The POS industry in Nigeria has become a lucrative business venture due to the increasing demand for cashless transactions. With the rise of e-commerce and the need for convenient payment options, the POS industry has experienced significant growth in recent years. This growth has created an opportunity for individuals to start their own POS businesses and generate income.
To start a POS business in Nigeria, there are certain requirements that must be met. Firstly, you need to register your business with the Corporate Affairs Commission (CAC) and obtain a business name. You will also need to obtain a Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS) and register with the Nigerian Communications Commission (NCC) to obtain a SIM card for your POS machine.
In addition to these requirements, you will need to partner with a bank to provide the necessary infrastructure for your POS business. Some of the recommended banks to partner with include First Bank, Zenith Bank, Access Bank, and GTBank. These banks offer competitive rates and reliable services that can help you grow your business.
Once you have met the necessary requirements and partnered with a bank, you can start your POS business. You will need to purchase a POS machine and obtain the necessary software to process transactions. You can also offer additional services such as bill payments, airtime recharge, and money transfers to increase your revenue.
In conclusion, the POS industry in Nigeria is a profitable venture that can provide individuals with a steady source of income. By following the necessary requirements and partnering with a reliable bank, you can start your own POS business and tap into the growing demand for cashless transactions in Nigeria.
What is a POS business, and how does it work?
In 2013, the Central Bank of Nigeria (CBN) introduced the agent banking system, which marked the beginning of the Point-of-Sale (POS) business in Nigeria.
POS agents, who can be banks, Microfinance banks, or Fintech companies, are responsible for operating and facilitating transactions through a POS service provider.
The POS business functions by offering various financial services to customers, such as withdrawals, money transfers, and bill payments.
One of the key features of a POS device is its ability to process transactions using the customer’s debit card. The agent simply selects the transaction type and enters the amount on the POS terminal.
To complete the transaction, the customer inserts their debit card and enters the four-digit PIN. The POS network then connects the card to the bank’s server and processes the transaction. If successful, a transaction receipt is printed for both the agent and the customer.
Is the POS business profitable in Nigeria?
Indeed, it is. Allow me to explain the rationale behind this statement. The majority of Nigerian banks tend to establish their branches exclusively in the most bustling commercial zones within each town. Even in the case of significantly large towns, it is highly likely that there will only be a single bank branch available.
Consequently, individuals residing in distant areas are compelled to rely on bicycles or buses to reach the bank, and subsequently, they must find alternative means of transportation to return to their homes.
This predicament is encountered by numerous Nigerians on a daily basis, and it is where Point of Sale (POS) agents come into play, offering assistance to alleviate this issue.
Which bank is best for a POS business in Nigeria?
Most commercial banks in Nigeria provide POS services to interested agents. Here are some of the banks preferred by most POS agents.
- First bank
- Wema Bank
- Opay mobile bank
- Bankly POS
- Monie Point POS
- Kudi bank
- GTbank
- Paga
- Zenith bank
- Access bank
- Quickteller
- Ecobank
- Baxibox
- UBA
Note that you must first be a user of a bank before you can register as a POS agent of that bank. You must create an account in that bank and perform regular transactions.
Requirements for starting a POS business in Nigeria
1. A good location
2. A POS device
3. Startup capital
4. Official requirements
- Recently taken Passport photographs
- Bank Verification Number (BVN)
- Account references
- CAC Certificate
- Tax Identification Number (TIN)
How to start a POS business in Nigeria
Now let’s get to the main topic of how to start your POS business in Nigeria. We have outlined everything in 6 steps.
1. Get a good location
Finding and securing a good location is very important for any POS business in Nigeria. If you have a good location, big sales and profit are assured.
How to identify a good location for a POS business
A good location will be a very busy place, and we all know that. But there are also some things to consider.
#1. Network
Have you ever visited a POS outlet and the agent told you there’s no network? Yes, it happens many times.
If you operate your POS business in a location that has a good network or service, you will perform all your transactions as smoothly as possible.
On the other hand, a location that has a poor network will give you a lot of trouble, most of which are not expected. If a customer were to visit your shop and you don’t have any network, such a person may not visit again (except if you’re the only POS agent in that area).
#2. Security
Running a POS business means that you will be handling a lot of cash. Everyone knows this, which makes a POS outlet one of the easiest targets for shoplifters, petty thieves and armed robbers.
This is why you should do in-depth research on any neighbourhood or area before sitting up your POS shop there. Ask around and determine the crime/theft rate.
#3. Competitors
If there are already more than two POS agents in your desired location, it is advisable to find another place.
Many people will have already been familiar with the existing outlets, and many will not patronize your shop in large numbers (unless one of your competitors is unavailable that day).
#4. Other factors
There are also other factors to look into before selecting a specific location for your POS business.
- The population of people in that area
- Profile of people in that area (most rich people don’t usually use POS)
- Closeness to banks (not many people will use POS services when a bank is just a 10-minute walk away)
2. Create your POS business plan
The fact that it’s a localized business doesn’t mean you shouldn’t create a business plan. Though not compulsory, it will help you stay on point.
On your business plan, you will outline your aims and objectives. You will also calculate and estimate how much it would cost you to start your POS business in Nigeria.
3. Raise the capital required to start your POS business
This step is pretty straightforward. After you have estimated how much it would cost you to start a POS business in Nigeria, you should come up with a way of how to raise that amount.
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4. Acquire a POS machine
You can get a POS machine from most commercial banks in Nigeria, as well as a few microfinance and Fintech banks. Here are a few things to consider before choosing your POS service provider.
- Network or service
- Cost of POS machine
- Transaction charges
Some POS service providers charge 0.65% and ₦10 for any transaction below ₦10,000. Transactions above ₦10,000 will cost ₦50. However, some banks only charge ₦10 for any type of transaction.
So make sure you compare with other POS service providers before making your choice.
5. Get a shop
Having done your research and made your decision concerning the location of your new POS business, the next thing to do is to look for a vacant shop in that area.
If it’s a very busy place such that all nearby shops are occupied or already rented out, then you should consider getting a small container or mounting a big umbrella.
Conclusion
A POS business is very profitable in Nigeria, as long as you find a good location. If you can’t find a shop to rent in your desired location, you can arrange for a container and operate your business there.
You can also get a big umbrella, a plastic table, and some chairs. This would add to your security (as no thief will rob you in front of everyone). However, you will be exposed to harsh weather conditions.
Whichever one you choose, it won’t affect your customers. You will earn a profit on each transaction, and it will all add up. By the end of the week, you will be smiling at how much profit you’ve earned.
Greatness from small beginnings!
