Why Nigerians Are Ditching ATMs: PoS Withdrawals Surge by 77%

New data from the Central Bank of Nigeria (CBN) shows a major shift in how Nigerians access cash. Between January and June 2024, the total value of ATM transactions dropped by 19.87% year-on-year to ₦12.21 trillion, down from ₦14.63 trillion during the same period in 2023. Meanwhile, Point of Sale (PoS) transactions skyrocketed by 77.35%, reaching a staggering ₦85.92 trillion.

PoS: The New Cash King

The rapid growth of fintech companies like Opay, Paga, and Moniepoint has driven a surge in PoS adoption. The number of registered PoS terminals grew from 3.22 million in 2023 to 3.97 million in 2024, while deployed terminals increased from 2.29 million to 2.94 million. This growth is critical in a country where, according to the International Monetary Fund (IMF), there are about 1,600 PoS operators per square kilometer but only 14 ATMs per 100,000 adults—far below Egypt's 31 per 100,000 adults.

In 2022, a McKinsey report noted that Nigeria had over 700 mobile money and banking agents per 100,000 adults, compared to just 43 agents per ATM. This shortage of ATMs has made PoS operators essential for providing cash access, especially after the 2023 cash shortage crisis highlighted their role in filling the gap left by banks.

A Shift Fueled by Policy

The rise of PoS withdrawals is also linked to the CBN’s cashless policy, which capped daily ATM and PoS withdrawals at ₦20,000 per individual. This policy pushed customers toward internet banking, mobile apps, USSD, and PoS channels. During the first quarter of 2023, cashless transactions surged by 44.84%, reaching ₦126.73 trillion compared to ₦87.49 trillion in the same period of 2022.

However, the policy had its challenges. Currency in circulation fell sharply from ₦3.23 trillion in September 2022 to ₦982.1 billion in February 2023. By March, the circulation rebounded to ₦1.68 trillion, following a relaxation of the policy. As of October 2024, currency in circulation had soared to ₦4.5 trillion, prompting the CBN to introduce stricter measures targeting PoS agents.

New Rules and Rising Tensions

In December 2024, the CBN introduced a daily cash restriction of ₦1.2 million for PoS agents and capped customer transactions at ₦100,000 per day. The move was aimed at reducing excess cash in circulation. However, many in the finance industry believe these measures fail to address the root causes of Nigeria’s liquidity crisis.

“PoS agents have been the scapegoat all along. This is an attempt to impose some order on chaos, but it won’t work because the fundamentals remain unaddressed,” said one financial expert.

Banks have also contributed to the decline of ATMs, as the high cost of maintaining these machines has made them less attractive. Meanwhile, PoS operators have faced allegations of colluding with traders and fuel stations to hoard cash before it enters the formal banking system, fueling calls for tighter oversight.

Cleaning Up the PoS Ecosystem

The CBN's latest policies aim to clean up the PoS space and encourage more online transactions. According to Oluwagunwa Ibirogba, chairman of the Lagos Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), the new restrictions will discourage cash hoarders. “Cash hoarders within the space will lose incentive, as large cash withdrawals will move online,” he explained.

The Future of Cash Access in Nigeria

While PoS operators remain critical to Nigeria's financial ecosystem, their role is under scrutiny as the CBN pushes for a more cashless economy. Whether these measures will succeed in reducing cash hoarding and fostering financial inclusion remains to be seen, but one thing is clear: PoS is reshaping how Nigerians access and use money.

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