The Central Bank of Nigeria’s (CBN) new agent banking transactions policy signals a repetition of its 2022 cashless and withdrawal policy, which caused widespread cash scarcity and disrupted economic activities in early 2023.
The 2022 policy, aimed at reducing currency in circulation and promoting electronic payments, made Point of Sale (PoS) agents pivotal as they bridged the cash gap left by banks and ATMs. Under the policy, daily ATM and PoS withdrawals were capped at N20,000 per individual, pushing customers toward internet banking, mobile apps, USSD, and PoS channels.
Following implementation, currency in circulation fell from N3.23 trillion in September 2022 to N1.39 trillion in January 2023 and further to N982.1 billion in February. It later rose to N1.68 trillion in March, coinciding with the relaxation of the policy. Cashless transactions, meanwhile, grew by 44.84 percent, reaching N126.73tn in the first quarter (Q1) of 2023, compared to N87.49tn in the same period of 2022.
Since then, however, currency in circulation has soared to N4.5 trillion as of October 2024, prompting the CBN to introduce new measures targeting agent banking.
“In line with the Central Bank of Nigeria’s ongoing efforts to advance a cashless economy, the Bank hereby releases the following policy interventions, which have become necessary to enhance the use of electronic payment channels for agency banking operations,” the CBN said in its ‘Circular on Cash-Out Limits for Agent Banking Transactions.’
According to the Nigerian Financial Services Report, agency banking—including PoS and mobile money—is a key enabler of financial inclusion, especially for unbanked individuals who rely on these channels to receive and get funds.
Read also: CBN slams N1.2m daily limit on PoS agents
The Nigeria Interbank Settlement System Plc (NIBSS) reports that as of July 2024, 3.05 million PoS terminals had been deployed, with 4.06 million registered. The International Monetary Fund (IMF) notes that Nigeria has about 1,600 agents per square kilometre, driven by the growth of fintech companies like Opay, Paga, and Moniepoint.
Despite their critical role, PoS agents have faced allegations of exacerbating cash scarcity in banking halls and ATMs. They have been accused of colluding with market traders and fuel stations to mop up cash before it enters into the formal banking system, leading to calls for tighter oversight of the space.
Currency outside banks reached a historic high of N4.3 trillion in October 2024. “At the heart of the policy is the will to stem the liquidity crisis that we are in. PoS agents have been the scapegoat all the while. This is an attempt to impose some order on that chaos. I do not think it will work because we are not addressing the fundamentals. After all, cash is expensive for many banks,” one industry expert said.
The new policy caps PoS agents’ transactions at N1.2 million daily and imposes a cash withdrawal limit of N500,000 weekly and N100,000 daily per customer, regardless of channel. Agent terminals must now be linked to a Payment Terminal Service Aggregator (PTSA) for monitoring.
“Ensure that all daily transactions per agent, including withdrawals, limits of transactions, and balances in the float accounts of each agent, are sent electronically to NIBSS as a report to the CBN,” the CBN noted.
The policy also mandates that operators clearly distinguish between agent banking and merchant activities.
Oluwagunwa Ibirogba, chairman of the Lagos Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), believes the policy will introduce the much-needed order despite initial challenges.
“Cash hoarders within the space will lose incentive, as large cash withdrawals will move online,” he explained. “People can still make bulk purchases, but bulk cash withdrawals will transition to electronic channels.”
He highlighted that separating agents from merchants would refocus agency banking on its original purpose. Ibirogba added that ransom payments would become harder due to the traceability of electronic transactions and the unavailability of large volumes of cash,
In its circular, the CBN outlined combating fraud as one of the scheme’s benefits. This latest move to make cashless transactions the norm aligns with the apex bank’s vision of 2025, when it expects the use of cash to reduce. “The use of cash will naturally slow with the ‘mobile first generation,’ which will be economically active by 2025,” it said in its 2025 vision.
However, some experts predict that agents may find ways to bypass the restrictions. “We are likely to see more agents in the space because if one agent is capped at N1.2 million, the idea would be to look for other outlets,” an industry expert stated.
