Nigeria’s move toward a cashless economy is changing the way people handle money. Point of Sale (PoS) systems, those small devices used for payments, have become a common sight in both big cities and small villages. They make transactions easier and are helping reduce reliance on cash. But this shift also exposes some major problems, including weak infrastructure and unfair practices by banks and operators.
One big challenge is electricity. For years, many Nigerians have depended on generators because the national grid often fails. This is expensive and creates inequality. When the grid collapses, PoS systems that rely on steady electricity and internet stop working, leaving businesses and customers stranded. These outages highlight the risks of building a cashless system on unstable infrastructure.
Another problem is how some banks and PoS operators take advantage of the situation. Investigations show that some banks deliberately leave ATMs empty to force people to use PoS terminals, which come with higher fees. This means more profit for the banks and operators but higher costs for customers, especially in rural areas where options are limited. This practice not only increases expenses for users but also makes people lose trust in the financial system.
There’s also the issue of money leaving Nigeria through PoS operations. Many PoS operators pay fees to foreign companies for services like technology or branding. These payments are supposed to follow rules called transfer pricing, which make sure the fees are fair and reflect actual market values. But when fees are inflated, profits are shifted abroad, reducing the taxes Nigeria collects. This means less money for important things like schools, hospitals, and infrastructure.
Without proper oversight, these problems get worse. Some companies exaggerate the fees they pay to foreign affiliates, making it seem like they earn less in Nigeria. This reduces their tax bills. To tackle this, new tax reforms have been introduced. These reforms aim to make PoS operations more transparent and ensure the right taxes are paid. Agreements between PoS operators and tax authorities are part of the plan to keep things fair and clear. These changes are meant to protect Nigeria’s economy and ensure PoS activities contribute their fair share.
But new laws alone won’t solve everything. Nigeria has a history of good policies failing because they weren’t carried out properly. To make the cashless system work, the government needs to fix basic issues. Reliable electricity and internet are essential. Investments in things like solar power can help PoS terminals work even in remote areas. Teaching people how to use digital payments safely is also key. Public campaigns can help Nigerians avoid scams and embrace the benefits of cashless systems.
This shift also has a significant impact on Nigerians living abroad, who often send money home to support their families. These remittances are a lifeline for many households, covering essentials like food, education, and healthcare. However, high PoS fees and the persistent problem of empty ATMs reduce the value of these funds, making it harder for recipients to get the full benefit of what is sent. For senders, this adds frustration and financial strain, knowing that a chunk of their hard-earned money is lost to fees. If people feel the system is unfair or unreliable, they might resort to informal and less secure methods of transferring money, increasing the risk of fraud and reducing transparency in the financial ecosystem.
On the bright side, this shift creates exciting opportunities for innovation. Nigerians in tech and fintech, whether at home or abroad, have a chance to design affordable and reliable payment systems tailored to local needs. Imagine systems that minimize fees, work seamlessly in areas with unstable internet, and prioritize user security. Such innovations wouldn’t just improve convenience; they could rebuild trust in the cashless economy. By making these systems accessible and efficient, they can empower both individuals and businesses, helping to unlock Nigeria’s full economic potential.
Tax reforms also bring new challenges and opportunities for diaspora-led businesses with ties to Nigeria. These reforms aim to create a fairer system, ensuring that businesses contribute their fair share of taxes while operating transparently. However, navigating these new rules requires careful planning, as compliance can be complex. For businesses, this means adapting to regulations that prioritize proper pricing of cross-border transactions and fair reporting practices.
To make Nigeria’s cashless economy work, the government and stakeholders must tackle key weaknesses like unreliable infrastructure, high transaction costs, and a lack of public trust. If these issues aren’t addressed, the PoS revolution could fall short of its potential, becoming yet another missed opportunity in Nigeria’s path toward financial inclusion and economic growth. Now is the moment to act boldly and ensure that this transformation benefits everyone, leaving no one behind while building a stronger, more inclusive economy.
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