Cash Crunch Catalyst: POS Fees Skyrocket by 50% Amidst Escalating Naira Scarcity

Point of Sale (PoS) service providers across the nation are implementing substantial increases in fees for cash deposits and withdrawals, citing a scarcity of naira in banks. In certain areas like Lagos and Abuja, Nairametrics has observed a surge in transaction charges as POS operators grapple with challenges in accessing sufficient naira from their banks or ATMs.

In Abuja’s Karu locality, a POS operator informed a Nairametrics analyst that the charges for a transaction of N10,000 have risen from N200 to N250, reflecting a 25% increase in fees. Meanwhile, at Aya junction in the same city, Ms. Felicity, another POS service salesperson, revealed that she now charges N200 for N5,000 and N300 for N10,000, representing a staggering 100% and 50% surge in transaction fees, respectively.

Similarly, in Lagos, Mr. Joshua, a POS operator, shared with Nairametrics that due to cash scarcity, he has had to revise his charges. The standard N100 fee for N5,000 transactions has been replaced with N200, and N300 is now charged for N10,000 transactions, indicating a significant 100% and 50% increase in fees based on transaction amounts. The challenges stem from the growing difficulty in obtaining cash from banks and ATMs.

Mr. Joshua, who operates in Iyana Ipaja, Lagos, highlighted the increased struggle to procure cash, with banks withholding funds and compelling POS merchants to purchase money at higher costs than usual. He revealed that some banks limit withdrawals to as low as N20,000 per day, making it challenging for POS operators to maintain their previous pricing. The approaching festive season has intensified the demand for cash, exacerbating the situation.

Ms. Felicity in Abuja echoed similar sentiments, emphasizing the hindrances posed by security guards at banks who restrict POS operators from accessing ATMs. She stated, “I charge up to N300 per N10,000 withdrawal due to the difficulty associated with getting cash from ATMs.” Ms. Felicity outlined the predicament, saying that security guards, recognizing POS operators, prioritize non-operators for ATM transactions, forcing POS operators to seek cash from distant banks where their status is unknown.

Supporting this perspective, Mr. Rabs of POS Services at the Federal Ministry of Works and Housing Estate in Karu, Abuja, emphasized the need for operators to maximize profit on the limited cash they can secure, given the daily limit imposed by banks.

**CBN’s Response**

Contrary to the claims of cash scarcity, the Central Bank of Nigeria (CBN) asserted that there is sufficient cash in circulation. Hakama Sidi-Ali, the acting director of Corporate Communications at CBN, stated on December 13 that the currency in circulation had increased from N1 trillion in February 2023 to over N3.4 trillion by December 11, 2023. She attributed the perceived shortage to apprehension among individuals and explicitly blamed those deliberately hoarding cash for exacerbating the situation.

While the CBN has mandated the simultaneous use of both old and new naira notes, concerns about potential policy reversals persist, leading to the hoarding of the redesigned naira notes. The uncertainty surrounding the naira redesign policy has contributed to the reluctance of individuals to circulate the new notes, perpetuating the challenges faced by the POS operators.

**Holiday Season Impact**

The holiday season has further complicated the situation, with many individuals hoarding cash for Christmas and New Year celebrations. The increased demand for cash during this period has led to a surge in withdrawals, as Nigerians allocate funds for shopping, travel, and other holiday-related expenses.

Hakama Sidi-Ali acknowledged the holiday effect, recognizing that people tend to withdraw more cash during festive seasons. However, she assured Nigerians that the CBN has adequate cash reserves to meet daily transaction needs, even during the upcoming festive season. Despite the challenges posed by the holiday rush, the CBN remains confident in its ability to provide sufficient liquidity to sustain the economy.

In conclusion, the surge in transaction fees by POS service providers reflects the complex interplay of factors, including perceived cash scarcity, challenges in accessing funds from banks and ATMs, and concerns about currency policies. As the CBN addresses these issues and reassures the public of adequate cash reserves, the POS operators navigate the evolving landscape, adjusting their fees to cope with the prevailing challenges in the Nigerian financial ecosystem.