Nigeria: CBN Imposes N1.2m Daily Limit on PoS Agents, Caps Customer cash-out at N100,000

In a bid to reinforce its drive towards a cashless economy, the Central Bank of Nigeria (CBN) has introduced a new policy restricting Point of Sale (PoS) agents to a daily transaction limit of N1.2 million. Customers, on the other hand, are now capped at a maximum withdrawal limit of N100,000 per day, regardless of the channel used.

The apex bank announced these measures in a circular titled "Cash-Out Limits for Agent Banking Transactions," signed by Oladimeji Yisa Taiwo, for  Director of Payments System Management Department. The new rules also set a weekly cash withdrawal limit of N500,000 for individual customers, in addition to the daily transaction restrictions.

CBN emphasized that these policy interventions are aimed at increasing the adoption of electronic payment systems and strengthening the cashless economy. “These policies are necessary to enhance the use of electronic payment channels for agency banking operations,” the circular stated.

The Point of Sale system has become a lifeline for financial inclusion in Nigeria, especially in rural and underbanked areas. According to the Nigeria Interbank Settlement System Plc, as of July 2024, the country had 3.05 million deployed PoS devices and 4.06 million registered terminals, underscoring the critical role of these agents in enabling financial transactions.

Key Policy Highlights:

• Agent Cash-Out Limit: PoS agents are limited to a cumulative daily cash-out transaction cap of N1.2 million.
• Customer Withdrawal Cap: Customers can only withdraw a maximum of N100,000 per day via PoS agents or any other channel.
• Monitoring Mechanisms: Agent terminals must connect to a Payment Terminal Service Aggregator (PTSA) to report all transactions electronically to the CBN via the Nigeria Interbank Settlement System (NIBSS).
• Operational Guidelines: Agent banking services must be distinguished from merchant activities, with agents required to use the approved Agent Code 6010.

Industry Impact and Concerns

The move is seen as a double-edged sword, with fintech firms and PoS operators expressing concerns over its potential to disrupt operations, particularly in rural areas where PoS agents fill the void left by inadequate Automated Teller Machines (ATMs).

A recent Bloomberg report highlighted the reliance on over two million mobile agents for daily financial transactions, filling gaps left by the limited reach of ATMs. The International Monetary Fund estimates there are 1,600 agents per square kilometre in Nigeria, a density driven by fintech giants such as Opay, Paga, and Moniepoint.

Despite its advantages, the CBN’s crackdown on irregularities in agent banking has raised eyebrows. In a December 3 circular, the bank warned commercial banks of potential sanctions if they fail to maintain adequate ATM services.

The new regulations are expected to challenge PoS operators and consumers alike as they adapt to stricter limits on cash transactions. While the policies aim to foster a digital-first economy, stakeholders urge the CBN to strike a balance that ensures financial inclusion remains accessible to Nigeria's unbanked and underbanked populations.

West Ekhator