POS Business

Everything You Need to Know About Starting a POS Business in Nigeria [2024]

Are you one of the many people who want to make a side income, or are you looking for an avenue to become self-employed and self-dependent by operating your personal business? A POS business might be the best option for you since it requires little capital.

One of the perks of this business is that you don’t need to budget any additional amount for advertisement, nor do you need a luxurious outlet to operate. You can decide to start right in the comfort of your home. 

Key Insights

  1. POS Business in Nigeria has a great earning potential with transaction reach around 600 trillion naira as at 2023.
  2. Common services that POS vendors offer include cash deposits and withdrawals, bill payment, and account opening.
  3. You can start a POS outlet with as low as 50,000 naira.
  4. Locations with high traffic of people and scarce commercial banks make the best place to make profit from your business.

What is a POS System?

Point of sale (POS) systems are a process used by many retail outlets to facilitate easy customer payment. However, if you are looking to do a POS business in Nigeria, you are not selling anything; instead, people are coming to you to help them deposit money, withdraw money, and pay bills to other merchants. By doing this, you charge a market price obtainable by other POS operators. This price will be your gain for every transaction you help people to perform. 

Many people prefer using point-of-sale operators for their transactions because ATMs often have long lines and occasionally have poor network performance. POS is just similar to having a neighborhood minibank!

As a result, consumers now engage in their banking activities at these POS outlets rather than at banks. For a nominal price, POS outlets facilitate consumers’ lives by providing them with instant access to cash.

Is POS Business Profitable?

You may be asking yourself: Can profit from a point-of-sale business be possible? The response: Without a doubt!

The Nigeria Interbank Settlement System (NIBSS) recorded a 55% increase in the value of POS transactions, which reached a whopping N600 trillion in 2023.

Various POS transactions, including bill payments and transactions at POS establishments, are included in this data. It illustrates how commonplace this mode of payment has grown.

In a good location, especially one with few or no commercial banks, you could make up to 10,000 naira per day from your business.

The point here is that the point-of-sale business can help you make a massive difference in terms of your finances. This business is an opportunity for you if you’re considering getting into the POS industry.

How Does the POS Business Work?

In agency banking, human agent networks deliver financial services directly to people’s doors, so they don’t need to go to the banks. These agents, who work for financial institutions or mobile money providers, use point-of-sale (POS) systems. For this reason, POS businesses are referred to as agency banking.

There are many point of sale (POS) firms in Nigeria, and they serve a variety of purposes. The majority of people go to a nearby POS vendor whenever they need cash, so they haven’t visited a bank or ATM in a very long time. In addition, there are many tales of POS vendors saving the day for those needing cash or other financial services when traditional banks are untrustworthy.

POS facilitates cash withdrawals, payments for products and services, and utility bill payments for local debit cardholders. The POS operator only needs to be given your debit card, which they will then insert into the terminal. Customers authorize the transaction by entering their four-digit PIN.

The terminal processes the transaction using mobile data after it is finished and prints a confirmation receipt. The receipt will indicate “completed” or “declined” based on how the transaction turned out.

The most excellent thing is that these point-of-sale businesses run on payment processing systems that do away with the requirement for customers to visit banks in person. Convenience and accessibility are key factors.

Typical Services Provided by POS Business

The services you should be able to get at your point of sale are listed below:

  1. Withdrawals of funds
  2. Transfers or deposits of cash into accounts
  3. Easy services for opening bank accounts
  4. Paying subscriptions, airtime top-ups, and utility bills, such as those for power or prepaid meters.

These services not only meet your consumers’ financial demands but also make banking services more convenient and accessible for them.

 

 

How to Start a POS Business in 2024

When you’re prepared to start a POS business, follow these five steps to get started:

  1. Start the Process

To start as a POS vendor, you must have an active commercial bank account. After this, you can decide where to get your POS machine. To get your POS machine, you can either use 

  • Traditional commercial banks in Nigeria, such as FirstBank, UBA, and GTB or
  • Fintech companies such as Opay, Moniepoint, Paga and BaxiBox
  1. Choose a POS Service Provider and Register

Make sure you have the required paperwork before beginning your registration. These may include a registered business name, an appropriate point of sale location, and a legitimate form of identification (such as a national ID card).

References, a Bank Verification Number (BVN), and passport photos are also required. Learn about the particular specifications that your selected POS service providers have specified.

Select a POS service provider (traditional banks or Fintech companies) that is trustworthy and in line with your business objectives, then go to them for the registration process. After being accepted, you’ll get the POS machine and be able to start providing services to your customer.

  1. Be Aware of the Startup Cost

Once you know your POS machine provider, it would be good to understand how their brand work, the features of their POS machine, operating or maintenance fees, and the cost of the POS machine. All these will add up as your startup capital. 

Usually, the cost of obtaining a POS machine in Nigeria can be between 20,000 and 50,000 nairas, depending on the provider issuing the machine. However, you will need a minimum of 50,000 naira to kickstart your business. 

  1. Choose Your location

The success of your business depends on the location you choose. To optimize profits, target high-foot-traffic locations, including markets, student neighborhoods, the vicinity of gas stations, grocery stores, and event venues. You may conduct a location survey to learn more about the competitors and possible clients in the area you have selected.

  1. Offer Outstanding Services

To build a solid reputation, be sure to offer exceptional customer service. To draw clients and keep them coming back for more, you can also provide discounts and be keen on cash flow management to stay within your funds and even your e-wallet or bank account.

Read Also

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How to Register a Business Name in Nigeria: The Complete Guide [2024]

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Conclusion

Operating a POS business in Nigeria is one of the best ways to make a side income as a starting entrepreneur. If you are tired of 9-5 jobs paying peanuts at the end of the month, you better prepare to gather the initial startup capital and become a self-sustaining businessman who can control your time, money, space, and life. 

 

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