The Central Bank of Nigeria (CBN) is once again stirring the waters of financial services, this time with a policy intervention aimed squarely at Point of Sale (PoS) agents. A new circular has imposed a daily transaction limit of ₦1.2 million ($771) on PoS agents, ostensibly to promote the use of traditional bank ATMs and push Nigeria closer to the ideal of a cashless economy. Whether this move achieves its intended purpose or merely ruffles feathers (including those of Nigerian fintechs) remains to be seen.

Released on Tuesday, the circular — signed by Oladimeji Yisa Taiwo for the Director of the Payments System Management Department — lays out the policy’s specifics. “The Bank hereby releases the following policy interventions, which have become necessary to enhance the use of electronic payment channels for agency banking operations,” the document read. It was a sober reminder that the CBN has never shied away from sweeping interventions, no matter how contentious.

Agency banking — through PoS terminals and mobile money agents — has been a lifeline for millions of Nigerians, especially in rural areas where formal banking infrastructure is sparse. According to the Nigerian Financial Services Report, this model has enabled people without bank accounts to access money sent from across the country, boosting financial inclusion in underserved regions. As of July 2024, Nigeria boasted over 3 million deployed PoS units and 4 million registered PoS terminals, according to the Nigeria Interbank Settlement System Plc.

But the CBN’s new rules may inadvertently kneecap the very system it once celebrated. Under the new regime, cash withdrawals per customer are capped at ₦500,000 ($321) weekly, while PoS terminals are limited to ₦100,000 ($64) per customer daily. Agents, who often act as financial intermediaries, face a daily cumulative limit of ₦1.2 million. Moreover, these terminals must now connect to a Payment Terminal Service Aggregator (PTSA), and all transactions must be electronically reported to the Nigeria Interbank Settlement System (NIBSS).

These stringent measures are accompanied by clear demarcations: agent banking services must be distinct from merchant activities, and agents are required to use the approved Agent Code 6010 for all operations. The penalties for non-compliance have not been explicitly detailed, but the CBN’s reputation for enforcement leaves little room for doubt.

While PoS agents might be the most visible target of these changes, the CBN’s broader aim appears to be resurrecting the relevance of Automated Teller Machines (ATMs). A Bloomberg report recently highlighted how mobile money agents have stepped in to fill the void left by unreliable ATMs, which are often plagued by cash shortages. The country’s ATM penetration remains woefully inadequate, with less than two machines per 100,000 people, according to data from the International Monetary Fund. By contrast, there are over 1,600 mobile agents for every square kilometre, thanks to the explosive growth of fintech firms like Opay, Paga, and Moniepoint.

The CBN’s frustration with the situation isn’t new. Back in December 2022, the bank threatened to sanction deposit money banks if their ATMs weren’t adequately stocked. This ultimatum came shortly after the launch of Nigeria’s redesigned naira notes, part of the central bank’s broader cashless policy initiative. It also introduced stricter cash withdrawal limits, including a maximum of ₦100,000 per week for individuals via ATMs and daily PoS limits of ₦20,000. The fines for exceeding these limits were steep, ranging from 5% to 10% of the transaction value.

The CBN argues that these measures are crucial for advancing its cashless policy and strengthening electronic payment channels. Yet, critics question whether these interventions address the root causes of Nigeria’s financial infrastructure challenges. With more than 70% of the population reliant on cash for daily transactions, is it realistic to expect immediate adoption of digital alternatives?

Fintech companies have been at the forefront of financial inclusion, but their rise has not come without friction. The central bank’s policies often appear to be a delicate dance — encouraging innovation on one hand while reining in perceived excesses on the other. By clipping the wings of mobile agents, the CBN risks alienating a vital component of the financial ecosystem. Conversely, critics of fintech argue that the sector’s rapid expansion has led to regulatory gaps and inefficiencies, necessitating tighter controls.

Looking Ahead

For now, both sides must navigate an uneasy truce. PoS agents, already under strain from rising operational costs and shrinking margins, may see their viability threatened. Meanwhile, banks have their own hurdles to overcome: replenishing ATMs, expanding their networks, and regaining public trust. As Nigeria’s financial landscape continues to evolve, the tension between innovation and regulation will remain a defining theme.

Whether the CBN’s latest gambit will tip the scales toward progress or provoke a backlash from agents and consumers alike is anyone’s guess. What’s certain, however, is that the debate over how best to achieve financial inclusion is far from settled.