Home How To Start A Business How to Start a Profitable POS Business in Nigeria (Part One)

How to Start a Profitable POS Business in Nigeria (Part One)

by Precious F

If you are looking for information on how to start a POS business in Nigeria, you are in the right place. Due to the CBN’s cash withdrawal policy in 2023, there has been an increasing demand for POS transactions. POS, short for Point of Sales, has become a fast growing and lucrative business in Nigeria. 

As more people embrace electronic payments, POS stores where you can carry out various types of transactions are popping up in almost every street in Nigeria. Rural areas in Nigeria are also not left out of this trend considering the overall need for financial inclusion. In this article, we give you a step-by-step guide on how to set up a successful POS business.

Overview of POS business in Nigeria

In Nigeria, small businesses or individuals register with payment processing companies or banks to acquire POS terminals. These POS operators then take a percentage of each transaction done at their terminal as a fee or a service charge. The convenience provided by POS machines has made the business popular in Nigeria, providing an income stream for individuals operating as agents or business owners daily.

According to the Nigerian Inter-Bank Settlement System, the POS industry saw an increase of  27.85% in 2023. The total value of POS transactions grew from ₦8.39 trillion in 2022 to ₦10.73 trillion in 2023.

This is one of the reasons we say the POS business in Nigeria is fast growing and lucrative. Q1 of 2024 already records the total value of POS transactions at ₦2.62 trillion, with 315 million transactions carried out. The number of registered POS businesses also increased from 2,537,442 people in Q1 of 2023 to 3,730,441 people in Q1 of 2024.  This shows that the  business is profitable for both banks and vendors.

Despite its growth, the POS business in Nigeria is not without challenges. For example, fraudulent activities such as card skimming and cloning are huge issues that can lead to financial losses for both customers and operators. 

Furthermore, frequent network issues, downtime, and high crime rates in certain localities make it difficult for customers to use the service. To ensure the security and reliability of their services, POS operators must implement measures to address these challenges. 

Our Thoughts on the Future of POS Businesses in Nigeria

In business, it is important to pay attention to market trends in your industry. Is the market increasing or decreasing? Has it flat-lined over the years? These metrics are important because they help you make plans towards growing in an increasing industry or exiting a declining one. While the POS business seems to be at a peak, we believe new payment technology such as cryptocurrency and electronic wallets i.e Apple Pay, Google Pay, etc, could make the POS technology obsolete.

We predict that this could happen within the next 5 – 10 years of technological development. For instance, although the number of POS vendors increased in the first quarter of 2024, the total number of transactions carried out reduced by 19.03%. This decline in number of transactions can be a direct correlation to the increase number of POS operators. However, data tells us many stories, which means, it can also be something else…

Looking at it from a different point of view, the drop is also reflected in the total value of transactions carried out in Q1 of 2024, which came to a total value of ₦2.62 trillion, a ₦225.73 billion drop from the ₦2.84 trillion recorded in the same quarter of 2023. These might be due to the boom that Nigerian POS businesses faced in March 2023 as a result of the country’s cash scarcity. These could also be early signs of decline, a similar phenomenon to  the call centers of the early 2000’s. At Biztraction, we always advise entrepreneurs to make data-driven decisions, as a result entrepreneurs in this industry across the value chain can start thinking of what’s next. 

How Do POS Agents Make Money?

POS businesses can generate a daily return of between ₦5,000 to ₦20,000 or even more, but this depends on several factors such as location, number of daily customers, percentage of fees charged, and commission rates paid by their principal. Typically, when a customer performs a transaction such as a ₦5,000 withdrawal, the agent collects a charge fee of about ₦200. The POS provider takes a certain percentage, while the remaining amount goes to the agent’s wallet. The payment of this charge fee by the customer forms a significant part of the agent’s income. Furthermore, the bank or POS provider also pays the agent a daily or weekly commission based on the number of transactions they have carried out using their service or wallet.

How to start a POS business in Nigeria

Starting a point of sale (POS) business in Nigeria can be a profitable venture, but like every other business, it requires careful planning and execution to succeed. We are here to guide you through the basic process you should undertake before you start a POS business in Nigeria.

Step One: Market Research

Conducting market research is essential to understanding the potential demand for POS services in the area you plan to operate. This will help you identify your target audience, and competition, and assess their strengths and weaknesses. Before you start a POS business in any location, you should ask the following questions:

Is it an Urban or Rural environment? 

Urban areas have a higher population, and this gives POS agents a higher opportunity for more transactions, unlike rural areas. However, the cost of running a POS business might be lower in rural settings.

Is there a large amount of foot traffic in the area? 

Starting a POS business in a market, university, or other areas with high foot traffic would give you access to a large inflow of transactions. This is because the success of a POS business lies in the volume of transactions you carry out daily.

How many POS businesses are already in the area? 

Knowing the number of similar businesses and the amount of foot traffic in your target area helps you estimate the number of transactions you would make. If the number of existing POS businesses in your target area is high, odds are that you would have a lesser number of transactions or market share. The sweet spot is to discover an area with few existing businesses and a larger human traffic.

Is the area secure with access to stable internet? 

Some of the challenges of the POS business in Nigeria are stable internet and security. This is a very vital aspect to consider so that you don’t lose your investment.

Can I increase the value for my customers? 

Any business with better strategies and increased value for customers will always be successful. What incentives can you introduce to your customers that other POS businesses are not doing? How can you get customers to stay loyal to your business despite having other businesses in your region? In one way, it boils down to customer service and the experience that people get when they do business with you, and in another sense, it has to do with the strategies you develop to set you apart from competitors. 

Step Two: Business Registration and Permits

Recently the CAC mandated all POS operators to register with them. Irrespective of the kind of business you want to start, it is good practice to register with the appropriate authorities

POS agents also have to register with a bank or a Fin-tech partner to process transactions. Most of these institutions have a registration process, and Biztraction covers all the necessary processes and fees from major banks and Fin-tech partners in the POS business in Nigeria: A complete guide on everything you need

Step 3: Set-up Location

The cost of renting a suitable location will vary depending on your location and the size of the space. You would also need to set up your location with other necessary equipment that helps the business run smoothly. For instance, a generator or alternative power source can cost between ₦80,000 to ₦150,000. A solar option for power could reduce your cost of running the business. You would also need an internet connection to ensure your transactions go smoothly. Other equipment costs such as furniture and office supplies will depend on the size and style of your location, but it can range from ₦50,000 to ₦100,000. Depending on your budget, there are affordable options you can explore to reduce the cost of setting up the business.

Step 4: Hire and train staff

Hiring reliable and trustworthy staff and providing them with adequate training is crucial to the success of your POS business. The cost of hiring staff will depend on their skill level and experience, but it can range from ₦100,000 to ₦300,000 per year. 

Step 5: Develop a marketing strategy

Developing a marketing strategy to create awareness about your business is important. This may include creating a website, social media marketing, or using traditional advertising methods such as flyers and posters. The cost of marketing depends on the type and channels used, but it can range from ₦50,000 to ₦200,000. Providing excellent customer service is another crucial strategy that encourages customer loyalty and repeat business. This may involve hiring a customer service representative or training your staff on customer service skills. 

Final Thoughts

Starting a POS business in Nigeria can be a profitable and rewarding venture with the potential to contribute to financial inclusion in the country. It is important to keep up with the evolving regulatory landscape in Nigeria and ensure compliance with relevant laws and regulations governing the operation of a POS business in the country. This includes business registration with CAC, obtaining approval from the Central Bank of Nigeria (CBN) to deploy POS terminals and adhering to the rules and guidelines set by the Nigerian Communications Commission (NCC) and other relevant agencies. With these steps, we are certain you can establish a successful and sustainable POS business. We also researched on the estimated cost you would need to start a POS business in a different article.

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Biztraction Consulting

You are welcome.

Engineer Steve

Very educative write-up. Thanks to the team.

Biztraction Consulting

Thank you


Hi, thanks a lot for this POS business breakdown and all, it’s really beautiful.

But please, can you write about “Converting Airtime To Cash Business” in Nigeria..?
After buying the excess airtime and paying customers for selling to them, how do they make money from the airtime…?

Biztraction Consulting

Thank you, Japhet.

We would look into it and send an email if we write on converting airtime to cash


There are so many business that they will make using that money.
1 they will start a provision store

Samuel Ibiok

Nice article by the way, really informative


Thank you so much for this


Thanks for the hints , but I don’t understand this part “Evidence of business registration (CAC Certificate)”
What if someone doesn’t have a business at hand before , maybe a salary earner that want to start the business

Biztraction Research

In 2024, the CAC has mandated all POS operators to register their businesses. However, the association responsible for managing POS operators are in talks CAC

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