The new cash withdrawal limit of N20, 000 daily from Point of Sale (PoS) channel, effective from January 9, 2023, has been described as a threat to the sales and profits of operators.
The Central Bank Of Nigeria (CBN) had, in a letter to banks and other financial institutions on Tuesday, slashed the limits on cash withdrawals over the counter and via Automated Teller Machines (ATMs), PoS, and cheques.
Over the past few years, the number of PoS agents, also known as mobile money agents or bank agents, has surged, with the business serving as a means of livelihood for millions in urban and rural areas.
“It is going to affect agency banking because the volume of transactions will reduce significantly,” Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.
He said it is now up to the operators to find a way to position themselves better in the value chain.
Globally, agency banking is recognized by policymakers, researchers and development agencies as a financial inclusion initiative that has remained an integral tool in developing economies, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.
The opportunity to make an additional income is a major motivation for becoming an agent, according to a 2020 Enhancing Financial Innovation and Access (EFInA) agent survey.
“Agents surveyed are signed up by different principals/service providers. Nevertheless, First Bank (First Monie), OPay, QuickTeller, and MTN top the list of principals with a majority share of agents,” EFInA said.
Adesola Adeduntan, chief executive officer at First Bank of Nigeria Limited, said last year that more than 1.2 million individuals had been positively impacted economically through the jobs created via their agent banking proposition.
“This initiative has been a very formidable vehicle for job creation and economic development in several communities across the country, as more than 100,000 direct jobs and 300,000 indirect jobs have been created, with an agent earning an average monthly commission income of N85,000,” he said.
In Nigeria, the agents are third-party retail outlets contracted by financial institutions to process clients’ transactions. They are empowered to reduce reliance on over-the-counter transactions while providing convenient personalized services.
The agents are equipped to carry out services, which include account opening, cash deposit, airtime purchase, bills payment, withdrawals and money transfer. Many people prefer to visit PoS outlets to carry out transactions rather than banks as it saves them time and energy.
According to Shared Agent Network Expansion Facilities, the number of bank agents surged by 1,456.9 percent to 1.3 million in 2022 from 83,500 in 2018.