The landscape of financial transactions in Nigeria is changing as Point of Sale (PoS) terminals gradually replace the once-dominant Automated Teller Machines (ATMs).

Recent transaction statistics demonstrated the diminishing importance of ATMs, Dailu Sun Findings shows.

The overall value of ATM transactions in Nigeria fell from N14.63 trillion in 2023 to N12.21 trillion in June 2024, a significant year-over-year decline of almost 20%.

On the other hand, PoS transactions, which include both regular purchases and agent-facilitated cash withdrawals, saw a sharp rise of more than 77% over the same time frame, totalling N85.92 trillion.

Fintechs facilitate PoS growth

This transformation, which has been mostly driven by agile fintech entrepreneurs, has upended established banking conventions, forcing deposit money institutions to step up their attempts to regain relevance and establish a bigger presence in the fiercely competitive PoS market.

Deployment data show this tremendous change. Nigeria had an impressive 5.56 million deployed PoS terminals as of the first half of 2024, whereas just 16,714 ATMs were operational.

Fintech companies like OPay, Palmpay, and Moniepoint have been instrumental in this growth of the PoS network, thanks to their creative tactics and extensive reach.

These fintech startups have created a significant presence across Nigeria. The International Monetary Fund (IMF) projected around 1,600 PoS operators per square kilometre in the country, with fintechs accounting for around 1.6 million of the total number of over two million operators.

With more than a million operational terminals, Moniepoint handles a staggering N10 trillion in transactions per month. Palmpay reports a network of more than 600,000 merchants and a notable onboarding of over 1.1 million enterprises. By June 2023, OPay had established a sizable network of more than 500,000 mobile agents.

Nigerians rely on PoS

An increasing number of Nigerians now rely on these PoS agents as their main source of access to cash and other financial services due to their accessibility and convenience.

GSMA, the global association for mobile network operators, has recognised this impact, stating that “The growth of non-MNO-led mobile money providers like OPay and Palmpay in Nigeria has driven financial inclusion.”

Recognising this dynamic picture, incumbent banks are now strengthening their efforts to take a larger part of the PoS market. Guaranty Trust Bank (GTB) made a significant move in February by eliminating processing fees on all transactions completed through its GTBank PoS terminals for eligible SMEs.

Miriam Olusanya, GTB Nigeria’s Managing Director, explained that this aims to “empower businesses to get the full value of every payment they receive, whilst also ensuring a more seamless and efficient payment experience.”

A more robust push into retail and agency banking was also indicated by United Bank for Africa's (UBA) April deployment of an updated PoS terminal.

UBA’s Group Head of Retail and Digital Banking, Shamsideen Fashola, highlighted the terminal’s capabilities, including “instant settlements, real-time transaction tracking, and unmatched reliability,” designed to empower both merchants and agency banking operators.

An examination of the data showed that although banks such as First Bank, GTBank, and Zenith Bank were the first to push for the adoption of PoS in Nigeria, their initial emphasis on larger merchants and urban areas opened the door for fintechs to aggressively target the underserved small business sector and establish wide-ranging agency networks in both urban and rural areas.

Victor Olojo, former national president of the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN), emphasised the disruptive business models of fintechs, stating, “These fintechs had very aggressive business models that can make the system work by itself.

It was different from the traditional banking model, where you would wait for people to come into the banking hall. These fintechs were very aggressive with their approach to penetrating the market.”