By Olakunle Olafioye
Nigeria’s move to solve the problems associated with a cash-based economy through the cashless policy has brought both relief and distress at the same time.
The policy which finally came onboard in 2022, has, to a very large extent, eased some of the challenges associated with the cash-based economy, including the problems of high transaction cost, security risks and the propensity to mismanage public funds.
On the other hand the policy has been dogged by some other challenges among which is the persistent cash shortages, thereby giving room for exploitation of the masses by the Point of Sales (POS) operators, leading to high transaction costs.
Most Nigerians are lamenting having to pay additional costs while making routine purchases with their ATM cards as POS and bank transfer charges further worsen the high cost of living in the country.
A housewife, Mrs Aderonke Motajo, bemoaned having to pay surcharges over every item she buys using her ATM on POS machines, a situation she found frustratingly expensive.
“Imagine a situation where a trader using POS charges you an additional N50 on an item that costs N500. That is an additional 10 per cent increase on the cost price. If one has to pay extra charges on every purchase one makes that is automatically additional strain on one’s purse,” Mrs Motajo lamented, amid pleas to the authorities in the country to release more cash into the system.
Olajide Erigbemi, a young Nigerian graduate, recounted his frustrating experience with the cashless policy recently when looking for accommodation.
After searching for weeks, the young man finally found a house which suited his taste. However, at the point of making a payment, the landlady declined accepting a transfer of the rent citing his lack of faith in the modern means of payment. The young man said he had to embark on a cash hunt which took him almost a day.
“At the end of the day, I spent an additional N23,000 on an accommodation that was given out for N450,000 as total package,” he lamented.
If Erigbemi’s experience was exasperating, Mr Hassan Yusuf’s experience at an NNPC filling station situated at Honda Bus Stop along the Owode-Idiroko Road in Ogun State was not less irksome.
Yusuf drove into the filling station to fuel his car, which was on the verge of running out of fuel and had to make a transfer from his phone as the outlet’s POS machine was said to have issues. But more than 25 minutes after making the payment, the fuel attendant insisted she was yet to be credited and as such would not dispense the fuel into his car.
To add to his frustration, several other motorists who made similar transfers had their payments received instantly.
An obviously embarrassed Yusuf was spared of his blushes when he attempted to drive out of the filling station as the attendant confirmed the receipt of the transfer to his relief.
Yusuf would later blame his travail on exploitative POS operators who demanded higher charges as against the regular charges on the excuse of cash scarcity.
According to him, he had attempted to withdraw some cash from two POS operators before getting to the filling station, but both POS operators demanded far more than expected, thereby forcing him to resort to using his ATM card or making a mobile transfer for every transaction.
The cashless policy has created a huge business for POS operators as Nigerians who depend on physical cash prefer patronizing POS operators for their physical cash for a number of reasons. Erigbemi while narrating his frustration in getting cash to settle his rent said he could not get more than N50,000 from his bank due to the cashless policy.
Like Erigbemi, most Nigerians claim they no longer find banks attractive when they need cash due to the limited amount the banks make available to customers. They revealed their preference for POS withdrawals despite the high fees, attributing their preference to factors such as proximity, speed, customer service, and cash availability.
Mr Johnson Ogbeide, a Fintech expert, pointed out that POS operators were quite aware of the fact that most Nigerians no longer fancy going to the banks for cash and as such they are ready to take full advantage of the situation at the expense of other bank customers, thereby defeating the purpose for the ATMs.
He added that the dynamic had left regular bank customers at a disadvantage due to the resulting congestion at ATMs and higher transaction costs for everyday users.
His words: “Most Nigerians rely so much on cash for their day to day business activities. Unlike what obtained before, the cashless policy has made it difficult to get as much cash from banks as it was before. This is why the POS business has been able to evolve from being a mere alternative to traditional banking services into a crucial intermediary as well as first-choice service centre for cash supply.
“Unfortunately, the majority of these POS operators now charge arbitrarily. The high charges they impose on their customers, unchallenged, have continued to buoy them to source cash through desperate and unethical means, such as withdrawing cash straight off ATMs multiple times to fulfil their demand for cash. This makes it difficult for the people to get money from ATMs. While we must acknowledge that these agents bridge the gap left by banking institutions, they often do so at an unfair price for consumers.”
On their part, POS operators also blamed the high charges they demand from customers on the challenges of getting cash for their business. Investigations by Sunday Sun revealed that most POS operators now source for cash through two major avenues.
The majority of them claimed they purchase cash from businesses, where they collect physical cash from local businesses in exchange for digital transfers with a fee.
This development is believed to have created an informal economy of cash distribution. Apart from this, some of them also make direct withdrawals from ATMs using multiple ATM cards.
A POS operator, Rashidat Oyewole, told Sunday Sun that sourcing cash for her business was both herculean and expensive.
“I have to move from one place to another before I get the cash to run my business. Meanwhile, getting the cash is not free. Those who give us the cash also charge their own commission. Imagine a situation where you have to pay N1,000 to get N100, 000. Aside from that, you may have to spend on transport to get the cash. By the time you add up all these expenses coupled with rent and local government rates, you will discover that what we charge is not too much,” Oyewole explained.
Some analysts are quick to blame the unfortunate situation on the faulty process of putting the cashless policy together and the poor handling of the same by the banks.
While pointing out that most Nigerians still prefer POS withdrawal to ATM withdrawal despite the high charges, Dare noted that the development highlighted the growing reliance on POS machines, pointing out that the ATM network in Nigeria faces several issues, such as low withdrawal limits.
“Customers often cannot withdraw more than N5,000–N10,000 per transaction, leading to multiple withdrawals. This system is disproportionately affecting individuals who rely on cash, such as traders, commuter bus drivers, and elderly citizens who struggle with digital banking platforms,” he said.