How to Start a POS Business in Nigeria

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POS business in Nigeria is currently a very thriving business with many operators making as high as 50,000 naira daily in profit in view of the ongoing cash scarcity in Nigeria – InsideSource

Banks in Nigeria mainly open their branches in busy areas, thus making it somewhat tedious for customers who live far away in the less-populated areas to transport themselves all the way to the bank for small transactions, not to mention the endless bank queues. This has left room for the growth of the POS industry as a trustworthy alternative, especially for services such as withdrawals, deposits, bill payments, funds transfers, and BVN enrollment.

Statistics show that by October 2021, Nigeria had completed 6.4 trillion naira worth of transactions at POS terminals. This data demonstrates the profitability of this business.

In this article, we will explore the key  steps and requirements necessary to establish a successful POS business in Nigeria. With the right resources and preparations, you can tap into this thriving market and offer much-needed services to your customers.

Requirements To Start A POS Business in Nigeria

The CBN permits POS agents to work under various POS service providers, but certain requirements must be met.

Here we highlight a collective list of requirements to startup a POS business for various financial institutions:

  • An existing business with physical location
  • Accessible location
  • Android phone with data
  • Startup funds/capital (minimum of N50,000)
  • A valid email address

Some required documents include:

  • 2 recent passport photographs
  • Bank Verification Number(BVN)
  • 2 current account references
  • Valid means of identification like National ID card, voters ID card, etc.
  • Tax identification Number
  • Current Utility/Electricity Bill
  • Memorandum and Article of Association(if applicable).

Once the financial institution approves your application, they would give you a POS machine for free or attached with a cautionary fee, so you can begin your POS business.

How To Start A POS Business In Nigeria

A POS business provides merchants/agents with a secure and efficient means of accepting electronic payments from their customers. Here are the steps to start a POS business in Nigeria:

Have An Existing Business:

Having a business is sometimes a criteria for eligibility to start a POS business. This is because the business is concerned with finances and therefore requires a certain level of caution before operation. Commercial banks exercise this caution before approving an agent for their retail banking.

You must already be in operation and have been for at least a year in order to qualify. A shop or office where you conduct business is required, as is registration of the business with the Corporate Affairs Commission.

Approach A Bank:

Once you’ve chosen a bank, the next step is to contact the bank or any other operator like OPAY  and learn more about their requirements. The CBN guide permits serving as an agent for as many banks as possible.

There is several paperwork and documentation that you must fill out regarding the terms of the transaction. The bank then evaluates your application in accordance with internal CBN standards and accepts you if you satisfy all conditions.

Additionally, as part of the prerequisites for the proposal, you must produce specific documents and have a business account for direct deposits.

Get The Equipment For Your POS Business:

As soon as your application is approved, the bank gives you the necessary equipment to start the business. Apart from your mobile phone, these other materials are usually provided by the bank:

  • POS Terminal: a portable device that facilitates payments of goods and services at bank agent locations using payment cards.
  • Card reader
  • Barcode scanner to scan bills for bill payment transactions
  • Personal Identification Number (PIN) etc.

Choose A Location For Your POS Business:

To grow in the POS business, it is advisable to choose public places that have high human traffic volume like busy streets, markets, event centers, shopping malls, etc. The high volume of movement will influence your daily profit as more people use your service.

Once you have gotten a good location, construct a shed or shop but create enough space for easy movement for you and the customers. It is also important to have a banner in front to show the various banking services you offer.

Offer Services:

After the above steps have been completed, you can then start rendering your POS services to the public.

Factors To Consider Before Choosing A Location For Your POS Business

Choosing the right location is a crucial aspect of running a successful POS business in Nigeria. A good location can attract a steady flow of customers, improve sales, and increase your chances of success. Here are some factors to consider before selecting a location for your POS business:

  • Population: Choose a location with a high population density to maximise your customer base. Busy areas such as markets, malls, and commercial districts are ideal locations.
  • Accessibility: Your location should be easily accessible and visible to the public. Customers should be able to find your business easily and without difficulty.
  • Security: Safety is a top priority when choosing a location for your POS business. Ensure that the area is safe and free from criminal activities.
  • Competition: Assess the level of competition in the area. Look for a location that has minimal or no competition to give you an edge in the market.
  • Infrastructure: The location should have access to essential infrastructure such as electricity, water, and internet connectivity. This will ensure that your business operates smoothly and efficiently.
  • Rent and Overhead Costs: Consider the cost of rent and other overhead expenses in the location. A high rent may eat into your profits and affect the sustainability of your business.
  • Local Regulations: Be aware of any local regulations or zoning laws that may affect your business. Some areas may have restrictions on the type of business that can operate in the area.

How Much Do POS Agents Earn Daily?

POS businesses can make a daily return of between N5,000 to N20,000. The business’s location, however, plays a significant role in achieving this.

Most Popular POS Service Providers

These are some of the popular POS service providers include banks and other mobile money operators:

  • GTbank
  • Polaris bank
  • First Monie POS Agency
  • Flutterwave
  • Opay POS Agency
  • Monie Point POS
  • Wema bank
  • Paga
  • Zenith bank
  • Access Closa Agency
  • Quickteller
  • Ecobank
  • Baxibox
  • PalmPay
  • UBA Monie POS agency

Advantages Of Owning a POS Business in Nigeria

  • Affordable Capital:

A huge sum is necessary for many start-up businesses, but the POS industry is not one of them. To start the business, you only need at least N50,000, which you can get back within a week or two from the business.

  • Simple Structure:

Everyone is aware of how expensive it is to pay the annual shop rent in most Nigerian cities. But for POS businesses, a complex structure is not necessary—at least not at first. Most POS companies operate out of a straightforward wooden kiosk that serves as their office.

  • Customer Traffic:

A business requires clients to succeed, and the POS industry never faces a shortage of these. People must conduct transactions constantly, which increases revenue.

  • Side Hustle:

The majority of people require a side hustle to support their employment or other ventures due to the rising expense of living. This is the ideal chance for POS businesses. You could even hire someone to run the store while keeping tabs on how many transactions are made using your wallet.

Disadvantages Of Owning a POS Business

Just as we have analyzed the pros of starting a POS business it is only proper that we also analyze the cons. Therefore, before starting a POS business, you should think about its drawbacks.

  • Fraud:

Some shady persons frequent POS establishments to conduct fraudulent transactions. To recognize a scam when you encounter one, you might need some advice from those who have experience in the field.

  • Insecurity:

Managing POS firms necessitates moving big sums of cash from the bank to your location of operation. Criminals may target POS agents and their places of business for robberies. It’s critical to maintain constant vigilance and security awareness.

  • Bank networks:

It’s never fun to experience a terrible network during a transaction because, in addition to holding up the client, it also results in unauthorized bank debits, even though the money was never actually received by the agent. The majority of POS agents use various POS devices as a result of this frequent issue. To determine whether a POS service provider has a trustworthy network, it is also vital to conduct adequate research.

  • Unreliable electricity:

Some POS devices require charging. The unstable nature of electricity in Nigeria can pose a challenge. As a result, you might need a backup power source, such as a small generator, as a POS agent.

How Much Does It Cost To Launch A POS Company?

There is no set sum for the start-up costs of POS businesses in Nigeria. Instead, they rely on the following variables:

  • Location:

The sum of money required to rent a store, kiosk, or even an umbrella stand will depend on where you plan to launch your POS business. Find out how much it will cost to set up the location where you plan to run your POS business by asking around.

  • POS system/device:

POS equipment costs between N30,000 and N100,000. The bank or Fintech business you intend to engage as your POS service provider will determine the fee.

  • Cash on hand:

To be able to carry out everyday transactions, you require a substantial sum of money. It can range, at the very least, from NGN100,000 to NGN 300,000. You can meet the financial needs of your consumers with this amount of money.

Final Thoughts

Starting a POS business in Nigeria can be a lucrative opportunity in a growing market. With the increasing demand for seamless payment systems, there is no better time than now to take advantage of this business opportunity.

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