Banking agents who have defined the emerging Point-of-Sale (PoS) market and the entire payment landscape are facing an existential threat. Merchants are flooding into the territory that used to be dominated by agents, reducing profits and increasing concerns about redundancy in the market.
The banking agents are facing backlash following a decision to increase the fees they charge per PoS transaction. The Federal Competition and Consumer Protection Commission (FCCPC) is leading the charge, demanding a reversal of fee hike and threatening to fine operators as much as N1 million for violation of its cease-and-desist order. Violators of the order also have an option of a three-month prison sentence.
But leaders of agents’ associations such as the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) said the harsh economic realities that agents face require consideration by the government, its agencies and the consumers. Victor Olojo, president of AMMBAN, said while it has received the letter from the FCCPC, it has also communicated to the commission that it is not in the business of fixing prices for agents. The communique first brought to the public by the Lagos State chapter of AMMBAN was only a guide advising its members on the cap to set on fees in view of the current economic realities, he said.
“FCCPC cannot force an enterprise to sell at a loss. That is not possible. I think their interest is whether we are fixing the price and it is very clear: AMMBAN is not fixing the price. We are only advising our members to be competitive and not to charge beyond a certain price limit, which is a price cap. That is our position,” Olojo said. AMMBAN has over 1.6 million agent locations across the country.
Many agents say they not only grapple with inflation but there is also growing competition eating away at the little they make.
Merchants and agents share similarities in that they are both in business. The difference is in the products they sell. Experts define agents in the industry as cash-in-cash-out merchants that sell cash. Merchants are used for businesses that sell goods and services, for example, petrol filling stations, schools, hospitals, market traders and supermarkets.
Operators such as Moniepoint, PalmPay, Parkway, and Opay have admitted to seeing a spike in merchants taking up spaces in the market. Moniepoint, in particular, said before 2023, banking agents were dominant, accounting for 80 percent of PoS issuance on its platform. However, the reverse is the case so far in 2023, with merchants controlling by 80 percent.
Moniepoint now has over 1.3 million businesses, whereas the banking agents have now grown to about 611,000, with about 200,000 of these agents coming from January, when the Central Bank of Nigeria (CBN) attempted to issue new naira notes, causing severe scarcity in the country. The company says it does about 400 million transaction volume per month.
Merchants embracing PoS became ubiquitous when the naira redesign kicked off and caused widespread scarcity of banknotes. Many bank agents were unable to access cash to meet the growing demand of their customers.