With millions of Point of Sales (PoS) terminals in active use nationwide, there have been increased attempts by criminals to compromise the PoS ecosystem. As the Central Bank of Nigeria (CBN) for the umpteenth time, initiates another safeguard, the geo-tagging of terminals and restriction of their operations within a 10-metre radius to curb criminal practices, stakeholders caution that hasty implementation could thwart the expected gains, and also work against enhancing access to finance and credit, particularly for underserved populations. ENO-ABASI SUNDAY and JOSEPH CHIBUEZE write.

In the last decade or thereabouts, not many businesses in the country have boomed the way that Point of Sales (PoS) vendors have proliferated. 
Once considered an alternative, PoS agents have become a central part of the country’s cash economy. Thanks to their handling of millions of payments daily, as banks cut branch networks to manage running costs, and Automated Teller Machines (ATMs) often run dry.
  
According to Nigeria Interbank Settlement System (NIBSS) data, since their 2013 introduction, PoS terminals have become the go-to for cash for many Nigerians, with about 1,600 PoS operators per square kilometre. Indeed, from a mere 155,000 terminals in circulation in 2017, there are 8.36 million registered PoS terminals, with 5.90 million active/deployed as of March 2025. Transactions on this platform hit N10.51 trillion in Q1 2025, a 301.67 per cent increase from Q1 2024.

Laudable as the rise in PoS usage is in ensuring that more people are brought into the digital payment network in addition to aiding commerce and business in general, it has also raised innumerable risks, with rising fraud complaints involving agents topping the list. 

Additionally, it has also become a tool used by Internet fraudsters to aid their operations, while kidnappers also rely on it in their heinous trade.

The case of a female Delta State-based PoS operator, who handed out her account number to a certain Timothy, an alleged kidnapper, who ended up channelling N4 million ransom payment through her account, is still fresh in national consciousness.

A multitude of Nigerians have also fallen victim to criminal elements who use PoS operators as clearinghouses after hacking into people’s social media accounts on Facebook and WhatsApp. Once they have taken control of such accounts, they impersonate the account owners and make monetary demands from their contacts while claiming to be in one form of distress or another.

With this burgeoning scenario and attendant challenges, the Central Bank of Nigeria (CBN) has, over the years, been rolling out measures to curb malicious use of the devices. 

Only last year, in a bid to improve tracking and transparency, it mandated that PoS transactions be routed through licensed Payment Terminal Aggregators (PTSA).

It also directed PoS operators in the same year directed PoS operators to register their devices with the Corporate Affairs Commission (CAC). The bank’s latest effort to ensure sanity in the sub-sector and guarantee secure transactions is the geo-tagging of PoS machines, the implication being that all PoS terminals are now restricted to a 10-metre radius of their registered business addresses.

The development, which was contained in a new circular- “Migration to ISO 20022 Standard for Payment Messaging and Mandatory Geo-Tagging of Payment Terminals,” was signed by the CBN Director of the Payments System Supervision Department, Rakiya Yusuf.

It specifically directed banks, fintech companies and other licensed payment operators to install Global Positioning System (GPS) tracking on all PoS terminals.

This policy, which aligns with the apex bank’s bid to tighten oversight of electronic payment transactions, insists that all PoS devices must have “native geo-location services enabled, with Double-Frequency GPS receivers for reliable geo-location service.”

It further requires that every PoS machine must capture and transmit its location data at the start of a transaction, and while activity outside a 10-metre radius of the registered business or service point will be flagged, terminals that are not geo-tagged will be barred from processing payments.

“Geo-location data must be captured at transaction initiation and included in the message payload as a mandatory reporting field: Terminals not directly routed to a PTSA are not permitted to transact.

“All existing terminals and newly registered terminals must ensure strict adherence always to approved MSC code per sector: All existing terminals must be geo-tagged within 60 days of this circular; new terminals going forward must be geo-tagged before certification and activation,” it said.

For the CBN, digital innovations ranging from self-service technologies like cell phones, online and mobile banking, Artificial Intelligence (AI), big data, blockchain technology, distributed ledgers, among others, have greatly challenged orthodox systems and helped improve the operational efficiency of financial institutions as they respond to customer demands for more innovative services.  

Recognising the growing importance of consumer protection in an increasingly digital financial landscape, the Olayemi Cardoso-led apex bank is also embarking on a comprehensive review of consumer protection regulations. This review seeks to upgrade the regulatory framework to address emerging risks posed by the rapid growth of Fintech and digital banking solutions.

Only recently, Governor Cardoso explained that the Nigerian payments ecosystem has been ahead of many advanced economies yet has not always received the recognition it deserves.

“Many innovations that other countries are only now experiencing have been part of our system for years. We must celebrate these successes, as they contribute to building our global reputation. Nigeria’s dynamic fintech ecosystem has driven financial inclusion and positioned the country as a hub of innovation in Africa,” he said.

Cardoso added that despite a challenging external environment, Nigerian Fintechs continue to shine, attracting significant foreign investment while several have achieved global unicorn status this year. Their innovations, alongside those of other financial service providers, have fueled growth in transactions and made financial services more affordable and accessible for many more Nigerians.
 
“We must continue to leverage this channel to enhance access to finance and credit, particularly for underserved populations. However, I urge Fintech companies and banks to ensure their platforms are not exploited for fraudulent activities. Strengthening the KYC onboarding process is essential to prevent malicious actors from exploiting our financial system.

“Additionally, these institutions must prioritise improving transaction monitoring and bolstering consumer protection measures to ensure that digital channels remain safe, especially for the most vulnerable segments of our population”.

Cardoso said that while the apex bank continues to lay the foundation for price stability and foster a conducive policy environment, the role of banks in this journey remains crucial.
 
“At the Central Bank, we have intensified surveillance of market activities to ensure compliance. Together, we must build a market based on strong governance and transparency. As regulators, we will maintain a zero-tolerance approach to compliance violations,” he said.
 
But while the regulator insists that existing machines must be tagged within 60 days, and new devices must be tagged before certification and activation, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) has cautioned against rushing the implementation of the geo-tagging exercise.

According to it, there was a compelling need to avoid a rushed approach to avert a repeat of the naira redesign saga, which led to a severe cash crunch. The AMMBAN’s position was made known by its acting national president, Dr. Obioha Oti.

The group’s fears are shared by a Professor of Accounting and Financial Development at the Lead City University, Ibadan, Professor Godwin Oyedokun, who emphasised that “a rushed rollout risks operational backlogs, mistaken deactivations, and connectivity challenges, potentially repeating the naira redesign chaos. These risks can be mitigated with phased deadlines, bulk APIs, grace periods, offline tagging options, and transparent communication.”

Oyedokun, a forensic accountant, noted that PoS fraud persists despite earlier efforts to end it because transaction volumes have outpaced controls.  

“Weak agent onboarding, inconsistent KYC, poor data-sharing, and limited real-time monitoring leave exploitable gaps,” he said, adding that other urgent areas for reform should involve tighter agent life cycle controls (BVN/NIN validation, periodic checks, blacklists/whitelists). Adoption of ISO 20022 for richer transaction data and better risk scoring. Stronger device security (firmware updates, kill-switches, audit logs).

Telecoms safeguards against SIM-swap fraud. Improved chargeback processes and reconciliation. Consumer awareness and redress mechanisms. Phased enforcement with clear timelines.

“Finally, Geo-tagging is a helpful deterrent, but insufficient alone. A layered control strategy, combining robust KYC, advanced analytics, secure hardware, telecoms coordination, and public awareness, is essential to reduce fraud while sustaining financial inclusion. Geo-tagging will improve traceability of PoS devices and deter roaming or cloned terminals, but it cannot address major fraud vectors such as social engineering, SIM swaps, insider collusion, and chargeback abuse.

Consequently, it should be combined with stronger KYC/AML checks, data-sharing, behavioural analytics, tokenisation, and ISO 20022 adoption.” On his part, the Lead Director, Centre for Social Justice (CSJ), said that geo-tagging PoS terminals facilitates the identification and easy location of a licensed operator in the event a financial or other crime is committed. “So, the idea is a welcome development. However, it must be sequenced and given enough time to ensure that operators are properly captured. It could be done over a period of four to six months to ensure adequate time for all – the operators and the tagging authority,” he said.

Onyekpere alleged that there appears to be an overhype of purported crimes by the poor and youthful population, adding that they should be encouraged and not criminalised.

He added that it is the failure of the banking system and monetary policy that threw up the PoS business, stressing that it is only in Nigeria that ATMs do not dispense cash while roadside vendors stock cash. “So, the CBN and the authorities should address this failure.”

As part of the reform, the CBN has also directed payment companies to adopt a new global standard for transaction messages known as ISO 20022 by 31 October.

The ISO 20022 was designed to create a single global language for transactions, and align Nigeria with SWIFT’s migration timeline. The standard developed by SWIFT is expected to improve the quality of transaction data and make both domestic and cross-border payments more secure and efficient.

All PoS devices must run on Android version 10 or higher to integrate with the National Central Switch, which will host the software kit for geolocation monitoring and geofencing.

“All payment transaction messages exchanged domestically or internationally must be formatted in ISO 20022 in line with CBN and SWIFT specifications. All Institutions shall ensure complete and accurate population of mandatory data elements, including payer/payee identifiers, merchant/agent identifiers, and transaction metadata.

“All in-scope institutions must complete migration activities and be fully compliant not later than October 31, 2025,” it said. Speaking during the CBN Fair in Lagos, CBN acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, explained that as a means of protecting banks’ customers and ensuring that they are not short-changed, the CBN launched the Unified Complaints Tracking System (UCTS), aimed at streamlining and improving the management of consumer complaints against financial institutions.

The system, alongside a USSD code (*959#) for verifying licensed institutions, enhances transparency and consumer protection in the Nigerian financial sector.
 
According to the President, Bank Customers Association of Nigeria, Uju Ogubunka, agrees with the CBN’s efforts to sanitise the sub-sector, saying: “Brick/mortar banking is giving way to digital banking where transactions are completed in seconds, saving costs and providing convenience to bank customers. Consumers are looking for simple technology-driven solutions customised to meet their everyday needs, but secure transactions must be guaranteed,” he said.
 
Tinuke Adebola, a PoS aggregator based in Lagos, said: “PoS terminals are taking over the financial landscape. Banks are not ready to absorb the rising costs of maintaining ATM terminals that require power, security, cash movement, cash handling charges and so on. Banking is profit-driven, and ATM terminals are no longer meeting the profit needs of banks.”