Disadvantages of POS Business in Nigeria

The POS business in Nigeria has grown very quickly over the last two years to become one of the most popular in the country. This business involves POS agents providing banking services to people outside the four walls of a bank.

While presenting both the entrepreneur and the customers loads of benefits, there are still a few disadvantages of the POS business in Nigeria. The question that begs an answer is, “what are the disadvantages of POS business in Nigeria” Continue reading this post to find out.

Overview of POS Business in Nigeria

Before we discuss the disadvantages, let’s first show you an overview of this business in Nigeria. POS stands for “Point of Sale.” Originally, these machines were designed for vendors, retailers, and wholesalers to collect payments from customers who didn’t carry cash. The aim was to lead us into a cashless economy.

Interestingly, many parts of the country, mostly the rural areas, do not have access to full banking services. As a result, banks introduced POS points to such areas to assist in handling several banking services. Some of these services include:

  • Making bank transfers.

  • Conducting withdrawals.

  • Opening bank accounts.

  • Making bill payments such as cable TV and PHCN bills.

  • Payment for airtime and data subscription, etc.

In essence, the POS business has helped to reduce the stress that the Nigerian populace faces in terms of banking operations and services. This business became more popular during the lockdown period with people not being able to visit banking halls. Today, you will find a couple of POS points on every street, especially in urban areas.

Disadvantages of POS Business in Nigeria

As mentioned above, the POS business is rapidly expanding in Nigeria. More entrepreneurs are beginning to invest in this business. Despite alleviating the stress of the average Nigerian, this business has a few disadvantages. Some of them include:

Network issues

This is probably the most common challenge experienced by both operators and customers of POS businesses. Many times, the network is so bad, especially in rural areas, that individuals have to wait several minutes before a transaction is processed. It is even worse when the customer makes a transfer to the operator’s account.

When this incident occurs, it can result in frustration for both parties. More than this, many operators lose customers since they are not aware that it is a network issue, not the vendor’s fault.

Increase in fraud

Many POS operators will tell you that they have experienced some level of fraud while running this business. The same goes for customers who have patronized POS operators. For the operators, some of them have received counterfeit cash or incomplete funds for transfer or deposit purposes. In the end, they have to make up for the loss from their capital, which can ruin the business.

On the part of the customers, some of them have experienced more withdrawals from their accounts than they authorized. In some cases, POS operators configure their machines to save the PIN of the customer. After the customer leaves, they now withdraw from the account. Several POS customers have been swindled in this manner and lost their funds.

Cost of the machine

Another very common disadvantage of the POS business in Nigeria is the cost of the POS machine. Many people who venture into this business consider the cost of acquiring the machine first. Most high-quality POS cost N70,000 or more. When you tell the prospective operators about this price, they run away.

The issue with cheaper machines is that most of them are not fully efficient. They experience several issues including poor network reception, weak batteries, and difficulty in use. If you can, you should consider going for expensive high-quality machines.

Delay in funds reversal

This problem is linked to the network issue discussed earlier. Many times, customers try to make withdrawals and because of network issues, they get debited without the transactions going through. Typically, such funds should be reversed immediately or at least within 24 hours. However, some customers don’t even get their funds refunded even after complaining to the operator or their banks.

Again, this issue can make customers lose faith in a POS operator that they patronize frequently if this issue is recurrent. Customers and operators make several complaints without positive responses from their banks.


POS business, similar to every other business in Nigeria, is prone to attack from hoodlums. You will notice that most POS businesses shut down operations once it is sunset. The reason for this is that most of them are scared of being robbed.

Every prospective POS operator should consider hiring a security agent if they can afford to. Alternatively, they can consider locating their business in open and highly secure areas.

Absence of regulation

It is no secret that you will find a POS operator on almost every street, especially in urban areas. This is evidence that there are hardly any regulations to enter and run this business. Once you can afford the capital for the business, you can apply for the machine and resume work.

Because of this, you will notice that there are no specific charges on transactions. Different operators fix their prices depending on their location and the customer patronizing them. You will also notice that POS operators are crowded in some locations and almost non-existent in others. They would have been evenly distributed if there was a body to regulate the operations of POS businesses.

Difficult customers

We all know how difficult some customers can be. Many POS operators have to suffer uncomfortable encounters with such customers every day. Some of these customers come with malfunctioning or expired cards and expect you to carry out a transaction. It even gets worse when the customer is debited and the transaction is declined.


The POS business in Nigeria is very lucrative as it helps to ease the stress of the average Nigerian. Despite being so lucrative, it has its disadvantages. This post has discussed some of these disadvantages. Which other ones do you know? Kindly share them in the comments section.