How To Start an Agent Banking Business (POS) In Nigeria

How To Start an Agent Banking Business (POS) In Nigeria

How To Start an Agent Banking Business (POS) In Nigeria


Nigeria with a huge population of more than 200 Million people has one of the largest financial markets in the world.

A recent report by the National Development Plan (NDP) has shown that the Nigerian financial sector added a total of $22 Billion to the Nigerian GDP from 2017 to 2020. The banking sector chaired the market contributing the highest $21 Billion in 2019.

The POS business came into Nigeria in 2013 when the Central bank of Nigeria (CBN) introduced the agent banking system to reduce the endless queues in banking halls and to deepen financial inclusion in Nigeria.

Agent banking favours people living in remote and local areas where banks are far from their homes.

What is Agent Banking (POS), and how does it work?

The agent banking system in Nigeria operates under a POS service provider, like a bank or a financial technology company.

The agent keeps cash at hand for transactions, which will incur a bank charge fee. An agent banker offers customers a variety of transactions to choose from, such as withdrawal, transfer, and bill payment.

An agent banker operates with a POS device makes it possible for the agent to carry out all cash transactions with the customer’s debit card.

The customer’s card is inserted into the POS machine, in which they are allowed to choose their preferred financial transaction option and asked to input their transaction pin secretly.

The POS machine is an internet-enabled device that connects to the bank’s server to approve the transaction, which, if successful, brings out receipts for the agent and customer, respectively.

Agent bankers make their profits from the charge fee on every transaction performed by the customers, from withdrawals to airtime buying.

Sometimes, the POS service provider also gives the agents a commission. Seldomly, when a customer comes to make a transaction, such as a withdrawal of 5,000 NGN, the agent collects a charge fee of N100 Naira, also the agent banker can decide to charge an extra fee on every other financial transaction.

Why Should You Start an Agent Banking Business(POS) Business in Nigeria?

Banks in Nigeria only open their branches in busy areas, where there are markets or many other businesses.

So, people living far from these places will have to go at least a thirty minutes drive from their homes. To deepen financial access in rural areas, mobile banking was introduced to make this a reality.

Here are valid reasons why you should become an agent banker in Nigeria.

1. It is not capital intensive.

Starting a business in Nigeria is quite expensive and access to capital can be another challenge.

Becoming an agent banker in Nigeria does not require too much capital, and if you are someone who does not have access to exorbitant capital you can start a POS business with nothing less than N50,000.

2. It does not need an expensive structure.

Becoming an agent banker does not require that you put up expensive structures. Some people may not be able to afford an annual shop rent in Nigeria because it is expensive.

Becoming a banking agent does not require you to own any fancy structure. Most banking agents can be on the move, while the majority build their stands using a kiosk.

3. There is a huge demand for agent bankers in Nigeria.

One thing I love about becoming an agent banker in Nigeria is the fact that you dont have to create a new market for it because there is an existing market that drives it already. People always need to make transactions all day, this brings in more profit for the agent.

4. It is a profitable side hustle.

Are you thinking of a side hustle as a student or someone who is in the unemployment category? becoming an agent banker is something you should consider starting.

Most times You can even employ someone to manage the agent banking business while you run around doing other things.

What are the Downsides Of Starting an Agent Banking Business?

On almost every street in Nigeria today, there is an agent banker near you. Agent banking has become a common and lucrative business in Nigeria. But as much as it comes with its benefits, it also comes with its downside as stated below.

1. You are exposed to Theft.

A major downside of becoming a mobile banker is the fact that you operate outside the jurisdiction and protection of the bank making you vulnerable to attacks.

Running an agent banking business requires transporting large amounts of money from the bank to your place of business, which can expose your business to robbery attacks and criminals. It is important to be security-conscious and alert at all times.

2. You are exposed to fraudulent attacks.

As an agent banker, you need to take all measures to ensure that your machine is not hacked. Most times unsavoury characters patronise POS businesses to carry out fraudulent transactions, and this leads to fake transaction confirmations.

3. Poor access to Electricity.

Just like your smartphones, your POS Machines need to be charged, and if you intend to use them from dawn to dusk then you need access to constant electricity.

As an agent banker, you might need to have another source of power, like a small generator or a power bank to make things a lot easier for you.

How Do I start an Agent Banking Business (POS) In Nigeria?

Banks are only available in the busiest commercial areas of each town. If the town is large, there will probably still be only one location.

For people living in the remote part of town, it would be difficult to get to the bank most times. This is why agent banking has been put in place to ease the stress.

1. Decide on a Location.

One factor that must be considered when starting as an agent banker is your location of operation.

The agent banking reforms were implemented to deepen financial inclusion in Nigeria, off course you know that it is not to be operated in urban city centres.

When choosing a location as an agent banker, you should consider somewhere with access to a network so you dont have issues completing transactions.

Also, running a POS business means that you will be handling a lot of cash.  Everyone knows this, which makes a POS outlet one of the easiest targets for shoplifters, petty thieves and armed robbers.

Make sure you put security in mind when choosing a location. Lastly, If there are already more than two POS agents in your desired location, it is advisable to find another place. 

Because people will do business with whom they already know. Other factors that should be considered are the population density of such location, closeness to the bank and the income standard of the people.

Middle-class Nigerians are more likely to use agent banking, and the poor and the extremely rich people dont make use of the service.

2. Get The appropriate Documents.

Next is to get the required documentation to become an agent banker. Most times you need the following details which include;

1. An existing retail outlet in a physical geographical location for a minimum of 12 months.

2. Must have maintained a bank account for a minimum of 6 months.

A prospective agent may wish to register using either a business name (a corporate account) or a personal name (an individual account).

3. Get Startup Capital.

Becoming an agent banker is not as expensive as pointed out in this article. This is something that is started with a low capital of at least N50,000 ($100).

To activate your business as an agent banker you need startup capital. Apart from the money in your Piggy bank, you can raise enough money for your business raising through family and relatives.

I wrote a comprehensive guide on this blog on how you can raise startup capital for your business. Check out the link to the article to learn more.

4. Choose Your Prefered Agent Banking(POS) Provider.

Next is to choose a desired agent banking Provider to work with. Banking in Nigeria has improved over the years.

Competition amongst the individual banks has made more improvements as the banks try to offer their customers the best service.

There is still a lot to be done to offer consumers maximum satisfaction with financial service delivery.

These and more have created gaps that FinTech companies in Nigeria now seek to fill.

Becoming an agent banker in Nigeria was quite hard when commercial banks were major player, but with the emergence of Fintech services like Flutterwave and Kuda, being an agent banker have become more democratized than it used to be.

There are various kinds of agent banking services in Nigeria, all you need is to choose one that is more flexible for you.

Check out their agent banking terms and conditions and get access to their point of sales Machines.


What do you think?

Written by Udemezue John

Hello, I'm Udemezue John, a web developer and digital marketer with a passion for financial literacy.

I have always been drawn to the intersection of technology and business, and I believe that the internet offers endless opportunities for entrepreneurs and individuals alike to improve their financial well-being.

You can connect with me on Twitter


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