Dec 12 (Lagos) - Over the past year, due to CBN policies the business of POS operators has exploded all over the Country and now you hardly find a busy spot without someone sitting with a POS machine ready to sell you some cash.
So what is the business - It the most basic rental business in reality, here you are charging a rent for holding physical cash. You buy a POS debit machine from a Bank and open an account linked to that machine. Then you sit at a busy spot where you service people who cannot access an ATM or Bank branch to withdraw money or make a transfer. You charge a 2% transaction fee just to hand out cash.
You are in reality an ATM machine in person who goes to an actual ATM machine to source the cash to sell to your clients or you go to a bank branch to source cash to sell to your clients. In the process, you also deplete the already scarce cash notes in bank branches and ATM's ensuring that people cannot get them from banks and ATM's.
Its a great business model for banks who get to sell these POS machines and also sell cash to these POS operators who add Premium and sell the same cash to end users. So end users have to pay to collect cash which they could have done for free by going to a bank branch or their Bank ATM.
So how does this really affect people? - It now becomes in the interest of the Banks to not give cash to customers and make them buy cash from these POS operators so they can get fees on that cash. It also encourages banks to not have cash in the ATM's and avoid all the costs associated with maintaining ATM's. Just have people siting on pavements by the road with these machines instead selling them cash notes.
Of course there will be an army of journalists ready to spin this in favor of Banks calling it "job creation" and "innovation". In reality if you look deep within a lot more jobs can be created in serving ATM's across the country than having people go through these POS operators siting by the roadside hawking cash.
Its something unique happening in Nigeria, you cannot find such business models in any serious economy. You got people buying cash as a business activity.
Public apathy towards Banks - Talking to people who patronize POS operators and pay such high fees of 2% or more we found that that there was a general feeling of apathy towards the Banks in the market. People felt that POS are better for them because they don't have to go to banks and stand in a queue or spend transport money to ATM's which will likely disappoint you. So people agree to pay such fees on accessing their cash while many are illiterates who don't know how high that 2% fees really is for the service they are getting.
For example, when I recently asked a friend who was visiting from USA to use POS operator for convenience and pay the 2%, he out rightly rejected the idea and instead went to bank where he spent an hour in the line and was finally given 20% of the cash he requested because there was no cash at banks. Eventually he came out of the Bank and went to a POS operator sitting just outside the bank and there was enough cash available there.
So if you have so many POS operators going to the bank branches to cash out all the cash is it any wonder that there is no cash available inside the Banks anymore.
Banks benefit from this situation because they too earn fees selling cash to POS operators so it is the end customers who will suffer all this fees.
CBN has failed the bank customers once again. They seem oblivious to what is really happening on the ground or maybe they are ok with cash being hawked on the streets like amala and suya.
reporting for easykobo.com on Thursday, Dec 14 2023 from Lagos, Nigeria