With Chuma Akanna, fintech lawyer and tech policy expert
As Nigeria marches toward a cashless economy, a quiet contradiction unfolds on its streets. Point-of-Sale (PoS) terminals — once introduced to promote digital transactions have become the country’s most reliable cash dispensers, stepping in where banks and ATMs fall short. Today, these handheld machines oil the wheels of everyday commerce, even as policymakers intensify efforts to limit the flow of physical cash.
Why has a country that prides itself on financial innovation remained so reliant on PoS cash withdrawals? And what does this reveal about Nigeria’s digital infrastructure, regulatory framework, and consumer behaviour?
In this edition of EXPERT SPEAKS, Business a.m. features insights from Chuma Akanna, a fintech lawyer and tech policy analyst, who dissects the structural and behavioural realities behind Nigeria’s peculiar dependence on PoS agents and outlines a roadmap for building a truly inclusive, digital financial ecosystem
Why do you think Nigeria remains heavily dependent on POS agents for cash withdrawals despite its cashless policy?.
I think Nigeria remains dependent on POS agents primarily due to the structure of its informal economy. According to the IMF, the informal sector accounts for about 58% of Nigeria’s economy and includes over 40 million small businesses. Most of these businesses operate on a cash basis and rely on POS agents as a convenient and accessible means of handling financial transactions. Even though digital payments, especially bank transfers, have gained traction, many of these transfers are still routed through POS agents—highlighting their integral role in the transaction chain. In many underserved or rural areas where traditional banking infrastructure is limited, POS agents often serve as the only practical access point for financial services. For the cashless policy to be truly effective, it must be supported by a robust, inclusive infrastructure and POS agents currently provide a viable vehicle for achieving this.
How can fintechs and banks innovate to make digital payments more reliable and appealing so that Nigerians rely less on cash withdrawals?
Eliminating cash transactions entirely in a short timeframe may not be realistic, but they can certainly be significantly reduced. One of the key drivers for this shift is the rapid growth in internet penetration in Nigeria, which has risen from 28.75% in 2018 to about 48.81% as of May 2025. This growth creates a strong foundation for digital services, which are essential to the success of cashless and digital payment systems. For fintechs and banks to make digital payments more reliable and appealing, they must prioritize the development of robust infrastructure.
While several fintech companies have made notable progress over the past five years, challenges such as unreliable internet connectivity and inconsistent power supply continue to hinder widespread adoption. These infrastructure gaps must be addressed to ensure sustainable progress toward a cashless economy. In my opinion, Public-private partnerships (PPPs) involving the government, financial institutions, fintechs, and telecom companies are also critical. By working together, these stakeholders can build and maintain the infrastructure needed to support a fully functioning, inclusive, and trustworthy digital payment ecosystem.
Additionally, many Nigerians remain skeptical of digital financial systems due to concerns about fraud and lack of trust. To overcome this, banks and fintechs should invest in proper sensitization and awareness campaigns, offer incentives for adopting digital payments, and ensure strong consumer protection measures are in place.
What lessons can Nigeria learn from other countries that have successfully reduced dependence on cash?
Nigeria can learn several key lessons from countries like Kenya and China, which have made significant progress in going cashless. One major takeaway is the importance of reducing regulatory barriers that often slow down innovation. By creating an enabling environment, governments can encourage more fintech innovation and investment. Regulators should position themselves as partners in progress, not just enforcers, supporting safe experimentation and rapid scaling of digital financial solutions.
Also, supporting local fintechs and homegrown solutions is essential. Kenya’s success with M-Pesa highlights how empowering local innovation can lead to scalable and sustainable digital ecosystems, not only within the country but across the continent.
Another important lesson is to adopt a mobile-first strategy. For example, China leveraged heavily on mobile payment systems. This mobile-first approach made it easy and convenient for people, even in rural areas, to access financial services. Finally, infrastructure development is also vital. Reliable internet, electricity, and mobile network coverage must be prioritized to support seamless digital payments.
Do you see POS culture in Nigeria as a symptom of weak digital infrastructure, consumer habits, or regulatory gaps?
The POS culture in Nigeria is an assortment of these different elements. While POS agents have played a crucial role in deepening financial inclusion especially in remote and rural areas where traditional banks have little or no presence, the system also reflects broader challenges in the financial ecosystem. The infrastructure required to support a seamless and efficient POS network is still underdeveloped. Issues such as unstable internet connectivity and power supply continue to affect the reliability of POS transactions.
The recent CBN policy set to take effect in April 2026, which mandates that POS agents operate under only one principal, may present new challenges for operators. Although the long-term intention is to build a stronger super-agent network, in the short term, it could limit flexibility and increase operational difficulties for agents who currently work with multiple service providers. That said, the POS system has proven beneficial, especially in bridging the financial access gap for underserved communities. However, rather than focusing on increasing regulation, regulators should prioritize improving critical infrastructure, ensuring that digital financial services are more stable, accessible, and reliable across the country
How have CBN’s withdrawal limits and agent restrictions impacted financial inclusion, especially in rural and semi-urban areas?
In Nigeria’s informal sector, most transactions, particularly those under ₦5,000 are still heavily cash-based. These small-value transactions form the backbone of daily economic activities in these communities. Access to cash in rural and semi-urban areas is therefore critical. The introduction of withdrawal limits and agent restrictions has made it more difficult for residents in these regions to access the cash they need for everyday transactions. This has disrupted local economies and strained the operations of POS agents, who serve as the primary financial access point in many underserved locations.
The CBN justifies the withdrawal cap by citing a sharp increase in fraud through agent channels between 2021 and 2023. While safeguarding the financial system is important, these restrictions risk undermining the financial inclusion efforts that agent banking was designed to support. A more balanced approach would involve strengthening fraud prevention mechanisms while maintaining flexible cash access for communities that are still transitioning into the digital economy.
What role should government policy play in ensuring that the cashless vision becomes a lived reality rather than just a slogan?
Nigeria’s cashless policy goals which include increasing financial inclusion, improving economic efficiency, lowering the cost of cash handling, and curbing corruption, can be achieved through coordinated and sustained efforts. First, government policy should prioritize inclusive stakeholder engagement. This includes not just banks and fintechs, but also civil society, telecom companies, consumer advocacy groups, and the general public. Broad-based consultation ensures that policies are grounded in the realities of everyday Nigerians and are more likely to succeed in implementation.
Second, infrastructure investment is critical. Expanding broadband internet and mobile network coverage, especially in rural and underserved areas, is essential for enabling digital transactions and access to financial services. Finally, robust and flexible regulatory frameworks (focused on the unbanked and underbanked) should be created to support innovation while ensuring consumer protection. Policies should aim to reduce costs for end-users, foster healthy competition among service providers, and create an enabling environment for scalable fintech solutions.
