CBN kicks as PoS operators hike charges without approval
An alleged illegal hike in service charges by Point of Sale (PoS) operators has drawn the ire of Nigerians, who are gasping for breathe, especially with the gale of new charges, taxes and soaring inflation.
Beyond the new charges and taxes, the peeved Nigerians who are also burdened by rising food and transportation costs, saw absolutely no need for the illegal charges hike, which has already pitched the operators against the Central Bank of Nigeria (CBN).
While the CBN insists that it has not sanctioned a set of increases in the service charges by PoS agents, the operators said the unfriendly business environment has necessitated an upward review of their charges.
The Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) had announced that with effect from July 17, 2023, to withdraw N1,000-N2, 400, a charge of N100 would be paid while withdrawal of N3,500-N4,000, attracts a charge of N200; N4,100-N6,400 (N300); N6,500-N7,900 (N400); N8,000-N10,900 (N500); N11,000- N14,000 (N600); N14,500-N17,900 (N700) and N18,000-N20,000 (N800).
Deposits from N1,000-N4,900 attract a charge of N100; N5000-N10,900 (N200); N11,000-N20,900 (N300); N21,000-N30,900 (N400); N31,000-N40,000 (N500) and N41,000-N50,000 (N600).
The announcement by the PoS operators to jack up their charges jolted Nigerians, especially rural dwellers who now almost entirely depend on the services of PoS agents to make quick withdrawals or deposits.
Even the Concerned POS Operators in Nigeria, through their Chairman, Mr. Kayode Salako, had described the increase as outrageous and anti-people, saying the charge would compound the woes of many Nigerians.
He said: “While we agree that the new cashless and fuel subsidy removal policies have greatly affected businesses, we think the best thing, for now, is for the association to fight for how to make business easy for agents and the masses by fighting for some preference from the government to at least let the PoS operators have access to cash if it would take the bank to increase their daily withdrawal limit.”
Yesterday, the CBN told The Guardian that it was still engaging the POS operators and would soon find a way around the issue.
The CBN Director, Corporate Communications, Dr. Isah AbdulMumin, who spoke via telephone, said: “Yes, the apex bank is aware of the move by PoS agents to increase transaction charges. We at the CBN understand their plight. We know their challenges but we are engaging with them to find a common ground.”
Although the new charges were not yet operational in Abuja, the nation’s capital, and Lagos State, the commercial capital, findings showed that operators in other parts of the country had effected them.
A PoS attendant in Abule-Egba area of Lagos State, Favour Asagwara, confirmed that old service charges were still obtainable in the area.
“It’s still N100 for N5, 000; N200 for N10, 000; N300 for N15, 000 and N400 for N20, 000 and so on. It was only during the new naira policy that the increase was last effected,” she said.
However, in some parts of Ogun State, the operators have continued to milk their customers, especially in areas where there are limited or no trace of banks.
The Guardian can confirm that in Ifo, Arigbajo, Apomu, Papalanto, Ewekoro, Itori, Wasinmi and its environs, the PoS operators were charging as high as N400 for N10,000, while N200 was charged for withdrawing N5,000 as far back as a fortnight ago.
Operators in Enugu State have also raised their charges. From N100 per transaction of N10,000, they now collect N200 per transaction of N10,000 and this is applicable for both withdrawal and deposit.
One of the agents in Enugu, who identified herself simply as Ugochi, stated that circumstances beyond their control forced the new increase, stressing that they were not making much gains out of it.
She added that the cost of operations and maintenance of their services from the owners of the machines and the connecting banks were responsible for the sharp increase. She, however, added that the increase has reduced her patronage.
A resident, Mr. Jude Onwe, while lamenting the development, said that it would bring more hardship on the people.
“Cost of services is increasing by the day. The ugly thing is that it leaves one without a good plan any longer. Those of us who are into the transport business are not finding it funny. You wake up in the morning, buy fuel and struggle to break even. It is a dangerous situation,” Onwe said.
He added: “It is not their fault; it is a system fault. There are no regulations. I tried to ask one of the operators why they increased their charges and she told me that the banks have increased their charges. She said they pay maintenance fees for every transaction; that unless they increase, they will be out of business.
“So, what I think is that we are gradually getting back to the days of cashless policy where you pay much to access the cash. What they have done is about a 100 per cent increase and because there are no checks, the people must live with it. The only difference at the moment is that the cash is there, but you must pay to get it.”
A trader, Justine Nwakwo, said that himself and others in the same line of trade with him rely more on the PoS operators for their transactions, stressing that, “as it is, many people may now have to resort to the banks to do their financial transactions.”
He added: “I think you pay less by transacting with the banks. The exception is that PoS transactions are easier and more accessible. But for the banks, you must look for their locations. You end up spending hours more than you would have done with the PoS. The only thing here is that it leaves one with a choice to either make do with the banks or pay for the services of the PoS. The truth is that the economy is not looking fine. Incomes are not increasing. Those of us in businesses can at least manage with price increases but those who live on monthly fixed incomes are not finding it easy at all,” he noted.
He added that with the recent increase, queues at the banks and ATM machines would increase, as transacting in the banks would reduce charges.
A student of the Ogun State Institute of Technology (OGITECH), Igbesa, where the new charges have been implemented, Sunkanmi Okesola, accused the operators of being insensitive to the plight of the masses.
“The current service charge increase is uncalled for. Some of the operators are greedy. They are still reminiscing about the huge profits made during the naira scarcity occasioned by the CBN naira swap policy.
“Their advantage is that usage of the PoS is quicker, saves time and nearer to us. But since the new regime has been introduced, myself and other schoolmates have returned to the banks. We trek to the nearest ATM point, and endure the queue and the stress. Since they want to make things hard for us, we have also found an alternative by returning to the banks,” she said.
A female operator approached by The Guardian at the Egunla Estate, Arigbajo, Mrs. Moradeyo Ogunsanwo, fixed her service charge at N400 for N10, 000. According to her, the service charge in the area was due to the distance between the area and banks.
“The nearest bank to Arigbajo is at Ifo, which costs N200 to and fro. The long queue at the banking hall and loss of precious man-hours are the things we put into consideration to fix the service charge. When the customers consider what they are going to spend at the nearest ATMs, they prefer to withdraw or deposit money with us,” she said.
Another PoS operator based in Abeokuta, Mr. Samuel Fakeye, who confirmed that there has been a slight increase in the service charge in the town since last month, stated that he charged N300 for withdrawal of N10, 000. Fakeye noted that the new service charge was very necessary because of the rate of inflation.
“Even if you want to board a taxi to the bank now, the price has increased. The prices of other things like the printing paper for the PoS machine have also increased. Even the risk of handling cash is part of the development.
“At times, you will be debited unnecessarily, which most times draw back the business for weeks as you visit the bank to get the money back. Even, the cost of the PoS machines and others are the things we factored-in.
“The charges are not the same across the states; it depends on patronage. When you get more patronage, you charge less. Some people who have enough money to do the business fix lower charges. Those that are managing with little cash have to put in the necessary charges.”
In Rivers State, a civil servant, Mrs. Yinka Sodeinde, said that the service charge for a withdrawal of between N1, 000 and N5, 000 was still N100 and N200 for N10, 000 and so on.
“I use them most times because there’s no bank close to my house. I enjoy fast withdrawal without the hassle of having to queue in banks. I hardly go to the bank for withdrawal except I have other things to do.”
A teacher in Ibadan, Oyo State, Mrs. Yinka Fatinikun, who said the operators save most people a lot of stress, also said: “If I have to go to the nearest bank to my house, I usually take a bike and it costs about N400. If I approach the PoS operators in my area, only N100 will be removed, which is still okay.”
An operator in the Bwari area of Abuja, Mrs. Bridget Samuel, told The Guardian that increasing the charge on PoS transactions would surely affect her business negatively.
Acting CBN Governor, Folashodun-Shonubi
“People are complaining that we are charging N100 for N5,000. What will they now say when you tell them that it is N300? They will just leave you and go and queue at the bank.”
A resident in Abuja, Mr. Yakubu Abin, who visited one of the PoS agents to make withdrawal, warned against increment in charges.
His words: “When they were doing naira redesign they gave us crazy charges. We accepted it because we had no option. But this time around, they should just not try it.”
In 2012, Nigeria developed its first financial inclusion strategy with the target of bringing up to 80 per cent of its population into the financial system by 2020, according to Enhancing Financial Innovation and Access ((EFInA), a financial sector development organisation.
The country failed to meet the target as financial inclusion grew to 64.1 per cent in 2020 from 63.2 per cent in 2018. Although the inclusion rate dropped marginally from 36.8 per cent in 2018 to 35.9 per cent in 2020, the excluded adult population of 38.1 million in 2020 was higher than the 36.6 million in 2018, meaning 1.5 million adults fell into the exclusion circle in the last two years to 2020.
Out of the 106 million adult population in 2020, 66 per cent of banked people are in urban areas compared to 34 per cent in rural areas.
The World Bank’s 2021 Global Findex report also showed that Nigeria’s banked population increased by 15.6 percentage points to 45.3 per cent. This implies that almost 56 per cent of Nigerians are unbanked.
Globally, agency banking is recognised by policymakers, researchers and development agencies as a financial inclusion initiative that has remained an integral tool in developing economies, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.
Data from the Shared Agent Network Expansion Facilities show that the number of bank agents surged by 1,456.9 per cent to 1.3 million in 2022 from 83,500 in 2018.
Apart from the data on the number of bank agents, a recent International Monetary Fund survey showed the number of bank agent outlets per 1,000 square metres increased by 380.2 per cent to 680.9 in 2021 from 141.8 in 2020.
In the first quarter of 2023, the volume of PoS rose by 37.5 per cent to 387 million from 281 million in the corresponding period of last year, according to the Nigeria Inter-Bank Settlement scheme.
While some analysts see some positives in the increment of charges by PoS operators, others expressed fears that it may erode the gains of recent years.
A public affairs analyst, Dr. Ikenna Uwaga, sees the development as part of the economic downturn affecting every sector. While agreeing that it may create more poverty and even lead to loss of jobs, he added that the cost of services for other sectors would soon follow suit.
Uwaga, however, stated that the development was a plus to the cashless policy of the Federal Government, explaining that it would boost online transactions.
“I think what the economy is looking up to by this development is to reduce the amount of cash that people carry about. If I can pay for a transaction with online transfer with less difficulty, what do I need cash for? That is the point and that is what this increase is trying to promote. I see it that POS operators must quickly start thinking of alternative ways of survival because a continuous increase in service charge may take them out of business. If the online channels are working effectively such that you can use your ATM, make your transfers using your phone, then they have issues to contend with. This is something they must guard against while fixing their rates,” he stated.
To the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, the situation is dicey.
His words: “Yes, I agree with them that prices of everything are going up and it is affecting their business and so they too need to raise their charges, but I don’t think their charges should rise as high as they are proposing.
“They should know that people have options; those who usually do not go to ATM may just start going there if it becomes cheaper for them. Their business is also competitive; judging by the number of operators, if one is not careful he may lose customers to others that are willing to charge less.”
For an economic analyst, Jonathan Aremu, there is no need to fix charges for PoS operators.
According to him, each operator should charge whatever he wants because it is a free market.
“If anyone is charging too high, he will lose customers while those whose charges are reasonable will remain in business. Determining charges for PoS operators is the least of the things that should bother us for now,” he noted.
