Point-of-sale (POS) services have since been in existence in Nigeria but they weren’t so popular until a few years ago. Before this time, customers relied more on the use of automated teller machines (ATMs) for quick and seamless transactions. But even this wasn’t much of a solution.
ATMs often have long queues, issues of power outages, and stuck customer cards or funds. In addition, they may be located far from a user’s residence.
These problems were solved by the introduction of handheld POS devices since they can be carried around, making them largely available to customers. Moreover, POS devices do not get card-stucked and they run on portable batteries which can be easily replaced.
The convenience that comes with the use of POS makes it an important point of discussion. Follow us as we take a deep dive into the topic.
What is a Point-of-Sale (POS)?
The term POS, or Point-of-Sale, broadly refers to two things.
POS Terminal
First is a special hand-held machine that is used to conduct card and cardless banking services.
The POS machine or terminal is a device that appears like a miniature ATM (automated teller machine). It has a display screen that may be touch-enabled, some buttons, and a card slot. Users present their credit or debit cards to perform withdrawals and other transactions using this machine.
POS Agent Business
Secondly, the term POS could be used when referring to public businesses that offer Point-of-Sale services. Usually, the POS service is run by an agent who handles the machine or terminal, performs services for customers, and gets paid in return.
Payment for a point-of-sale service may be offered in cash or deducted directly from a customer’s card during a transaction.
How a Point-of-Sale (POS) Works
Most modern Point-of-Sale machines work just like an EMV card terminal and are equipped to handle EMV chip cards. EMV which stands for (Europay, Mastercard, and Visa) is a global standard for credit and debit card payments based on chip card technology. \ When you insert a Mastercard or Visa card into a POS machine, the transaction process involves the card chip communicating with the terminal to authenticate the card and verify the transaction. This process is more secure than traditional magnetic stripe transactions because the chip generates a unique code for each transaction, making it more difficult for fraudsters to duplicate the card information.
However, not all POS machines are exclusively EMV terminals. Some may still accept magnetic stripe cards or contactless payments like NFC (Near Field Communication) transactions (e.g., Apple Pay, Google Pay). The capabilities of a POS machine depend on its specific hardware and software configuration.
Types of POS Terminals or Systems
There are different types of POS, depending on the specific classification you’re looking at. This section outlines two types of POS each under the categories of storage and hardware.
Types Based on Storage
Cloud-based POS
Cloud storage is the new norm and POS machines are being adapted to this. These terminals function like any other POS would. However, data from transactions and other functions are saved directly to cloud storage.
This relieves businesses, especially supermarkets, of the need to purchase and maintain local storage systems. Also, the cloud storage features allow remote processing of business transaction data.
There are many cloud-based POS available in the market today.
Local Storage POS
A local storage POS system is purchased together with a storage device. This device is kept within the business premises. It stores records of ongoing POS transactions within the business.
Types Based on Size/Hardware
Legacy POS
Legacy POS comes big and with some serious hardware. They have large screens, a central processing unit (CPU), and a desktop-type keyboard. Sometimes, this type of POS also comes with a barcode scanner, which is either handheld or placed on a table.
The legacy POS is predominantly a local storage POS. This is because its large casing fits perfectly for a hard disk and most other types of local storage devices.
Mobile POS
A direct alternative to the legacy POS is the mobile POS. This type of POS uses hardware that can accept and run mobile applications. They are usually associated with the Android operating system (OS) and businesses can customize them based on their needs or services.
How to Register and Start a POS Business in Nigeria
It is possible to underestimate the intricacies of starting a successful POS business in Nigeria. As a point, seeing POS agents scattered at every corner misleads people into thinking that there is little to the business. Onlookers end up with the notion that the business is easy to launch, undemanding or excessively profitable.
Unfortunately, they get it all wrong.
The POS business is, first and foremost, very highly competitive. To put numbers to this, there were over 1.5 million POS service agents in the country as of 2022. Furthermore, factors such as a business’s location and the network signal strength (within such location) also significantly impact turnover.
If you’re still interested in starting a POS business despite the numbers then here’s a step-by-step guide.
Research the POS Business
The first step to starting a business will always be research.
Research is conducted to understand the intricacies of a business. It also acts as a tool for feasibility study, where the merits and viability of a specific business project are evaluated.
In this case, researching will help uncover all the necessary steps to starting and running a POS business.
Raise Capital
Good quality research will provide an idea of the capital requirement for a POS business. You should be well informed on whether the venture is capital-intensive or not. Once you have sufficient knowledge of this, you’re in a good position to begin raising capital.
Capital can come from several sources. These include personal savings, contributions from family and friends, business loans, etc.
Search for a Business Location
As we mentioned when introducing this section, your choice of a business location is critical to the success of your POS business. Considerations such as the cost of renting a shop or outdoor space, access to potential customers, and the safety of the business are important.
Register a Business Name
The ideal thing to do before moving on with your business setup is to get a proper registration done. You may contact a certified agent of the Corporate Affairs Commission (CAC) or visit the office in person to get started.
For your POS business, it is advisable that you register a Limited Liability Company (LLC) rather than a business name or entity. This is because owners of LLCs have their personal assets protected in the case of a business loss.
A ton of benefits are associated with having your business fully registered, including the protection of your business name and access to government grants or loans.
Select a POS Provider
Having the capacity to start a POS business does not mean you should jump right into it. Instead, you need to make sure to select a reliable provider.
Start by asking which POS service provider you admire or trust - and why. Answering this simple question will pinpoint providers that you’re comfortable partnering with.
But you’re not going to be working with more than one POS service provider. It, therefore, makes sense to filter your list. One way to do so is by creating a list of all options available to you and learning how they each operate - what their policies look like and how they’ve performed over time.
Ultimately, you want a service provider that you can be proud of - both in terms of their brand image and service quality. A careful look at online reviews for each POS provider might help provide a final point of assessment for an informed decision.
Register with your Preferred Provider
Now that you’ve carefully and confidently selected a POS provider, it is time to get registered. You can go about this by searching online for the provider’s office nearest to you.
Alternatively, you can check the provider’s website to see if they allow online registrations.
Note that personal documents such as passport photograph, national ID, and proof of address are usually required. Having these documents handy saves you time and energy and increases the speed at which your registration is processed.
In addition, you must be prepared to make the necessary payments as part of the registration process.
Acquire a POS Terminal from the Provider
Your POS terminal should come well-boxed after your registration is done and accepted. Also, a welcome package including the POS device manual, the provider’s complaint and service support channels, and instructions on how to operate as an agent of the POS provider, etc., should be issued to you.
Begin Your Business
All boxes are now checked. You can, therefore, go ahead to advertise your business, launch it, and begin generating income.
Companies with the Most POS Agents in Nigeria
The following data was released in 2022, capturing the vast number of active POS agents nationwide. Among other things, this data provided valuable insights into POS adoption and the companies with the top number of agents.
Opay
OPay, one of Nigeria’s biggest fintechs, revealed that it had a total of 563,252 registered POS agents. This figure put it in the spotlight with a 33.17% dominance over other POS service providers.
Moniepoint
Moniepoint came in second place. With 303,946 POS agents, the company stood out as the most popular POS service provider after OPay.
First Bank
Deposit Money Banks (DMBs) also have the license to operate as point-of-sale (POS) service providers. As a vivid example, First Bank reported a count of 160,740 POS agents.
QuickTeller
A 2.3% share of the POS service market and 35,490 POS agents ranked QuickTeller as the fourth company on this list.
Conclusion
POS in Nigeria has come a long way.
Based on year-on-year transaction figures and the ever-growing number of agents, it is clear that the technology, and its underlying business, enjoy the embrace of countless Nigerians.
Residents across the country would gladly say that they find POS services to be much of a better option compared to locating and using an ATM.
