Nigeria is taking steps to increase transparency and reduce fraud among its 1.9 million Point of Sale (PoS) agents, who play a crucial role in the country’s financial inclusion efforts.
The Corporate Affairs Commission (CAC) will now require these agents to register as businesses.
Previously, fintech companies onboarded agents by collecting information such as names, physical locations, and phone numbers, as outlined in the Central Bank of Nigeria’s (CBN) regulatory framework for agency banking. These agents, equipped with PoS devices, facilitate transactions at shops and designated locations. The agent banking space is highly competitive, with Fintechs like Moniepoint, OPay, and PalmPay as dominant players.
The new registration rule comes amid a rise in fraud incidents involving PoS terminals, which accounted for 26.37% of fraud cases in 2023, according to a report by the Nigeria Inter-Bank Settlement System Plc (NIBSS). In response to growing fraud, the CBN is collaborating with the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) to implement a feature on PoS terminals that flags suspicious transactions.
The PoS agent model has low barriers to entry and offers an attractive secondary income stream for small retailers, contributing to its widespread adoption. Fintech startups have kept onboarding processes simple and often provide PoS terminals at a loss to gain market share.
However, the requirement for agents to register as businesses may complicate the onboarding process. Business registration can be a complex and potentially lawyer-intensive process. To address this, some fintech companies are partnering with the CAC to streamline registrations. For example, Moniepoint partnered with the CAC in February to help digitize the operations of over 2 million small businesses, including integrating a CAC registration application within their app. Similar partnerships, like PalmPay’s recent agreement to register over 200,000 businesses, will likely become common as competitors adapt to the new requirements and work to continue signing up agents, who remain vital to their operations.
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