The PoS Surge and the Decline of Traditional Banking Infrastructure
The numbers paint a stark picture of Nigeria’s evolving financial landscape. By March 2025, the country boasted 5.90 million active Point of Sale (PoS) terminals processing transactions worth an astounding 4.87 billion naira every hour. In contrast, the number of active ATMs had dwindled to 16,714 machines, a decrease from 17,377 in the preceding six months. This presents a critical imbalance: Nigeria now has one PoS terminal for every 26 citizens, while ATMs serve only 14 adults per 100,000. The infrastructure of formal banking has been rendered largely obsolete, not by policy shifts, but by the overwhelming force of market demand meeting technological capability.
This transformation has occurred with remarkable speed. PoS transaction volumes surged from 2.62 trillion naira in the first quarter of 2024 to 10.51 trillion naira in the first quarter of 2025, marking a significant year-on-year growth of 301.67 percent. For the entirety of 2024, PoS terminals processed 18 trillion naira across 1.5 billion transactions, a 69 percent increase from the 10.7 trillion naira recorded in 2023. These are not minor adjustments in payment behavior; they signify a comprehensive replacement of traditional banking infrastructure with an agent-based cash distribution network that largely operates outside the formal banking sector.
The contrast with traditional banks is striking. Nigeria’s largest bank by branches, First Bank of Nigeria, operates 820 locations globally, serving over 43 million customers. Access Bank, the largest by assets, maintains 740 branches across Nigeria and Africa. United Bank for Africa operates approximately 1,000 branches with over 3,000 ATMs, while Zenith Bank has 454 branches worldwide. Collectively, the formal banking sector operates fewer than 7,000 branches nationwide, with the top ten banks accounting for the majority of this physical presence.
In stark opposition, the agent banking network has deployed 5.90 million active terminals. This figure is more than 350 times the number of ATMs and nearly 1,000 times the number of bank branches, highlighting the profound shift in how Nigerians access financial services.
The Rise of PoS Terminals and Dominant Fintech Players
Nigerians are not merely using PoS terminals as a supplement to traditional banking channels; they are actively moving away from ATMs. This preference is driven by the convenience of agents who provide cash on demand, bypassing the queues, downtime, and empty machines that have characterized bank infrastructure. The agent revolution has been propelled by three key fintech companies that aggressively pursued market capture.
- •Moniepoint currently processes approximately 42 percent of Nigeria’s total PoS transaction volumes. It operates through a network of over 400,000 active agents spanning all 36 states.
- •Opay ranks second with a 25 percent market share and more than 563,000 agents. Its network is primarily concentrated in major urban centers like Lagos, Abuja, and Port Harcourt.
- •PalmPay holds an 18 percent market share, with over 500,000 agents as of mid-2023. The company has achieved rapid expansion within the retail and small business segments.
Collectively, these three fintech entities control roughly 85 percent of Nigeria’s agent banking ecosystem. This level of market concentration is unparalleled in any segment of the formal banking sector. The speed of their expansion underscores how effectively they outmaneuvered traditional banks in adapting to market needs.
The Dual Impact of the PoS Economy: Inclusion and Risks
The impact of this PoS-driven economy on financial inclusion has been substantial. A 2023 survey by Enhancing Financial Innovation and Access revealed that 36 percent of Nigerian adults used a PoS agent for deposits or withdrawals in the previous year. This coincided with a sharp decline in visits to formal bank branches after 2020. Agents have successfully extended financial services to approximately 11 million Nigerians who were previously unbanked, reaching populations in rural and peri-urban areas where banks have historically lacked a presence.
Data indicates that as of mid-2025, 80 percent of retail payments under 5,000 naira are still conducted in cash. However, PoS terminals have emerged as the primary mechanism for converting digital balances into physical currency. This displacement of traditional banking infrastructure has introduced significant complications, highlighting the systemic importance agents now hold. Currency in circulation surged from 982.1 billion naira in February 2023 to 5.01 trillion naira in June 2025, with a remarkable 89.76 percent held outside the formal banking system.
The Central Bank of Nigeria’s acting director of currency operations acknowledged in 2024 that cash, which would typically flow through formal banking channels for processing and reissuance, is now being held by PoS operators. This liquidity hoarding undermines monetary policy tools such as the cash reserve ratio and lending rates. It leaves the CBN with limited visibility into money supply and reduced ability to influence credit conditions.
Furthermore, fraud statistics underscore the inherent risks within a system that experienced rapid growth outpacing regulatory oversight. Nigeria Inter-Bank Settlement System data shows that PoS channels accounted for 26.37 percent of all fraud incidents in 2023. Fraud attempts via agent channels escalated from 9 billion naira in 2021 to over 22 billion naira in 2023. In the second quarter of 2024 alone, reported fraud losses surged to 28 million dollars from 1.9 million dollars in the first quarter, a fourteen-fold increase suggesting an accelerating problem.
Regulatory Interventions to Stabilize the PoS Ecosystem
These vulnerabilities have prompted the CBN to implement increasingly stringent controls. In December 2024, the apex bank imposed a 1.2 million naira daily transaction cap for each agent and a 100,000 naira daily withdrawal limit per customer, with an additional 500,000 naira weekly cap. In August 2025, regulators mandated that all PoS terminals must operate within a 10-meter radius of their registered addresses, effectively curtailing mobile agent operations.
Following these measures, in October 2025, the CBN issued comprehensive new guidelines requiring agents to establish exclusive relationships with a single principal institution by April 1, 2026. This move aims to eliminate the common practice of agents operating terminals for multiple fintech platforms simultaneously.
The exclusivity rule represents the most significant regulatory intervention to date. It will compel agents currently working with multiple fintech entities to consolidate their operations with a single provider. The policy's objectives include enhancing traceability, reducing oversight gaps, and curbing fraud. However, it is expected to intensify competition among Moniepoint, OPay, PalmPay, and traditional banks for agent loyalty. Critics express concerns that this rule could diminish competition, limit customer choice, and strain rural access to financial services, particularly if smaller agents struggle to secure partnerships with dominant players.
This regulatory overhaul acknowledges a reality that market data has already clearly demonstrated. The agent network is no longer merely an alternative to formal banking; it has evolved into the primary mechanism through which millions of Nigerians access cash, make payments, and conduct their daily financial transactions.