This is a detailed guide on how to start a POS business in Nigeria.
There are many profitable business opportunities that one can invest in Nigeria; POS business is one of such.
POS business is very profitable in Nigeria, and easy to start as well.
You may not necessarily be the one to run it. You can simply start one and employ someone to manage it for you.
If you wish to learn how to start a POS business in Nigeria, this guide will help.
In this guide, I will show you how to start a POS business in Nigeria, the cost of starting a POS business in Nigeria, and how to get a POS machine for free in Nigeria.
POS Business In Nigeria
POS which is known as Point of Sale or Point of Purchase is a system that allows customers to make payment for goods and services with their debit cards on a POS machine in retail shops, offices, supermarkets, fuelling stations, pharmacies, eateries, etc.
The idea of POS machines in retail outlets is that customers can pay for goods and services without necessarily carrying cash around.
In Nigeria, POS usage has gone beyond just making payments for goods and services in retail outlets.
POS can now be used to make transfer and withdrawal of funds, sell airtimes and pay bills, namely GOTV, DSTV, Startimes, PHCN, and other utility bills.
This aspect of POS usage is what is referred to as agent banking in Nigeria.
The agent banking system started in 2013 in Nigeria, after its guidelines and operations were released by the Centra Bank of Nigeria.
This opened up another business opportunity in Nigeria, namely the POS business, where people can easily go to withdraw and transfer money using their debit cards, without necessarily going to the ATM stand.
The POS business, no matter how popular it is becoming today, is still one of the best-untapped streams of income in Nigeria, especially in the rural areas.
This development is one of the reasons why there are no many crowds in ATM stand when compared to before.
Thus, many commercial banks have come to appreciate and sponsor POS agents to make their services available to remote areas, and reach a larger number of people.
One way they sponsor and support POS business in Nigeria is by providing the POS agents with POS machines, mobile phones, and other relevant equipment that will make it easy and comfortable for these agents to carry out minor banking transactions.
If you are looking for a business to start without much capital, or you already have an existing business and wish to diversify, starting a POS business may not be a bad idea for you.
In fact, it may be the best idea for you, especially if you have an exiting shop or kiosk.
How Much Does It Cost To Start A POS Business In Nigeria?
The amount you need to start a POS business in Nigeria may vary, depending on 2 major factors that include:
- Your Location
- How you intend getting the POS machine
1. Location: Your location is one of the factors that will determine the amount of money you will need to start a POS business in Nigeria.
For instance, you definitely will need a shop, a small kiosk, etc, where you will be doing the business.
If you are in rural areas, or in a location where things are quite cheap, then it won’t cost you much to secure a place where you will stay and be doing business.
Whether you intend to get your own place, or partner with someone who already has a shop, and be giving him a certain monthly fee for using his shop.
Whichever you prefer, it will cost less, when compared to someone in an urban area, or place where the cost of living is relatively high.
2. How you intend to get the POS machine is another factor that will affect the amount you will be needing to start your POS business.
For instance, if you intend to get the POS machine from the banks, you may get it for free.
I mean, you are likely not going to pay anything for it, however, there might be some terms and conditions attached to it.
However, if you intend to buy the POS machine from other companies or agencies, you may get it for an affordable rate of ₦40,00 to ₦80,000, depending on the type.
Whichever means you intend to get the POS machine will ultimately depend on you.
Lastly, you will be needing around ₦200,000 at hand that you will use to be paying people when they come to withdraw.
That’s pretty much the breakdown of how much you can use to start a POS business in Nigeria.
In summary, the cost of starting a POS business in Nigeria is between ₦250,000 to ₦500,000.
Requirement To Starting A POS Business In Nigeria
Like I mentioned earlier, POS business is very profitable in Nigeria, especially one that is set up in a very remote area, or a location very far from banks.
However, before you can start a POS business in Nigeria, there are certain requirements you must meet.
- Be registered with CAC
- Have a shop or office
- Have an existing business
Let’s discuss these requirements briefly, so you have a clear understanding as to why they are important.
1. Be registered with CAC
Before you can operate any business in Nigeria legally, such business must have been registered with the Corporate Affairs Commission (CAC).
Hence, it is essential you register your CAC business with CAC if you must operate legally in Nigeria.
As a matter of fact, the requirement stipulates that you must be registered with CAC as any of the below entities.
- Limited Liability Company
- Sole Proprietorship
- Cooperative Societies
- Public Entities
- Trusts or any other entity aside from faith-based or NGOs.
Truth is, registering a business with CAC is very easy, and comes with a lot of benefits as you will come to learn.
As a matter of fact, you can now register your business with the Corporate Affairs Commission, CAC right from the comfort of your homes (I did mine myself online).
If you wish to get started with registering your business with CAC, you might find our step by step guide on how to register a business with CAC very helpful.
2. Have a Shop or Office
I hope you can understand why having a shop is a requirement before you can start a POS business in Nigeria.
For those who may not, let me help you understand. Operating a POS business requires you to have a shop or an office, as you can not just stand on the road carrying out certain transactions.
I understand some persons might not have much cash to go and rent a shop or an office. However, there is a way around it.
Most POS agents as you may have also noticed operate in a kiosk, and in other people’s shops.
All you need to do is have an agreement with a shop owner in a good location, that you will be paying him a certain amount of money every month, then he can permit you to be doing your POS business from his shop.
3. Have An Existing Business
Also, it is required you have an existing business that is currently in operation for at least twelve months.
Steps To Starting A POS Business
Now you have all the requirements for starting a POS business in Nigeria, here is how to go about starting one.
1. Get A POS Machine
The first step to start a POS business in Nigeria is to get a POS machine. To get the POS machine for your POS business, you can either buy one or get it from the bank.
Getting A POS Machine From The Bank
For a lot of persons who wish to begin a POS business, but are on a tight budget, how to get free POS machine in Nigeria is their major concern.
If you are one of those wondering how to get a POS machine free in Nigeria, then it is very possible.
However, the only legitimate way you can get a free POS machine in Nigeria is if you get it from a trusted commercial bank in Nigeria.
To get a POS machine from GTB, First Bank, Access Bank, Zenith Bank, or any other reputable commercial bank in Nigeria, simply visit the bank of your choice and fill in the required documents you will be given.
Some of the document you are expected to fill are:
- A valid means of identification e.g Driver’s license, National ID card, International passport or voter’s card.
- 2 passport photographs
- 2 current account references
- Evidence of business registration (CAC Certificate)
- Tax Identification Number (TIN)
- Memorandum and Article of Association.
- Credit Bureau Report
- A minimum capital of about ₦50,000
After providing all the required documents and information, the account officer will process your application, and you will be contacted in less than 30 days.
However, before the POS machine will be given to you, you will be required to sign an agreement document with them.
Buying A POS Machine
If you think you’d rather buy your own POS machine instead of getting one from the bank then there pos vending companies in Nigeria where you can buy one.
The prices of POS machine differs, depending on where you are buying it. For instance, if you are buying from Jumia, the price of POS machine in Jumia ranges between ₦50,000 to ₦100,000.
Other operators to get POS machine in Nigeria are:
- Nexgo Pos
- citiserve etc.
2. Get A Location
I already mentioned the importance of getting an office for your POS business.
Hence, picking a good location for your office is very necessary. One of the things you must consider when picking a location for your POS business is proximity to the bank.
By proximity, I mean, do not pick a location that is very close to a commercial bank, or an ATM stand, as it is likely not going to move very well.
A lot of persons would rather just walk to the ATM stand, rather than withdrawing money from you.
Hence, ensure you pick a location that is very far from the banks, or close to the marketplace, or a rural community, etc.
POS Services To Render
When everything is set, below are some of the services you can render with your POS machine and collect a commission.
- Cash deposit and withdrawal
- Balance inquiry
- Money transfer services
- Bill payment (taxes, utilities, tenement rates, subscriptions, e.t.c)
- Mini statement generation and issuance
- Cash disbursement and cash repayment of loans
- Agent mobile payments/banking services
5 Tips To Succeed In POS Business
To succeed in your POS business, below are 3 tips I believe will be very helpful to you.
- Do not charge a high fee for transactions. For instance, you can charge ₦100 for transactions of ₦1,000 to ₦5,000; then ₦200 for transactions of ₦6,000 to ₦10,000 Naira, etc.
- Do not set up your business where hoodlums operate a lot, to avoid losing your money to them.
- If you must employ someone to manage it for you, ensure is someone you know very well, and trust, to avoid stories that touch.
- Always be present at all costs. If you are not always available, people will not take you seriously.
- If you accept transfers, always confirm the money in your account before giving out funds, unless it’s someone you know too well, because scammers have found a way to fake bank alerts these days.
That’s all on how to start a POS business in Nigeria.