…Banks push back
By Chinenye Anuforo
Nigeria’s financial transaction landscape is experiencing a shift as the once-dominant Automated Teller Machines (ATMs) steadily give way to the rising prominence of Point of Sale (PoS) terminals. Driven largely by nimble fintech innovators, this evolution has disrupted traditional banking norms, compelling deposit money banks to intensify efforts to reclaim relevance and secure a stronger foothold in the increasingly competitive PoS space
The declining relevance of ATMs was illustrated by recent transaction data. Between January and June 2024, the total value of ATM transactions in Nigeria experienced a substantial year-on-year drop of nearly 20 per cent, falling from N14.63 trillion in 2023 to N12.21 trillion. In contrast, PoS transactions, encompassing both everyday purchases and cash withdrawals facilitated by agents, witnessed an explosive growth of over 77 per cent during the same period, reaching a total value of N85.92 trillion.
This dramatic shift is reflected in the deployment figures. As of the first half of 2024, Nigeria had a relatively modest 16,714 active ATMs compared to a massive 5.56 million deployed PoS terminals. This expansion of the PoS network has been largely driven by the innovative strategies and widespread reach of fintech players such as OPay, Palmpay, and Moniepoint.
These fintech companies have established a formidable presence across Nigeria. The International Monetary Fund (IMF) estimated approximately 1,600 PoS operators per square kilometer in the country, with fintechs accounting for around 1.6 million of the total number of over two million operators. Moniepoint boasts over one million active terminals and processes an impressive N10 trillion in transactions each month. Palmpay reports a significant onboarding of over 1.1 million businesses and a network exceeding 600,000 merchants. OPay had built a substantial network of over 500,000 mobile agents by June 2023.
The accessibility and convenience offered by these PoS agents have made them the primary point of access for cash and other financial services for a growing number of Nigerians. GSMA, the global association for mobile network operators, has recognized this impact, stating that “The growth of non-MNO-led mobile money providers like OPay and Palmpay in Nigeria has driven financial inclusion.”
Recognising this evolving landscape, traditional banks are now intensifying their efforts to capture a larger slice of the PoS market. Guaranty Trust Bank (GTB) made a significant move in February by eliminating processing fees on all transactions conducted through its GTBank PoS terminals for qualifying SMEs. Miriam Olusanya, GTB Nigeria’s Managing Director, explained that this aims to “empower businesses to get the full value of every payment they receive, whilst also ensuring a more seamless and efficient payment experience.”
Similarly, United Bank for Africa (UBA) launched an upgraded PoS terminal in April, signaling a stronger push into retail and agency banking. UBA’s Group Head of Retail and Digital Banking, Shamsideen Fashola, highlighted the terminal’s capabilities, including “instant settlements, real-time transaction tracking, and unmatched reliability,” designed to empower both merchants and agency banking operators.
Victor Asemota, a growth partner at AnD Ventures, believes this is a crucial awakening for the banking sector, noting, “The banks are waking up. Banks have everything and can launch anything.”
A historical perspective revealed that while banks like First Bank, GTBank, and Zenith Bank were the initial drivers of PoS adoption in Nigeria, their early focus on urban centers and larger merchants created an opening for fintechs to aggressively target the underserved small business sector and build extensive agency networks in both urban and rural areas. As noted in the study ‘Evolution of POS Technology in Nigeria’s Banking Sector’ by Light Frank and Adeoye Adedemeji, “Banks focused on large retailers, shopping malls, and high-end merchants as early adopters, gradually expanding the reach of POS technology,” while fintechs adopted a more inclusive and aggressive outreach strategy. Moniepoint, for example, reports that over 33 million people use its POS terminals monthly, highlighting their widespread adoption.
Edidiong Uwemakpan, Moniepoint’s VP of Brand Communications and PR, explained their agency banking success as a solution to “the challenges we noticed in account settlement and around the reconciliation process among merchants.” Victor Olojo, former national president of the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN), emphasized the disruptive business models of fintechs, stating, “These fintechs had very aggressive business models that can make the system work by itself. It was different from the traditional banking model, where you would wait for people to come into the banking hall. These fintechs were very aggressive with their approach to penetrating the market.”
The widespread adoption of PoS technology, largely driven by fintech innovation, has been instrumental in deepening financial inclusion in Nigeria, particularly in reaching previously unbanked populations. Oluwatomi Eromosele of EFInA highlighted that PoS agents are “extending formal financial services to about 11 million Nigerians who are not banked but are actively engaged in financial offerings.”
Despite the current dominance of fintechs in terms of PoS terminal deployment and agent networks, researchers Frank and Adedemeji emphasized that banks remain critical to the PoS ecosystem, providing the essential financial infrastructure for processing transactions and often partnering with fintechs and payment processors to facilitate the continued growth of cashless payments.