₦airaland Forum

Across the country, Nigerians are gradually adapting to making virtual payments for goods and services while moving away from a cash-dependent economy. Still, this shift is coming at a cost — at least N2.654 billion.

In 2023, the Central Bank of Nigeria (CBN) introduced several policies intended to stabilise the economy and help the naira experience some gains.

These policies received mixed reactions as experts and Nigerians disagreed with the CBN over feasibility. A major talking point was the potential burden of bank charges.

Despite the CBN’s best efforts, Nigerians still rely on cash. But with banks’ ATMs no longer satisfying this need sufficiently, point-of-sale (PoS) merchants are the new go-to.

To access this cash, one would have to transfer the equivalent to a PoS merchant and then pay a transaction fee to get hold of their physical naira. In essence, Nigerians now buy the naira every time they need it.

THE MINIMUM COST OF CASHLESSNESS

According to the Nigeria Inter-Bank Settlement System Plc (NIBSS), as of February 2024, there were 26.54 million registered PoS terminals in Nigeria.

This figure is almost five million more than the 21.65 million figure from July 2023.

FIJ found that the minimum cost of withdrawing N5,000 from each PoS merchant was N100. This N100 cost was stable for all withdrawals below N5,000, meaning if Nigerians withdrew N500, they still would have to pay the same N100 as they would if they withdrew N5,000.

With this understanding, if all registered PoS terminals completed one single under-N5,000 transaction in a day, they would have charged Nigerians a minimum of N2.654 billion, a cost their banks would have waived if they withdrew from their own ATMs. This waiver from banks also applies to three withdrawals a month from other banks’ ATMs.

Although the CBN argues the goal of its recent policies is to discourage cash withdrawals in all forms, Nigerians still rely on cash for transportation, trade and several other economic activities.

Major opponents to the success of the cashless policy are network failures and poor telecommunication structures. The country battles poor service delivery, and in some communities, there exists no network coverage to transact virtually, leaving residents with the only option of travelling long distances to withdraw cash in bulk and distribute it to others for a fee.

SOMETIMES, THE COST IS HIGHER

In Ikeja, the capital city of Lagos State, FIJ found no fewer than five PoS merchants stationed close to each other opposite an Access Bank ATM outlet.

Stationed along the road leading to what Lagos residents have come to dub ‘Computer Village’ are these many merchants waiting to hand cash to whoever had difficulty getting them from the bank. Finding customers was no hassle. The big problem these merchants faced was the emergence of more merchants.

When FIJ spoke to them, they expressed no concern for competition from the bank.

“E no de work na,” one merchant said with the wave of a dismissive hand despite a visible number of people lining up at the ATM.

Another would tell FIJ that the ATMs were never stable. Sometimes, they worked; other times, they failed. Not working was more common for these machines. In the market, there were no fewer than six banking halls and cash machines operating close to each other. This did not deter the merchants.

However, not all PoS machines worked. Some merchants had two to three machines so when one failed, the other worked. Not all machines were used for withdrawals either. Some shopowners had machines to receive money for goods and services they rendered. While some of them combined cash withdrawals with business, others stuck to just business.

For those who stuck to primarily aiding cash circulation, FIJ found out how much they made on average.

HOW MUCH A NAIRA IS WORTH

If N5,000 costs N100, then a naira would be worth N0.02 when one considers the math. If everyone got their naira from PoS merchants, they would be spending N1.02 for every purchase that is priced at N1.

After speaking with several merchants, FIJ was able to learn about how they got their money, how they vary charges, and how much they made on average.

One such merchant was Afolabi Kolawole. Like most merchants, he has a minimum fee, and sometimes charges higher fees for customers he believes can pay.

“Some customers come to withdraw N5,000. I charge them N100. Some come for N10,000, and I charge between N200 and N300,” he told FIJ.

“If it is cash transfer; they bring cash to me and want me to help transfer money to a destination account, I charge between N200 and N300 for every N20,000 depending on how the customer patronises me.

“During the cash scarcity era, banks gave us a maximum of N5,000 instead of N20,000, and for every withdrawal, they took N35. Some banks gave us N10,000 per withdrawal, and deducted N35 for each withdrawal. There was a bank that gave as high as N20,000 for the same fee.

“Since cash began circulating, I have had no need to visit a bank. I have customers who regularly reach out to me to ask if I need cash. They provide it to me.

“In a day, I make between N3,500 to N7,000 in profits. I have about 16 withdrawal customers on average daily, and about four customers for cash transfers. That is about 20 customers per day.”

Bridget Nnamani says she goes as high as N150 per N5,000 withdrawal. She said when she gets N100 to N150 profits, the company whose machine she uses, keeps N5, while she keeps the rest as profit.

Sometimes, she generously does not charge a fee to her loyal customers who deposit money in their accounts through her machine or who transfer money to other accounts. Her main income source is cash withdrawals.

To get her cash, she goes to banks. When FIJ asked her how much the banks charged, she said, “Their charges are not much. I don’t even know but it is not much.”

Her profit goes as high as N5,000 a day. “I can get like 30 to 40 customers on a good day, and on a bad day, I might make about N3,500,” she told FIJ.

With each merchant getting at least 20 paying customers a day, if only one out of every four of the 26.54 million registered machines served withdrawal purposes, there would be at least 6,635,000 machines nationwide for withdrawals.

When one multiplies this number by the N2,000 a day from 20 paying customers [assuming they all make a minimum N100 worth of transaction], that would mean a N13.27 billion minimum daily cost to Nigerians. Six times higher than if all machines performed just one N5,000 transaction a day.

ECONOMIC IMPLICATIONS

Nigeria has a rapidly growing population. At press time, the country’s population is estimated to be around 236.46 million people.

With this many people, there exists the need for a robust economy to cater to several needs.

However, the country continues to experience a decline in its GDP per capita owing to policies that the Bola Tinubu administration introduced.

The International Monetary Fund (IMF) revealed that Nigeria’s GDP per capita shrunk to $835.49 in 2025 from $877.07 in 2024, indicating a 4.74 per cent dip.

Meanwhile, the National Bureau of Statistics (NBS) has begun rebasing its calculations to include proceeds from illegal activities as part of the country’s GDP.

While the government considers new ways to make the economy look better than it is, a lack of cash means among the taxes a minimum wage earner has to pay and the cost of living they have to endure is a 2% withdrawal fee, which translates to N1,400 for every 70,000 —at least.

TUANKU:
When you calculate the cost of transportation to the bank or cost of buying petrol to drive to the bank, add that to the delay and stress at the bank...i will gladly pay the extra charge and use POS.

TUANKU:
When you calculate the cost of transportation to the bank or cost of buying petrol to drive to the bank, add that to the delay and stress at the bank...i will gladly pay the extra charge and use POS.

monex:
this title is misleading.

dunno if it is the english or the maths

cremedelacreme:
Which kain calculation be this?

If Nigerians withdraw 5K, POS makes 2.654 Billion. How?

The poster is on expired drugs.

monex:
this title is misleading.

dunno if it is the english or the maths