The idea of starting a POS (point of sale) business in Nigeria is a commendable one because of its high demand, profits, and low capital requirement. Today, the high rate of Nigerians standing in a queue at an ATM point for hours to make a withdrawal or money transfer is alarming, especially during national holidays when banks won’t be open for business.
This was one of the primary reasons for introducing point of sale, popularly known in Nigeria as POS. In recent years, the POS business has grown to be one of the most done SMEs in the county.
In this article, we will be answering two important questions about the POS business. The first question we will be answering is, what is the cost of starting up a POS business in Nigeria, and the second is how much you can earn daily in the POS business in Nigeria.
What is POS?
Point of Sale Terminals (POS) is portable machines that allow customers to pay for goods and services at merchant locations using their payment cards. I’m sure you’ve seen or used one in the past at the grocery store, shopping malls, boutiques, nightclubs, churches, and any commercial center.
Services you can offer with POS
- Cash deposit into any Nigerian bank account
- Cash withdrawal from any bank in Nigeria
- Balance inquiry
- Instant opening of bank account
- Payment of purchased goods
- Paying utility bills such as cable, airtime, electricity, etc.
- BVN (Bank Verification Number) Enrollment
What is the cost of starting a POS business in Nigeria?
There isn’t any actual amount in Nigeria to start a POS (point of sale) business. The overall price of starting a POS business depends on your shop’s location (in Nigeria, shop locations usually determine its cost), the expense you got your POS machine at, and the specific amount of money you need for daily business transactions.
Speaking of the specific amount of money you may need for your daily business transactions, it is recommended to have up to N150,000 or more at hand because most customers may come for withdrawals, and you need to have physical cash to give them.
And you should also budget between N70,000 to N95,000 to obtain the POS machine from any fintech company or bank near you. However, some financial institutions like FirstBank (Firstmonie) offer free POS to interested persons who reach their requirements but it comes with a cost in interest rate.
How lucrative is the POS business in Nigeria?
Based on the high rate Nigerians patronize POS agents daily and the low cost of running the business, it is obvious that the business is quite lucrative, especially if it is located in a very good place with a high demand for the service.
See Also: Top 50 Businesses You Can Start With ₦50k In Nigeria 2022
Another thing you need to know is that your profit sorely depends on the number and amount of transactions you were able to perform in a day because you earn profits from the commissions you receive from each customer who visits your business stand. For example, a customer might want to take out a withdrawal of N10,000. The bank will charge N200 to the customer for this transaction and then share the charged N200 with you on a 60 40 ratio. Meaning you will get N120 as a commission, while the compensation bank takes N80.
How to start a POS business in Nigeria
The first step of starting a POS business is to get a Strategic location, where many people may need to perform daily POS tasks. These places could be student areas, markets, and other busy places where banks and ATMs are far from people’s reach.
Secondly, you will need to go to any bank of your choice to fill in some forms of agreement or documents on the condition of issuing you the proposed POS machine. The bank then reviews the application based on CBN internal guidelines and decides if you meet all the conditions.
In addition, you may be required to provide the below credentials:
- Any valid government-issued ID card, e.g. National ID card, Driver’s license, Voter’s card, or International passport.
- 2 recent passport photographs
- Evidence of business registration (optional)
- BVN (Bank Verification Number)
- 2 current account references
- Tax Identification Number (optional)
- Memorandum and Article of Association
- A minimum startup capital of N50,000 in bank
- Statement of account
After approval, the bank will give you the necessary equipment for the POS business. These types of equipment include:
- The POS machine you will use for your business
- Barcode scanner to scan bills during a transaction
- A Personal identification number (PIN)
- Card reader
- A comprehensive manual for operating the POS machine
As an entrepreneur with years of experience, I highly advise any individual or team that wants to start any business, including a POS business, to undergo a full background assessment before starting the proposed business.
My reason for this is to give you full knowledge of what you are about to invest your money into, other secrets behind the business you may not be aware of, and how much you truly need to start it up to prevent an early collapse. You can read 20+ Powerful Tips to Be a Successful Entrepreneur to learn more.
Conclusion
Based on our research, starting a POS business doesn’t need a lot of capital investment, and the good news is you’ll be earning money from the moment you start the business. But to succeed more in the business, I will highly recommend you secure a shop in a strategic location. Last but certainly not the list, a POS representative in Nigeria can earn anywhere from N8,000 to N12,000 per day, depending on the customer flow and transactions. Feel free to ask me any questions on the comment section below.
