Impact of CBN's new policy on POS operators

On March 9, 2023, barely a week away from Nigeria’s 2023 gubernatorial elections, there was one thing we weren’t expecting: a memo from the Central Bank of Nigeria (CBN).

Yet, we got one.

CBN released an exposure draft, proposing updates to its 2013 agency banking guidelines. CBN proposed two new restrictions. The first was retail merchants' point-of-sale devices (POS) should not be used for agent cash-in/cash-out services (aka cash withdrawals and deposits). The other was mandating agents be exclusive to one financial service provider. But in this article, we will focus on the first one.

CBN doesn’t want merchants at supermarkets, fuel stations or restaurants etc., using the same POS devices to process customer payments and offer cash withdrawals or deposit services. You may have visited some stores in your neighbourhood where the merchant also sells cash (for a fee) to those like me who would rather spare themselves sunburn from walking long distances to locate an ATM.

Merchants who offer these kinds of services are common. About 70% of agents who sell cash are regular merchants. CBN is aware of this but wants these merchants to use separate POS devices, one for collecting payments and the other for selling and depositing cash.

For context, a point-of-sale (POS) device can be configured in three ways. 1.) for merchants to collect consumer payments during a purchase at a merchant location 2.) for agents to process cash withdrawals or deposits at agent outlets (agents offer other services on their POS, i.e. utility payments, funds transfer, airtime etc. But CBN’s guidelines were specific to cash withdrawals and deposits. 3.) for merchants to process both purchase and cash-in/cash-out services.

Companies that supply POS devices to merchants and agents are called ‘acquirers’. Banks and non-banks can be acquirers. Non-bank acquirers are typically fintechs with