Point-of-sale (POS) systems are essential tools for businesses of all sizes and industries.
You can accept payment, streamline operations, and increase efficiency amongst a lot of other benefits that it holds. From restaurants, and retail stores to healthcare providers and other types of small businesses, you can rely on a POS system to manage transactions, and inventory and keep track of your business finance.
In this article, we will highlight top businesses that need POS terminals, how to know a good POS system provider and where to get a POS for your small business.
What is a POS?
A POS Terminal, or as it’s commonly referred to in Nigeria simply as the POS, is a device that allows businesses to process payments made by their customers at the Point of Service (POS).
With a POS Terminal, businesses enable customers with the ability to make payments using their debit cards or a bank transfer, especially in situations where cash is limited.
Why Do You Need A POS Machine?
- Time Savers: If you own a restaurant, the last thing you need during rush hour is customers having trouble paying their bills and blocking the way for new customers. The POS terminals speed up transactions and reduce checkout lines, helping businesses serve more customers in less time.
- Improved customer relationships: If there’s one thing Nigerians hate – it’s queues. If it becomes a constant thing, it shows inefficiency and is a clear sign that your customer service needs work. A POS terminal can provide customers with an easy and convenient shopping experience, reducing frustration and increasing customer satisfaction.
- Better Inventory Management: With a POS, businesses can keep track of their inventory in real-time, allowing them to reorder products quickly and effectively when stock runs low.
- Secure Transactions: POS terminals are equipped with secure payment processing systems, reducing the risk of fraud and increasing customer trust.
- Streamlined Bookkeeping: By integrating with accounting software, a POS system can help businesses manage their finances more effectively, reducing manual data entry and the risk of errors.
Before you read on, here is step by step guide to get a Moniepoint POS machine including the cost and everything you need to know.
Businesses That Need A POS
A POS is a versatile tool that offers several benefits to many businesses across Nigeria. These benefits include ; managing their inventory, tracking sales, and generating detailed reports on their business performance.
Businesses that need a POS for these reasons are:
- Restaurants and fast-food chains
- Pharmacies and health stores
- Filling stations
- Hair and beauty salons
- Bars and nightclubs
- Hotels and lodges
- Fitness centres and gyms
What Other Ways Can A POS Be Used?
With the POS being able to perform several financial transactions, it’s no wonder that Nigeria embraced it as a substitute for traditional banking.
For starters, the POS was a mobile device so it could be used anywhere the handler wanted, especially locations where banks were unavailable.
Additionally, if a fee was added to every transaction made on a POS, it had all the potential to be a profitable business. Being easy to start and needed in every corner of the country, it didn’t take long for the POS business to become widespread.
POS Business Statistics
Between 2017 and 2022, the number of POS terminals in Nigeria grew significantly. In 2017 alone, there were around 155 thousand terminals, while as of April 2022, this figure reached roughly 1.1 million.
Over the last years, the value, as well as the volume of POS payments in Nigeria, experienced a great increase. With the ease of starting a POS business and the widespread adoption of Agency banking in underserved communities, that number is expected to grow significantly.
The Nigerian POS market was estimated to be worth over $500 million in 2021 and is expected to grow significantly in the coming years as more businesses adopt electronic payment systems.
- Mobile payment usage: Mobile payments are becoming increasingly popular in Nigeria, with over 70% of adults using mobile money services as of 2021.
- Adoption by small businesses: Small and medium-sized enterprises (SMEs) are one of the fastest-growing segments of the Nigerian POS market as they look to improve their payment processes and reach more customers.
- Payment Security: The Nigerian government has implemented various measures to improve the security of electronic payments, including the use of encryption technologies and the implementation of fraud detection systems.
- Competition: The Nigerian POS market is highly competitive, with a large number of companies offering payment processing and related services.
These statistics highlight the growing importance of the POS industry in Nigeria and the opportunities it presents for businesses of all sizes.
Benefits of a POS business
- There is an insufficient number of functional ATMs, which results in long queues in the bank. Once you start up a POS business, those people in need of any form of transaction will get it done in your shop instead of wasting much time in the bank.
- Poor network service at ATM points and banking halls has propelled many customers to find alternative means of performing their transactions.
- It creates employment for the unemployed. Instead of carrying files from one office to the other in search of jobs, you can start a POS business that could bring food to the table. In addition, the low barrier entry requirements in starting POS business points provide much-needed employment opportunities amid high unemployment rates, even for graduates.
- it also enables consumers to withdraw money when nearby ATMs are effortlessly far away.
- It does not require an expensive structure. You can just construct a small kiosk using wood or planks.
How Does The POS Business Work?
- A POS agent operates under a POS service provider, like a bank or a financial technology company. The agent keeps cash for transactions, which will incur a bank charge fee.
- In the POS business, the agent offers customers a variety of transactions to choose from, such as withdrawal, transfer, bill payment, or even opening a personal bank account.
- A POS device makes it possible for the agent to carry out all cash transactions with the customer’s debit card. The agent selects the transaction type on the POS terminal and the amount. Then the debit card is inputted, and the customer simply has to input their PIN.
- The GPRS network connects to the bank’s server to approve the transaction, which, if successful, brings out receipts for the agent and customer, respectively.
Is the POS Business Profitable in Nigeria?
The Point of Sales (POS) transactions increased to N807.16 billion in January 2023, representing a 40.7 percent surge compared to N573.72 billion as of January 2022. This is all the proof you need to know how many POS Terminals are used in Nigeria. There are several reasons for this.
Banks in Nigeria only open their branches in busy areas with markets or many other businesses. For people living far from these significant locations, they have to embark on hour-long trips just to perform their daily financial transactions. The POS Terminal presented itself as a significant source of relief for these underserved people and became a reliable substitute for whole communities.
The business also needs no advertising campaign because every community needs it. POS agents place their stores in noticeable locations. All of this contributes to the lucrativeness of this business.
Services Offered by POS businesses
A POS Business offers more services than the standard withdrawal and transfer of money. Some of these services are
- Withdrawal of funds from a bank account
- Opening a bank account
- Funds deposit
- Payment of bills such as electricity, TV subscription, airtime and others
- Funds transfer
Advantages of Owning A POS business
- Affordable capital: Many businesses need an enormous sum as capital, but the POS business is not one of them. At least the sum of 50,000 NGN suffices to start the business, which you can raise within a short time.
- It does not need an expensive structure: Everyone knows how expensive it is to afford annual shop rent in most places in Nigeria. But there is no need for a fancy structure for the POS business, at least while starting. Most POS businesses use a simple wooden kiosk as the office of their business.
- Customer traffic: For a business to flourish, it needs customers, and the POS business never lacks customers. People always need to make transactions all day; this brings in more profit for the agent.
- Side hustle: Most people need a side hustle to support their careers or other businesses because of the ever-rising cost of living. POS business is a perfect opportunity to do this. You can even employ someone to manage the shop while monitoring the number of transactions carried out through your wallet.
How to Become a POS Agent
A financial institution approves a POS agent to perform mobile money services like withdrawals, transfers, and bill payments to customers.
Before becoming a POS agent, you must choose a POS service company.
To become a POS agent, one must open a bank account with the financial institution you want to work with or work under a bank with which you already have an account. The latter is a better option because your transaction history can make you more qualified to be accepted as their agent.
What Does It Cost To Start A POS Business
The startup cost for a POS business in Nigeria has no fixed amount, but it depends on some factors, which are listed below;
- Available Cash: A POS Agent must be able to provide cash for customers who need it. Holding a significant amount of up to N300,000 should be sufficient to manage the needs of all your customers for a day.
- Location: Choosing the best location to set up your business is how much your POS business can make. Yet, the more people pass through a location, the more it would cost to make it your base of operation. Ask around for the cost of rent and setting up a kiosk/booth for your POS business.
- POS machine/device: The cost of a POS Terminal depends on the company you choose to partner with. Some can be as expensive as N100,000. A Moniepoint POS only costs N21,500 and is easily one of your more affordable options.
Requirements for Starting A POS business
- Start-up capital: As mentioned earlier, the capital needed for the POS business is inexpensive because you don’t need a lot to start the business.
- Location: The next step is picking out a location for the business, somewhere with a need for POS business and where your business will flourish. Examples of such places are markets, parks, well-populated areas and others.
- Official requirements: The Central Bank of Nigeria has set some requirements that POS agents must meet before any financial organisation approves them. You can get details of the requirements either by going to the bank you have chosen or by contacting their customer care. The CBN permits POS agents to work under various POS service providers, but the required documents for each provider might vary from the other.
Below are some of these documents:
- Valid means of identification like National ID Card, Voter’s ID Card, etc.
- Passport photographs
- Bank Verification Number (BVN)
- Current Account references
- Evidence of business registration (CAC Certificate)
- Tax Identification Number (TIN)
- Once the bank approves your application, they will give you a POS machine, free or attached with a cautionary fee so that you can begin your POS business.
How to Choose A Location For Your POS Business
- Network Connection: A good network service is very crucial to the success of your POS business. This is because the POS machine you will use for your business transactions is powered by a telecommunication network service, just like your mobile phone. As a result, a location with good network connectivity access will help the smooth and fast confirmation of transactions with your customers and their banks.
- Crime Rate Level: You also need to consider the safety factor when settling for a particular location for your POS business. This is because your business activity involves cash handling, and you may want to spend some time researching the crime rate of your intended business location.
- In addition to the above, you can also have a special purse/pouch around your neck or a safe with a solid lock to prevent theft and burglary.
- Proximity to ATM Points: Positioning your POS business point close to existing ATM points is not bad. Often, those machines break down or are not loaded with cash, especially on weekends and public holidays. If you notice that an ATM is not dispensing cash, you can go there to advertise your service. Some people there in urgent need of money might subscribe to your service.
Like all businesses, getting started in the POS Business requires patience, knowledge and the ability to build strong relationships with your customers.
There’s just one more thing you need to consider, and that’s choosing the right partner. Why not be a POS agent at Moniepoint? We offer some of the lowest charges per transaction and make it easy for you to get started by making our POS Terminals very affordable. To learn more about becoming a Moniepoint POS agent, click here.