The more than a million banking agents that have embraced Point of Sale (PoS) terminals of operators like OPay, PalmPay, and Moniepoint would not give them up any time soon.
However, many of the agents are grappling with the rising cost of operations on these platforms and this contributed to the latest decision to increase PoS charges in Lagos. Ogun, Edo, and Oyo states have also reviewed their prices, according to Victor Olojo, president of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN).
The price hike is a response to the recent removal of the petrol subsidy and the floating of the naira. With the subsidy gone, prices of goods and services have skyrocketed. Transportation costs have also climbed to record highs in nearly all Nigerian cities. Olojo described transportation as a critical part of the cost for banking agents, especially for those living in rural communities where banks’ presence is scarce.
Nigeria’s 33 licensed commercial banks have less than 5,000 branches. The majority of these branches are in the cities, with Lagos hosting the largest presence of bank branches. In states like Kano, over 20 local governments do not have bank branches present.
“For many locations outside Lagos, where you don’t have banks you have to travel as much as 100 kilometres in some cases to get to a bank to get cash for the business. Transportation forms a very critical part. And if you look at the service itself, it is convenience service. Before now, many Nigerians would have to take transport to go to a location, go to a bank or ATM or service point, but because of the ubiquity of mobile money agents, that cost is already taken care of,” Olojo said.
Another cost pressure for banking agents is the terminal fee. Terminal charges for operators like OPay and Moniepoint were recently increased to reflect the impact of rising inflation on the operations of operators. As of result of the increase, terminal charges for N10,000 rose from N50 to N60. Hence, an agent who charges N200 for this type of transaction would make N140.
OPay has the largest number of agents in its network with 563,262, followed by PalmPay with 500,000 agents and Moniepoint with 322,266 agents. These operators owe their traction to the ability to provide terminals and service support that ensure little or no glitches in transactions. PalmPay goes as far as enabling agents to facilitate withdrawals using their PalmPay agent app without the need for a PoS.
“Most banked customers are now comfortable with using apps, and an increasing number come to PalmPay agents to withdraw money after having funded their PalmPay account through bank transfer, thereby removing the necessity of using an ATM card and POS to facilitate the withdrawal,” said Kevin Olumese, senior marketing manager at PalmPay Nigeria. “This is faster and more convenient for both the agent and the customer as the transfer happens within the PalmPay ecosystem, which is free of charge and for which the success rate is 100 percent.”
Moniepoint has also enmeshed itself in the agent network model where it has been able to build a system that harnesses the potential of the agency network. The company has also been able to layer the agents into different categories. Moniepoint currently does not need field staff because the agents are out there directly employing other agents to get the job done and the results show up in the growth in the number of agents.
Augustina Alabere, an agent with OPay, said the increase in terminal fees does not really affect her cost as much as the increase in the price of PoS paper does.
“The cost of PoS paper is on the high side. We used to buy a roll, which contains 10, for N1,200. The cost is now N2,000,” she said.
She also identified the cost of renting a shop as a significant pressure point on her revenue. Rents are climbing as shop owners adjust to inflation, forcing PoS operators to dip hands inside their profits to augment the new shop rates.
“If it is only PoS that you do in your shop, it won’t profit you more because every shop now has PoS; so everyone is sharing the gain,” Alabere said. “To me, the charges on PoS transactions are still on a lower rate because everything else is on the high side.”
The operators are most likely trying to recoup some of their huge investments in the business. OPay, for instance, has offered free transactions since 2019 and has now imposed a fee on the fourth transaction. PalmPay has also followed this route. Although, it tried to deflect the fee by offering users a 20 percent interest rate on their annual savings.
Experts say the recent hike in PoS fees is one way the agents are using to express their displeasure at the rising cost. It is not entirely directed at OPay, PalmPay or Moniepay, which they say have given them a lifeline to earn income, but at the government, which seems to be doing little to address the galloping inflation.