The Central Bank of Nigeria (CBN) has set new limits on cash withdrawals through Point of Sale (POS) agents to promote a cashless economy and reduce fraud. Effective immediately, individuals can withdraw up to N100,000 per day, while POS agents have a total daily withdrawal limit of N1.2 million.
Additionally, customers are limited to a maximum cash withdrawal of N500,000 per week. These measures, announced on December 17, 2024, by Oladimeji Yisa Taiwo of the Payments System Management Department, aim to standardize agency banking operations and encourage electronic payments.
The directive requires POS agents to use the approved Agent Code 6010 for all transactions and to keep their banking services separate from other business activities. All transactions must be conducted through float accounts maintained with their principal institutions.
Financial institutions are instructed to monitor accounts linked to agents’ Bank Verification Numbers (BVNs) to detect unauthorized banking activities. Agents must connect their terminals to the Payments Terminal Service Aggregator (PTSA) and submit daily transaction reports to the Nigerian Inter-Bank Settlement System (NIBSS) electronically, using a reporting template provided by the CBN.
The CBN emphasizes that principal institutions are responsible for their agent’s actions and will conduct regular oversight, including backend checks, to ensure compliance. Violations of these directives may result in penalties, such as fines and administrative sanctions.
While these policies aim to enhance security and promote electronic transactions, some POS operators and customers express concerns. Operators worry about sustaining their businesses with reduced transaction volumes, and customers, especially in rural areas with limited bank access, may face inconveniences due to lower cash availability.
The apex bank believes that with collective effort, Nigeria can transition to a more secure, transparent, and cashless financial system. The CBN’s latest intervention underscores its commitment to addressing the challenges of a cash-heavy economy and ensuring that digital payment methods become the norm across the country.
Rising Costs and Transaction Charges
The newly imposed cash withdrawal limits by the Central Bank of Nigeria (CBN) have sparked concerns among Point of Sale (POS) operators about the potential rise in transaction charges.
Many operators, who rely on high-volume cash transactions to sustain their businesses, fear that the restrictions could lead to significant revenue losses. As a result, they might be compelled to increase transaction fees to cover operational costs.
Why Costs May Rise
1. Reduced Transaction Volume
With daily limits of N100,000 for individual customers and N1.2 million for agents, operators will process fewer transactions, potentially affecting their profit margins. To compensate, they may increase charges per transaction.
2. Higher Operational Expenses
Many POS agents incur various expenses, including terminal maintenance fees, logistics, and payments to employees or subcontractors. These costs remain constant, regardless of reduced transaction volumes, putting additional pressure on operators to raise charges.
3. Compliance Costs
Adhering to the new guidelines, such as connecting terminals to the Payments Terminal Service Aggregator (PTSA) and submitting daily transaction reports, may require investment in new technologies or systems. These costs are likely to be passed on to customers through higher charges.
4. Increased Risk Exposure
In areas where demand for cash is high, such as rural communities with limited banking infrastructure, operators may face a heightened risk of carrying large sums of money. The withdrawal limits may force them to make more frequent bank visits.
While the withdrawal limits aim to promote a cashless economy, rising transaction charges could create new barriers to financial access if not carefully managed. Collaboration among the CBN, financial institutions, and POS operators is essential to balance the policy’s goals with the realities on the ground.
