POS: The new normal bank

Mobile money agency, otherwise known as PoS business, has been on the increase in the country with vendors easily spotted in every nook and cranny. KOLA MUHAMMED takes a look at the nature of the business, its impact on the economy, attendant challenges, health risks as well as the implication for commercial banks.

“YOU barely need to walk ten metres before you’d find a PoS agent. They are virtually everywhere and I must confess that they have made conducting financial transactions much easier. Instead of going to queue for hours at the bank, I can easily do whatever I want to do in minutes and move on with my life.”

This was the confession of Tolu Faniyan, a trader, who admitted that the proliferation of mobile money business outlets on streets meant that she could avoid the stress of going into a banking hall.

In what corroborates Faniyan’s words, Gbenga Olaleye, a university student who does not have a bank close to his residence, told Sunday Tribune that though the alternative form of banking came with charges, it was better than having to get to the bank as early as possible in order to avoid a long queue in trying to deposit cash or use the automated teller machine (ATM).

“If one wants to enter the banking hall these days or use the ATM, one would have to get to the bank around 5am to stand a chance of avoiding large crowds. More so, I have to travel a considerable distance before I can get to a bank. I avoid all these exhausting scenarios by patronising these people for a fee which is not worth all the stress at all”, he said.

Sunday Tribune’s further interactions revealed that many more Nigerians hold similar opinions.

Armed with a Point of Sale (PoS) machine, often seen sitting down inside a kiosk or under a branded umbrella, mobile money agency  operators are engaged in a growing business initiative which appears to capitalise on the gaps of traditional banks, especially in the face of the COVID-19 outbreak, in providing an alternative banking option to customers.

The onslaught of the novel coronavirus means that people are unable to assemble in public places, with crowds discouraged at all levels of human interaction. Hence, only a handful of millions of Nigerians can be allowed inside banks to conduct transactions. Also, a significant percentage of people stay in areas which are far from banks and many who do not stay in towns, just like Olaleye, have to find their way to such places.

Yinka Adewale, founder of Kudi, an online financial solutions platform, disclosed that agency banking was bound to be the new norm given that over 60 million adult Nigerians do not have access to financial services and traditional banks could not establish banks everywhere because of the cost of setting up one, including the logistics.

“I always say traditional banks are always going to be relevant but they can’t cater to all Nigerians. Over 60 million Nigerians need financial inclusion because they don’t have access to financial services. There can’t be banks in every city because building banks all over would cost billions.

“Even an ATM costs nothing less than ₦20 million to set up. But the cost of agency banking is less costly and easier to set up. So, mobile agency banking is bound to be unstoppable because it is bringing financial services to people on their doorsteps,” Adewale said in an interview.

 

How does the cash flow?

Speaking to Sunday Tribune, Ifeyimika Samuel, who owns a chain of PoS outlets in Osogbo, Osun State capital, sheds light on how money agents are increasingly becoming less dependent on banks for cash.

“When it comes to providing cash for people who make withdrawals, we don’t really patronise banks again. In the ecosystem of business, there are many who deal with cash and need to deposit the huge cash into their account. Petrol stations, for instance, deal a lot with cash. We simply collect the cash from them, use the cash for our customers who need money and give the petrol station people the digital money they want. It’s simple and everybody is satisfied. Another advantage is that we close very late in the evening, not the regular 4pm”, he said.

 

Job creation

Mobile money agency has proven to be a job opportunity for youths and Ifeyimika Samuel confirms to Sunday Tribune that he has about 30 youths all of whom are virtually under age 25.

“The population of youths who are unengaged is enormous, so, there are more than enough youths who are either secondary school leavers or undergraduates on break, to employ. There are about 30 people that I engage and I know many others like me who engage in ten folds of youths that I engage”, he stated.

Tolulope Adeleye works as a mobile money agent supervisor in Ogun State and confirmed that the number of youths she supervises directly and indirectly in her local government area alone is about 150, not to mention those using platforms different from hers as well as other local governments.

President of Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), Osun State chapter, Alli Akeem, spoke to Sunday Tribune that mobile money agency had created over thirty thousand jobs for people in the state in about three years, without taking other states into consideration.

“By the virtue of my position, I can confirm that mobile money agency, for over three years that we have been practising it in this state, has provided jobs for over thirty thousand people. It has even become a full-time occupation where people come to learn the trade before they even stand on their own.

“And the number I’m talking about is just for Osun State alone. If we take other states into consideration, we could be looking at over a million jobs in the country”, he explained.

Funke Osunsanmi, a mobile money agent, also speaks to Sunday Tribune on the nature of the job, the demands and the challenges.

“If one would compare it with doing menial jobs, this job [mobile money agent] is way preferable. Usually, we sit in a place and customers come to meet us on the spot for the services they want us to provide for them. The remuneration we get is usually between 10 and 20 thousand naira and it is not bad to have such coming in at the end of the month when you consider that there are many losing their jobs in droves.

“The only headache I have is when customers have chargeback issues. Chargeback is when a customer withdraws and money is deducted from the customer’s account but does not reflect in my own account. When it comes to money, people can be really aggressive,” Osunsanmi added.

 

Implication on Nigerian economy

Economics expert, Oluseyi Odunuga, states that the emergence of mobile money in Africa has been a blessing on the Nigerian economy and that of Africa at large, while outlining the cyber risks that attend the innovation.

“Since the introduction of mobile money system to Africa, Nigeria has been the largest mobile money market on the continent. One of the reasons for this is the convenience against our large population. It is driving the Nigerian economy towards financial inclusion and gradually a cashless economy.

“It has created more jobs for youths and can be said to have indirectly reduced the rate of crime in the country. Particularly, it has contributed to the increase in Nigeria’s Gross Domestic Product (GDP) because they are small-scale businesses, and they serve as a source of additional income for the Nigerian government through the Central Bank of Nigeria.

“On the other hand, there is the risk of hacking of credit card details. Along with the proliferation of mobile money agents, cybersecurity should also be upped in order to reduce the risks. Users should also be careful in the way they handle their cards and card details,” Odunuga added.

 

On chargebacks and other issues with PoS

AMMBAN leader, Alli Akeem, disclosed that their association has an understanding with commercial banks and CBN as to fast-tracking the issues customers have with withdrawing on PoS.

“Issues are normal to come up when using Point of Sales and from the quarterly financial inclusion meeting we have with commercial banks and CBN, we tender all these issues. Normally, these issues don’t take more than five working days to address and we are still working on bringing these challenges down to the minimum.”

A bank official who simply wanted to be identified as Blessing told Sunday Tribune that their customers are often advised to deal directly with banks and designated ATMs of such banks as resolving issues that occurred on third party platforms often take longer to reconcile.

 

Is mobile money agency a threat to commercial banks?

Sunday Tribune spoke with a manager at First Bank of Nigeria, who chose to stay anonymous, on the emergence of mobile money agency and whether it stood as a potential threat to commercial banks.

“Agency banking is aimed at promoting banking to the millions of unbanked Nigerians, especially those in the rural areas where access to banking services is limited, though it is also prevalent in urban areas.

“They have three primary functions which are to receive deposits, provide withdrawals and open first tier account for people. The CBN continues to encourage banks to diversify by growing their agency banking because it is the supervisory agency.

“Hence, being an initiative of CBN, they are to complement our efforts in ensuring that millions of Nigerians who are yet to be banked are reached. To add, not only do commercial banks provide PoS for mobile money agents, we also have agencies which are an extension of the bank. Apart from First Bank, there are other banks which also have their own mobile money agency division.

“However, in the long run, while mobile money business may not be a threat to the business of commercial banks, there is likely to be a reduction in the number of staff that works within banking halls as some would lose their jobs in the process”, he stated.

 

Point of Sale or Point of Fraud?

On the safety of POS operations, the First Bank manager affirmed that banks have been mandated to put in place conditions which must be met before interested persons can be registered as agents.

One of the requirements was the provision of a known location for the business which would be verified by the bank while a PoS machine would not be issued until a prospective agent meets certain transaction threshold.

“The safety of customers PIN lies with the customers as even a bank does not have access to a customer’s PIN not to talk of agents. PINs are compromised when customers are not careful in imputing it into PoS or automated teller machines”, he explianed.

 

COVID-19 risk

With COVID-19 still raging across the globe, Nigeria inclusive, Omoyiola Dolapo, a medical practitioner at Obafemi Awolowo University Teaching Hospital, Ile-Ife, Osun State, spoke to Sunday Tribune on the viral exposure that the public usage of PoS could bring as well as ways to tackle it.

“The novel coronavirus is one which is not only air-borne but can also settle on surfaces which include PoS machines and ATMs. So, a lot of caution needs to be made when performing activities like this. In these instances, washing hands with soap for at least 20 seconds (according to WHO) and using 60-70% alcohol-based sanitisers before and after making contact with public surfaces need to be emphasised.

“Sanitisers are handy and should always be with us, in our pockets, cars and bags. So, whenever there is physical contact with exposed surfaces, we can sanitise our hands. Also, there is the option of using electronic means to conduct financial transactions. With this, physical contact and the risk of contracting the virus will be minimized”, he said.

 

Additional reporting by LUCKY UKPERI

 

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