All You Need To Know About Starting A POS Business In Nigeria (2021 Full Guide)

Remember when we all had to queue in front of ATM machines or bank counters to perform basic transactions? It feels like a lifetime ago. All of that has changed because convenience was ushered in with the emergence of the POS business in Nigeria.

In 2012, the Central Bank of Nigeria (CBN) introduced the Point of Sale (POS) system to further drive home its cashless policy aimed at enhancing Nigeria’s payment system. Five years after Nigeria’s Central Bank (CBN) launched its Cash-less Nigeria project to reduce the amount of physical cash circulating in the economy, it is finally catching on.

Data from Nigeria Inter-Bank Settlement System (NIBSS) showed a significant uptick in the use of Point of Sale (POS) terminals for payments in year 2016. Total transaction volume from January to November 2016 increased 65% against all of 2015. The value of POS transactions doubled between 2014 and 2016.

Furthermore, in a research conducted by Premium Times on “The effectiveness of the POS Business in Nigeria”, it was discovered that in a lot of rural communities, people have to travel a couple of kilometers to get cash for their day to day living.

In Bauchi, The 40-year-old village chief said he travels about 12km to the nearest bank in to access banking services. They pay 350 to 400 Naira as transportation fee from Sabongarin Nguwankasa to Central Bauchi. This is in Comparison to the 100 to 200 Naira charged for using the POS Machine with little or no stress.

Consider These Before Starting A POS Business In Nigeria

Apparently, POS business is a viable way to make money. It’s more profitable in communities with no banks and places where ATMs are not enough to serve the financial needs of the community. By creating easy access for financial transactions in different localities, the POS business has given individuals and business owners additional means of income. They are sometimes called bank agents. Although not serving as direct employees of a bank, they deliver banking services on behalf of banks on an agreed commission.

The Point of Sale terminal is a portable device that facilitates payments for goods and services at merchant locations using payment cards issued by all banks on the network.The services offered include withdrawals, fund transfers, bill payments and sale of recharge cards or top up to all networks without buying vouchers.

What You Need To Get Started

Step 1:

Find a host. A host is a financial institution that is the source of the services you extend to your customers. Examples include First Monie, Quickteller, Paga, FCMB, etc. They install the system and control the functions of your POS machines. All hosts have requirements, some of the requirements are; full name, phone number, business name, address, Bank, account number, account name, BVN, email address, Date of birth, passport and valid ID card.

Step 2:

Get a location. The location of your POS business is very important to your success. A good location determines how good your business will turn-out. According to research, people make ₦2,000 – ₦20,000 daily as a result of their location.

Step 3:

Get your Capital. The availability of capital increases your chances of making more income. Lack of money reduces your functionality.

Step 4:

Acquire your Shop. Get a space where you can be easily identified, very importantly places where there are no sources of cash withdrawal and off course there should be a continuous supply of light, to charge your device.

Step 5:

Acquire a POS machine as i its the most important thing needed to start the business. All transactions are carried out using this device. Some of the machines are given for free or are leased for a period of time for as low as ₦30,000.

Step 6:

Advertise your business. It is very important to inform people around your environment about the availability of a POS machine close to them. You can never say how happy you will make them that day. Releasing the stress, they will have to go through to get cash for their day to day activities.

Let’s Do A Budget

  1. POS Machine – ₦30,000
  2. Table – ₦3,500
  3. Chair – ₦3,500
  4. Extension Box (electricity to charge your POS machine) – ₦3,500
  5. A metal kiosk –  ₦60,000 (optional)
  6. An outdoor umbrella –  ₦7,000 to ₦8,000
  7. Levies/rent – ₦5,000 yearly – ₦10,000.

With a total of about ₦52,500 – ₦120,000 a new stream of income can be created. However, to operate a mobile POS business in Nigeria 9where you go about with your machine), only the POS machine is needed.

Major Challenges To The POS Business In Nigeria

READ MORE: Here are some of the reasons why your business fails

  • Capital: There can be no business without finance. Personal savings is the first on the list to raise capital for your POS Business. In the process of reaching out to family and friends to support your business, a couple of them will think that the business will not strive. And this is the reason many people take loans to start their POS businesses.
  • Tax: In Nigeria thousands of business owners are on the brink of financial failure owing to illegal and arbitrary taxes demanded by officials. There are no official rates fixed on the taxes and levies charged on business owners which facilitates an illegal tax negotiation racket for revenue officials to exploit. According to Human and Environmental Development Agenda (HEDA), Nigeria loses about N100 billion every year to tax-related fraud.
  • Lending out income: At different times, colleagues in the same business or other types of business may need cash loan for a short period of time, therefore reducing the capital that will add return of income on the borrowed sum.
  • Electricity: This is the bedrock of most businesses in Nigeria. We have all been there, where your device battery is low and the expected time for NEPA to restore electricity is far gone. Then your POS machine is a useless rectangle of plastic that cannot generate any income. When using a POS machine the wise thing to do, is to get an alternate source of power .
  • POS Software /Network: The software is the IT infrastructure a POS machine operates on. In Nigeria today, POS Businesses are springing up every day. In some areas, there could be up to 5 POS spots on one street. It is advisable to use a POS machine that has a good network system which will give you an edge over the others. It aids in serving more customers, there-by increasing your income per minute.

There are 4 types of POS systems for retailers

(a) Desktop POS system

(b) Mobile POS system

(c) Tablet POS system

(d) Self-service POS system

The latest and greatest POS systems are leaps and bounds beyond their old counterparts. IT problems can still occur. Here are the common POS system interruptions to expect.

1. POS security breach

When getting a POS machine do not look out for cheap but for one with a hacker detection component. This is very crucial for keeping your POS system and customers’ credit card information secure.

2. Inaccurate Reporting

The digital POS system helps in giving analytical reports at the speed of light. However, if the data you are collecting does not add up, there could be a flaw in the system you have purchased. A reliable POS system is worth the investment when it works accurately.

3. Usage issues

As they are different individuals in the country, there are different types of employees, some learn faster than others. Taking the time to train your staff on a new POS system will pay off, instead of annoying customers by fumbling in frustration.

4. Software problems

The best way to avoid software problems is to research the best POS systems customized specifically for your business. Buying a tablet and enabling it with an off-the-shelf POS system is certainly one way to upgrade your business. Using products that not suited for your business can lead to technical issues when you need it the most.

5. Tracking promotions

One reason to upgrade your POS system is to optimize the tracking and reporting on sales and promotions. However, some point-of-sale systems fail to do this properly, and this can lead to bad analytics hurting your business. Promotions are a must for any retailer and your POS system should not have any issues handling sales.

6. Mobile compatibility

Your POS system should be of high-quality, it should be compatible with your mobile device so that you can keep an eye on the sales carried out in your company even when you are not present.

7. Internet connectivity

A solid Wifi network is essential for businesses to strive. After all, man’s wants are insatiable. A good POS system will require strong internet connectivity for functional operations. Wifi is at the heart of successful operations.

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One Comment

  1. Ifechukwude Ojeme

    Wow, very useful information. Thank you.

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