The Point of Sale (POS) business in Nigeria has gained massive traction in recent years, primarily due to the increasing demand for convenient banking services in both urban and rural areas. As a growing part of Nigeria's financial ecosystem, POS businesses bridge the gap between banks and customers by offering essential financial services such as withdrawals, deposits, bill payments, airtime purchase, and fund transfers.

Starting a POS business in Nigeria is an excellent opportunity for entrepreneurs who want to provide a much-needed service while earning a decent income. In this guide, we’ll break down the process, covering all the requirements, steps, and tips to get your POS business up and running successfully.

What Is a POS Business in Nigeria?

A POS business involves using a POS terminal or machine to facilitate financial transactions between customers and banks or mobile money platforms. The POS agent earns a commission for every transaction they process, making it a profitable business, especially in areas where access to banks or ATMs is limited.


Many POS agents in Nigeria operate as mobile money agents, offering additional services such as selling airtime, paying utility bills, and performing online transfers. Given the country's growing population and limited banking infrastructure in remote areas, the POS business has become an essential part of the economy, especially for the unbanked population.

Why Start a POS Business in Nigeria?

Starting a POS business is not only profitable but also provides a critical service to millions of Nigerians who have limited access to traditional banking services. Here are some compelling reasons to start a POS business in Nigeria:

    

• Low startup capital: Compared to other businesses, the POS business requires minimal capital to start, making it accessible to many entrepreneurs.
• High demand for services: The need for easy access to cash withdrawals, deposits, and bill payments is growing, particularly in areas with few bank branches.
• Flexible business model: You can operate the business from anywhere, whether in a kiosk, small shop, or even as a mobile agent.
• Regular income stream: As an agent, you'll earn commissions for every transaction. The higher the volume of transactions, the greater your profit.

Step-by-Step Guide to Starting a POS Business in Nigeria

1. Understand the POS Business Model

Before jumping into the business, it’s important to have a thorough understanding of how the POS business operates. POS agents work as intermediaries between financial institutions and customers, facilitating basic banking transactions through POS terminals. You earn a commission on every transaction, including cash withdrawals, deposits, transfers, and utility payments. The more transactions you handle, the higher your earnings.

Knowing the commission rates for each type of transaction will help you plan your pricing strategy and maximize your earnings. For instance, you may earn higher commissions on withdrawals compared to bill payments or airtime purchases.

2. Choose a Business Structure

When starting a POS business, you have the option of either operating independently or partnering with established banks and mobile money operators. Most beginners prefer partnering with banks or mobile money platforms like:

    

• OPay
• Paga
• Moniepoint
• Firstmonie (First Bank)
• Kudi
• Access Closa (Access Bank)
• PalmPay

By partnering with these institutions, you gain access to the necessary tools, including the POS machine, transaction software, and technical support, in exchange for sharing the commission.

3. Select a Strategic Location

The success of your POS business largely depends on your choice of location. Choose areas with high foot traffic and limited access to banking facilities or ATMs. The best locations for a POS business in Nigeria include:

    

• Rural communities: These areas often lack traditional banking infrastructure, so people rely heavily on POS services for their financial transactions.
• Markets and shopping centers: High traffic in these locations can lead to more transactions.
• Urban slums and outskirts: Many residents in these areas prefer POS agents because they are closer than banks or ATMs.

By positioning yourself in a strategic location, you increase the chances of getting more customers and generating higher revenue.

4. Meet the Requirements of POS Providers

To start a POS business in Nigeria, you need to meet the requirements set by banks and mobile money operators. These requirements are generally straightforward but vary slightly from one provider to another. Here are the standard requirements for starting a POS business:

    

• Business registration: Register your business with the Corporate Affairs Commission (CAC) of Nigeria. A registered business name adds credibility and helps you partner with banks or mobile money operators.
• Valid means of identification: You will need to provide a valid ID such as a National ID card, Driver's License, Voter's Card, or International Passport.
• Bank Verification Number (BVN): Your BVN is essential for carrying out financial transactions and verifying your identity.
• Utility bill or proof of address: You must present a utility bill or another document that verifies your residential or business address.
• Initial capital: The initial capital varies depending on the bank or mobile money platform. This amount serves as the cash float for daily transactions and covers the cost of purchasing or renting the POS machine.
• An active bank account: You need an operational bank account to receive payments and commissions from transactions.

Once you meet these requirements, you can apply to get your POS machine from a bank or mobile money operator.

5. Acquire a POS Machine

After meeting the necessary requirements, you can apply to receive your POS machine from your chosen provider. Banks such as First Bank, Access Bank, Zenith Bank, and UBA, as well as mobile money platforms like OPay and Moniepoint, offer POS machines to their agents.

Some banks provide the POS machine for free, while others may require you to pay a deposit or purchase it outright. The cost of acquiring a POS machine ranges between ₦25,000 to ₦60,000, depending on the provider.

6. Set Up Your Business Location

You need to set up a location where customers can easily access your services. This could be a small shop, a kiosk, or even a shared space in an existing business. Ensure that your location is secure, as you’ll be handling cash transactions.

If you're operating in a rural area or market, having a physical setup gives your business visibility and encourages walk-ins. You might also want to consider branded banners or signs to let people know what services you offer.

7. Maintain an Adequate Cash Float

To run a POS business efficiently, you need a sufficient cash float to handle withdrawals. A lack of cash can frustrate customers and harm your reputation. Additionally, you need to have enough electronic funds in your bank account to process deposits, bill payments, and fund transfers.

The amount of float you need will depend on the daily transaction volume in your location. Start small, and as you grow, you can increase your cash reserves.

8. Promote Your POS Business

Marketing your POS business is essential for growth. Here are some effective ways to promote your services:

    

• Word of mouth: In many communities, word of mouth is the best way to attract customers. Satisfied customers will recommend your business to others.
• Banners and signage: Display clear signs that indicate the services you offer, such as “Cash Withdrawal Here” or “Pay Bills Here.”
• Loyalty programs: Offer incentives like discounts or free services for customers who frequently use your POS service.

As your business grows, providing excellent customer service will help you retain clients and attract new ones.

Additional Considerations for Running a POS Business in Nigeria

Compliance with Regulations

To avoid penalties or having your business shut down, always comply with the regulations set by the Central Bank of Nigeria (CBN) and your chosen POS provider. Never engage in fraudulent activities, and ensure that all transactions are transparent.

Security and Fraud Prevention

Since you’ll be dealing with cash and sensitive customer data, security is a top priority. Install security measures to protect your business from theft and fraud. Educate yourself and your staff on how to spot suspicious transactions and avoid scams.

Investment in Technology

Reliable power and internet connectivity are essential for running a POS business. Consider investing in a backup power supply (such as a generator or inverter) and a reliable internet connection to minimize downtime and ensure seamless operations.

Conclusion

Starting a POS business in Nigeria is a lucrative venture with relatively low entry barriers and high growth potential. By following the steps outlined above—understanding the business model, choosing a strategic location, meeting the provider’s requirements, and promoting your business—you can create a successful and sustainable POS operation.

With the right approach, your POS business can thrive, helping to serve the unbanked population while providing you with a stable source of income.

Also Read

• Palmpay POS Machine Price, Charges, daily target and the process
• List of Cheapest POS Machines in Nigeria, Prices & Charges
• Moniepoint POS business, how to get started