2020 respectively. Analysts attribute the decline in PoS transactions in the last two months to the impact of the sluggish economy. For instance, analysts at Financial Derivatives Company Ltd (FDC) said in a report at the weekend that “transactions across epayment channels rose marginally by 0.38 per cent to N21.27 trillion in May from N21.19 trillion in April,” adding that “value of transactions flat lining as the level of economic activities slow.” Similarly, 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. “Moreover, 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.” New Telegraph, however, gathered that apart from the tough economy, another major reason for the decline in PoS transactions in recent months is the complaint by bank customers that they are being exploited by merchants who allegedly charge fees much higher than what the Central Bank of Nigeria (CBN) prescribes.

A Lagos-based businessman, Mr. Mike Onyeka, told New Telegraph that he had to stop using the services of POS operators when he realised that they were hitting him with high charges. He said: “Initially, when I started patronising PoS operators, which was about three years ago, their charges were moderate. But since last year when the demand for their services increased, they can charge you as much as N2,000 for a transaction that should not attract more than N500.” New Telegraph further learnt that widespread disruptions to PoS terminals network in recent times have also contributed to discouraging members of the public from using the e-payment channel. Analysts believe that the development could affect the Central Bank of Nigeria (CBN)’s efforts to boost financial inclusion.

The apex bank had, in 2013, introduced the agent banking system, under which financial institutions and mobile money operators could appoint third parties as agents, equipped with PoS terminals, to provide financial services on their behalf to members of the public. Commonly called PoS operators in most parts of the country, the banking agents have seen their business grow rapidly especially since COVID- 19 spread to Nigeria in February last year. With the pandemic forcing lenders to adopt Nigeria Centre for Disease Control (NCDC)-ordered COVID-19 protocols, such as social distancing and avoiding crowded environments, many DMBs believe that the situation presents an opportunity to boost their agent banking business.

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