The Central Bank of Nigeria's (CBN) latest directive, which sets a daily limit of ₦1.2 million per Point of Sale (POS) agent and caps withdrawals at ₦100,000 per customer, has sent shockwaves through the agent banking sector. The new rules, announced on Tuesday, have left POS operators scrambling to adapt to the changes, with many considering raising withdrawal fees to compensate for the reduced business.

The CBN's move is seen as an attempt to rein in POS agents, who have become a crucial source of cash since a CBN-engineered cash scarcity in 2023. The new rules threaten to upend the agent banking business model, which has seen increased patronage as Nigerians struggled to access cash from traditional banking channels such as ATMs and over-the-counter services.

POS agents across Nigeria face similar challenges. Crucial players in Nigeria's financial inclusion drive, POS agents have seen increased demand for cash via their services. The surge in demand is linked to a failed currency redesign in 2023, which triggered a prolonged shortage of physical cash. POS agents, who often source cash from informal channels like supermarkets and fuel stations, have become essential intermediaries in the cash distribution process.

However, critics accuse the agents of charging high fees while others claim agents foster a reliance on cash, undermining the CBN's goal of a cashless economy. The CBN's new directives, which will put 2 million agents under pressure, appear geared at limiting the influence of these agents. While the CBN's supporters will argue that the new policy will curb fraud and promote a cashless economy, many agents believe it will slow down customer patronage.

Many POS operators are exploring ways to cope with the changes, including raising withdrawal fees. "The decision took us by surprise," says Semiu Ajayi, a POS agent in Gbagada, Lagos. "I'll just increase my withdrawal charges. It used to be ₦4,000 for a ₦100,000 withdrawal, but now I'll charge ₦6,000 or more." Ajayi's response suggests POS operators will pass on the cost of reduced business to customers.

Others are looking for innovative solutions to manage the increased demand. "We plan to acquire more terminals to manage the increased demand," says Tade Oluwanisola, a POS agent in Ikorodu. "Not every customer will withdraw up to their limits daily, so we will spread the demand across multiple terminals."

The CBN claims the new withdrawal limits will address challenges, including fraud prevention, uniform operational standards, and regulation of the agency banking sector. The growing reliance on POS agents has sparked calls for stricter oversight, prompting a mandate for POS operators to register with the Corporate Affairs Commission (CAC) by September 2024.

The CBN will conduct oversight of the aforementioned actions, including impromptu backend checks, to ensure compliance. "Any breach of these directives will attract appropriate penalties, including monetary fines and administrative sanctions," the regulator stated in its December 17 circular.

As the POS agent community navigates this new landscape, one thing is clear: the CBN's latest directive will have far-reaching implications for the agent banking sector and Nigeria's financial inclusion drive. While the regulator's intentions may be to promote a cashless economy, the unintended consequences of these policies may ultimately harm the very people they are meant to help.