Nigeria’s Cash Crisis: How ATMs Lost the Battle to POS Operators
Nigeria’s ongoing cash crisis has been blamed on a haphazardly implemented cashless policy and the poor handling of currency circulation by banks, according to Tope Dare, Executive Director of e-Business and Infrastructure at Inlaks Computers Limited.
Speaking at a public lecture on Friday, themed “The Cash War Between ATMs and POS Agents in Nigeria,” Dare argued that regulatory missteps—not banking inefficiencies—are at the heart of the cash shortage gripping businesses and individuals. He warned that despite official efforts to promote digital transactions, physical cash remains central to the Nigerian economy.
“The CBN’s cashless policy has created persistent cash shortages,” Dare asserted. “People now prefer to hoard cash instead of depositing it in banks. The ATM withdrawal limits are meant to ensure wider cash distribution, but they are only exacerbating the problem.”
The Rise of POS Agents and a Parallel Cash Economy
Dare highlighted the unintended consequences of Nigeria’s cashless push, particularly the rise of Point-of-Sale (POS) operators as dominant players in the country’s cash distribution network. Initially conceived as a stopgap for areas underserved by banks, POS agents have evolved into primary financial service providers—often at the expense of ordinary consumers.
“The high fees charged by POS agents have incentivised them to source cash through desperate and unethical means,” he said. “Some withdraw directly from ATMs, depleting cash meant for regular customers, while others purchase cash from businesses in exchange for digital transfers, creating an informal cash market.”
This, he warned, has led to congestion at ATMs, disproportionately affecting individuals who rely on cash, such as traders, transport workers, and elderly citizens struggling with digital banking platforms.
Public Preference for POS Transactions
Despite the steep transaction fees, a survey conducted on street users revealed a strong preference for POS agents over ATMs. Factors such as accessibility, speed, and customer service were cited as key reasons for this shift.
“As of March 2024, Nigeria had approximately 2.7 million POS terminals, compared to fewer than 21,500 ATMs serving over 63 million unique bank clients,” Dare noted. “This disparity underscores the growing reliance on POS machines as the primary cash source.”
Moreover, many respondents found POS operators to be more approachable than traditional bank staff, despite lacking formal customer service training.
Regulatory Response and the Way Forward
Dare commended recent efforts by the Central Bank of Nigeria (CBN) to penalise banks failing to ensure adequate cash availability. These measures include increased oversight, encouraging customers to report ATM cash shortages, and imposing fines on non-compliant financial institutions.
However, he stressed that without a fundamental review of the cashless policy’s implementation, the country risks entrenching an exploitative parallel cash economy.
“The dissatisfaction of everyday Nigerians is growing,” he warned. “Something must be done before the situation devolves further.”
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