How PoS operators render bank ATMs redundant

Automated Teller Machines (ATMs) of commercial banks across the country have become virtually redundant as Point of Sale (PoS) operators have taken over the market, providing relief to many bank customers because of their proximity, Daily Trust on Saturday can report.

However, the development comes with concerns from customers of banks, especially in rural and semi-urban areas, who said they have been made to pay heavily to PoS operators for cash transactions.

Investigations by Daily Trust on Saturday across the country indicated that most bank ATMs hardly dispense, while those that do have placed restrictions on the amount a customer can withdraw in a day.

The number of PoS machines deployed by merchants and individuals across the country rose to 2.7 million in March this year, the Nigeria Inter-Bank Settlement System (NIBSS) disclosed in the latest electronic payment data released recently.

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This represents a 50 per cent increase year-on-year when compared with the number of deployed terminals in the same period last year, which was 1.8 million.

The March 2024 figure indicated that a total of 864,753 new PoS terminals were deployed last year.

However, the figure for deployed PoS is still lower than the total registered terminals.

According to the NIBSS data, a total of 3.730 million PoS machines had been registered across the country as of March 2024, which shows that a total of 1.04 million terminals are either yet to be deployed or have become inactive.

PoS transactions

The value of transactions over PoS terminals nationwide has been growing consistently over the years. However, data for March 2024 shows that there was a decline when compared with last year’s figure.

According to NIBSS data, the value of PoS transactions for March stood at N961.8 billion. This shows a 16.5 per cent decline compared with N1.15 trillion recorded in March 2023.

However, the record in March last year, when the PoS value hit an all-time high, is attributable to the unusual cash scarcity during the period, which forced many Nigerians to embrace electronic transactions.

Aside the 2023 cash scarcity, the growth of PoS transactions in Nigeria is being driven by many factors, which include rapid adoption by merchants for receiving payments.

Kano

In Kano, bank customers said they prefer to patronise PoS operators to withdraw money instead of visiting ATMs that on many occasions were not dispensing cash.

They said even if they found the ATMs dispensing, they are discouraged by the long queues, considering that beyond cash, the machines offer other services.

When our reporter visited a new generation bank along Zaria road in the commercial city, two ATMs out of six were dispensing cash, even as most of the customers were there for different purposes.

No one was seen at Access Bank ATM cubicle at Aminu Kano Teaching Hospital, suggesting that it was not dispensing. Few customers were, however, seen at Jaiz Bank ATM on Tafawa Balewa Way.

Naziru Adamu, a civil servant said he no longer goes to ATMs to withdraw cash because PoS operators are available next door, and their charges, according to him, are relatively low when compared with the cost of transportation to and from where the ATMs are located.

He recalled that when salaries were paid previously, civil servants would troop to Bank Road, where many banks with ATMs are located, to join long queues to withdraw their money, wasting productive hours.

“It is a new dawn; it is no longer the case as PoS operators now render the service at your doorstep,” he said.

Hafsat Aliyu, a housewife in Kurnan Asabe area of Kano, said she makes a fortune from the comfort of her room.

“I have the PoS machine and being a full-time housewife, I do the business from home. Most of the women around this area, especially those whose husbands live outside Kano, come here to collect money,” she said.

Abuja

In Abuja, a PoS operator in Kado District, Abdul Rahman, told Daily Trust Saturday that he and other operators have an understanding with many banks.

“It is a clean business; that is why we always have cash. When we go to the banks, they always give us priority.

“The truth is that most of these banks are the owners of the PoS machines, which they give to us; so they will rather make sure we have the cash first before ATMs,” he said.

Another operator in Jabi District, Chinese Ani, said, “PoS operators are so many that the banks battle with cash rationing, which is why customers find it difficult to get cash at the ATMs”.

Hannatu, a graduate of Business Administration, said she has 11 PoS outlets.

“After I graduated from the university and there was no job, my elder brother said I should level my head and go into the PoS business.

“He facilitated one machine and also gave me N200,000 as seed money. He also linked me up with some of his guys at UBA. Since then, God has been kind to me. In fact, I am now an employer of labour and I have a capital of over N3,000,000.

“I think it is a win-win between banks and millions of Nigerian youths. While they have provided job opportunities to the youths when you go to the banking halls, you will see that they are paying attention to other issues,” she said.

In an interview, Bolaji Sanni that lives in  Maseru Street, Zone 6, Wuse, Abuja, said he stopped using ATM since the 2020 when he lost his wallet.

“I didn’t go to the bank to collect a new debit card because there are three  POS (Point of Sale) in my area,” he said.

Peter Akpebele who resides in Millionaires quarters Byazhin, Kubwa, Abuja, said he stopped using ATM to withdraw money since the advent the new naira note in October 2022 when it became so hard to withdraw money from the ATM machines.

Plateau

In Plateau State, PoS centres, as preferred means of withdrawing cash, have transformed the financial landscape in Jos, the state capital, with hundreds, if not thousands of outlets dotting the streets, and providing source of livelihood to many youths.

Our correspondent who visited several bank ATM booths along Murtala Muhammed Way, in Jos, reports that customers were no longer queuing as before, when bank customers were often seen fighting over spots on queues.

Daily Trust on Saturday observed that there are more than a hundred PoS operators located along Bauchi Road alone, providing cash withdrawal and deposit services for customers.

Residents said they prefer transactions with PoS operators on the streets because it is more convenient and easily accessible compared to going to banking halls.

Rukayya Khalil, a resident of Zinariya, said “I prefer withdrawing from PoS operators because you hardly queue there.”

Lagos

In Lagos, one of our correspondents reports that most of the ATM stands visited on Friday morning were empty and not dispensing cash.

Some of the banks visited are Zenith Bank, Guaranty Trust Bank, First Bank around Ojodu, Agidingbi and Ikeja axis of Lagos.

As at 8:20am on Friday, all the six ATM points at the GTBank branch at Ojodu were completely empty.

After about five minutes, our correspondent sighted a young woman who emerged from the banking hall with a newly obtained ATM card with the intent to change her PIN.

At the First Bank branch on ACME Road, Agidingbi, all the ATM points were also empty when our correspondent visited at about 8:50am.

As our correspondent approached the stand, a security guard waved and said “E no pay”, meaning it was not dispensing.

Ms Linda Oba, a bank customer, told Daily Trust on Saturday that she has stopped using ATM machines for a long time.

“I can’t remember the last time I used the ATM. I only use it when I am withdrawing large amounts of money and want to avoid high charges from PoS.

“We have PoS everywhere, even at the doorsteps of our homes, so spending transportation just to go to an ATM stand is a waste of money to me,” she said.

Ilorin

During a visit to some banks in Ilọrin, the Kwara State capital, along Taiwo, Unity Road, Challenge and Murtala Mohammed Way, on Friday,  it was observed that many of the bank ATMs were empty while others were not working.

At the Unity branch of Guaranty Trust Bank, only three out of the six ATMs were observed to be functioning with only one customer banking.

At FCMB, Taiwo, there was nobody at the three ATMs, a scenario that was also witnessed at the two ATM terminals of Fidelity Bank branch a few metres across the road.

Prof. Nafiu Mikhail of the Department of Biochemistry, University of Ilọrin, said the issue of PoS has brought ease of access to customers’ money, although there are cases of identity theft and fraud by some PoS operators.

“Sometimes, out of five ATMs, only one is working and the rest have no cash, coupled with restrictions and limitations on how much you can withdraw.

“These days, banks don’t even load their ATMs with cash, which is why some people are speculating collaboration between the PoS operators and the banks. We have about four banks at Challenge in Ilọrin, but you will not get cash to withdraw even during weekends from all of them apart from at peak periods when you see queues, which is even as a result of many of their ATMs not working,” he said.

On his part, Mr Muyideen Aroyan, a retail distribution manager of a beverage company in Ilọrin, said “People don’t want to go for normal banking services.

“At times, the ATM eats up your card, rendering you stranded despite you having money; it’s really frustrating.

“People prefer keeping money at home than going to the banks because of the stress they go through to withdraw. The limit of withdrawal is N150,000, but the bank’s benchmark is N20,000,” he added.

On his part, Mr Abdulmumeen Tohir Gobir, a trader, said the PoS has greatly facilitated transactions and made it easy to receive payment instantly as a trader.

“For those who fear fraud, the fact that these payment platforms, e-wallets and mobile money apps are licensed by the CBN gives us rest of mind and they are really meeting the challenge.

“I don’t remember the last time I visited a bank, except if there was a complaint, people no longer go to the bank. How will a bank tell me the limit of cash I can withdraw or send from my money? If I have N10 million, I can collect it through PoS now,” he said.

Niger

In Minna, findings by Daily Trust on Saturday revealed that people rarely go to ATMs to withdraw cash or even go to banking halls for deposits because using PoS for such transactions in their immediate environments saves time and it is less costly.

Residents who spoke with Daily Trust on Saturday also said that most shops now have their PoS machines, thereby saving themselves the task of getting cash before buying items in the market.

Also, while some banks have reduced the number of their ATMs, those that have as many as eight in Minna, the Niger State capital, rarely load cash onto them.

Our correspondent observed that many of the ATMs in some commercial banks were either not loaded or always out of service.

He, however, reports that in a distance of one and a half kilometres, or from the Government House Junction, Minna, to Mobil Roundabout, there were 46 PoS stands by the roadside.

In between the stands, Daily Trust on Saturday observed that there are branches of Zenith Bank with eight functional ATMs, Keystone Bank, two branches of Polaris Bank, a branch of Access Bank also with multiple ATMs, Ecobank with multiple ATMs, Unity Bank, Wema Bank, Jaiz Bank and Stanbic IBTC Bank, all along the Bosso Road, from Government House junction to Mobile Roundabout.

Our correspondent also counted 47 PoS kiosks from Gbeganu Junction, a suburb of Minna, to Zakkah Primary School, a distance of one kilometer.

Moving from Obasanjo Commercial Complex to Maitumbi Area, many PoS stands were seen with youths, male and female, offering services to customers.

Speaking with Daily Trust on Saturday, Umar Mohammed, an ex-staff of Access Bank said he rarely goes to ATMs since he left banking job because it costs him less using PoS than going to ATMs.

Bank officials speak

Speaking on the preponderance of PoS outlets, a branch manager of a new generation bank in Ilọrin, attributed the development to proximity.

“But the PoS also has its own challenges. A lot of people are being exposed to fraud and reconciliation during failed transactions that usually take longer periods than using the bank’s ATM,” he said.

“So it is a comparative environment. Patronising PoS terminals doesn’t mean people no longer go to the banks to do their transactions. It is just an alternative channel and facilitates transactions.

“I don’t advocate for monopoly. Let everybody fight for their customers. The regulatory body should ensure that the turnaround time for return of failed transactions is real time, although banks have what we call ‘good faith’, where some customers are given money pending the time the system returns the amount that failed based on trust and confidence,” he said.

A Jaiz Bank staff in Ilọrin, Malam Umar, who also attributed the development to the proximity of PoS operators, said “Those patronising PoS still need to have bank ATMs in most cases.

“People are still demanding ATM cards. What we can agree on is that people may be using PoS machines to do their transactions rather than going to bank ATM machines.

“Technically, every cardholder has a primary account and the moment that bank is experiencing network issues, there is no PoS you can use that you will be able to obtain network because the ATM card works in tandem with bank services,” he said.

Another bank official, Mr Olayinka, said, “The issue has to do with convenience and affordability.

“Why will I take the stress/risk of going to the bank to collect N5,000 with transportation of between N500 and N1,000, instead of just paying a PoS agent N100 without queue most times?” he asked.

While he suggested that the banks should improve, he said the situation may be hard to reverse.

“Many bank customers have leveraged on money apps like Opay, Moniepoint, Palm Pay and the like because of their ease of accessibility. With just a phone, you can open any of their accounts in the comfort of your home. But the banks will be demanding utility bills and what have you,” he said.

 Why ATMs have become mere ornament – Financial analyst

Ayokunle Olubunmi, a financial analyst said the ATMs have become mere “ornament” and they are rarely dispensing because of several factors.

He said, “First reason is the reduction in the appetite of holding cash, the amount of cash that you spend in a week has drastically reduced from four years ago, there are even weeks when a single naira will not pass through your pocket.

“One good part of the naira redesign last year is that almost everyone is adopting electronic transaction, even hawkers accept transfer.

“Another factor has to do with the cost of maintaining those ATMs, don’t forget that most of the ATMs are imported, because of the dollar, the cost of buying those ATM and maintaining them has skyrocketed. Unfortunately, there is a cap the CBN has put on the amount the bank can charge customers, such that by the time you speak to most banks, they will tell you that look, it is not a profitable venture for them,” he said.

He said while many people are moving towards the POS agents, the ATMs are still working.

“So it is not like the ATMs are no longer working but the amount of money posted to them is not like before. You will see that most banks after working hours, it might not work.

“In the medium and long term, we would still see the ATM, but we will also see the gradual de-emphasizing of the ATM, because of a lot of factors.

“As the payment system gets more effective And more Nigerians embrace it, you would see that the amount of cash that we need to run this economy will reduce significantly.

“In the far future, you will see a very low number of ATMs…You would agree with me that before, if you wanted to give someone money, what you used was cheque, but the volume of cheques in circulation has dropped significantly.

“However, it doesn’t mean that cheques have been eliminated because some banks still use middle clearing but it to an insignificant portion. I think that the ATMs would also go to that route, but that would be in the farthest future,” he said. using ATM to withdraw money since the advent the new naira note in October 2022 when it became so hard to withdraw money from the ATM machines.