POS economy: How Nigeria’s banks and operators profit off cash scarcity

Cashland is in crisis, and both Nigerians and expatriates are caught in the storm. Once, walking into a bank and walking out with cash was as predictable as traffic jams on Third Mainland Bridge. But now, trying to withdraw ordinary ₦50,000 in cash from your own account is like asking the government to triple workers’ salaries – an exercise in wishful thinking.

Recently, I was with my friend, Ehi Braimah, navigating through the not-so-thick traffic from Ikeja GRA to Agidingbi. Ehi, a seasoned Brand and Public Relations expert, was on his way to a live radio program anchored by Reuben Abati – a no-nonsense TV and radio presenter who wields equal skill with prose delivery in newspapers and other journals. Somewhere along Oba Akran Road, Ehi spotted a vendor peddling pillow. What a convenient opportunity to buy directly from the source, especially since the vendor was selling a popular brand.

But alas, the situation was not that straightforward. When Ehi offered to pay via bank transfer, the vendor flatly refused. Instead, he pointed to a POS operator stationed nearby, ready to facilitate the transaction for a fee. For a ₦16,000 transfer, the POS charge was ₦400 – a shocking leap from the ₦65 banks would typically charge for the same transaction. However, the vendor insisted: no POS, no deal.

This is the harsh reality Nigerians face daily. Even the banks are no longer of much help. Most ATMs now dispense only ₦5,000 per withdrawal, forcing customers to make multiple withdrawals and pay the ₦65 fee repeatedly. A simple attempt to withdraw ₦20,000 from an ATM now comes with a side dish of ₦260 in cumulative charges. Little wonder many people, despite grumbling, end up patronizing the exorbitantly priced POS operators.

Ehi, visibly livid with rage, made it to the radio studio and wasted no time venting his anger during the interview. With characteristic candor, he condemned the recent actions of telecommunication companies, which have added to Nigerians’ woes by increasing charges by a whopping 50%. This, despite offering subpar service delivery and still recording humongous profits. Ehi’s words were a rallying cry, articulating the frustration many Nigerians feel about being squeezed from every angle – banks, telecoms, and now, even pillow vendors.

And this brings us to the bigger issue: what exactly is going on with cash in Nigeria? Why has the Naira suddenly become scarce like fuel during a tanker drivers’ strike? The Central Bank of Nigeria (CBN) told us cash would be available after their much-publicized Naira redesign, but here we are – banks are dry, and the streets are buzzing with POS operators who’ve become the new lords of liquidity.

Speaking of POS operators, have you noticed how they’ve practically replaced ATMs? Once upon a time, you’d stroll to an ATM and get your money, but now, you have to find a POS stand, pay an outrageous fee, and hope they don’t suddenly run out of cash. It feels like we’ve gone from “cashless policy” to “cash scarcity policy.” And the CBN? Silent. Watching. Unbothered.

If that’s not bad enough, Nigerians are now buying Naira with Naira! Yes, you read that right. Want ₦50,000 in new notes to impress your in-laws or pay for a traditional ceremony? Be prepared to cough up ₦65,000. That’s an additional ₦15,000 to the bargain. Need ₦20,000 in crispy cash for spraying at a party? That’ll be ₦30,000, please. This absurd trend is now the norm, with partygoers and social climbers shelling out extra just to flaunt bundles of new notes in public.

And despite the shouting from both the EFCC and the Central Bank that it is illegal to spray the Naira at parties – or worse still, sell mint notes for profit – this practice is thriving. At every owambe or celebrity event, children of the affluent and celebrities are throwing the Naira in the air like confetti, with POS operators right there in the crowd selling cash at premium rates. It’s like a cash carnival, in full glare of the law. But honestly, who do they want to arrest? Everyone seems to be doing it now, especially since banks have practically stopped paying cash to their customers.

The reality is that the Naira has been battered on all sides. Once a currency that could at least pretend to stand shoulder-to-shoulder with the dollar, it now folds like cheap adire fabrics in the presence of foreign currencies. Dollars, pounds, and euros have turned the Naira into a lightweight, and the banks seem to have decided to pile on by limiting access to even the little value it has left.

But let’s talk about the real victims here – ordinary Nigerians. How is the woman selling tomatoes in Jankara Market supposed to restock her goods when her bank limits her cash withdrawals to ₦20,000? How does the bus driver fueling his danfo navigate this mess? Must we all now carry POS machines in our pockets to survive?

The sad truth is that this situation is strangling small businesses and making life unnecessarily difficult for everyone. Transactions that should take minutes now drag on for hours because banks no longer have cash, and the people who do have it charge ridiculous fees to part with it.

So, here’s a plea to the CBN and the banks: fix this mess. The Nigerian economy cannot thrive on transfers alone – not when network failures are as common as political promises during election season. We need cash, and we need it to flow like the Lagos floods during rainy season, not drip witnessed by those still served water from public source.

And as for the rest of us, let’s keep asking questions. Where is our money? Why are some people walking out of banks with millions while the rest of us can barely withdraw what’s left of our dignity? Why are Nigerians paying a premium to access their own hard-earned money? And why does spraying mint notes at parties now seem like a bigger industry than agriculture? Until we get answers, the mystery of the missing Naira will remain unsolved, and the struggle to access cash will continue to make life in Nigeria more frustrating – and absurd – than it needs to be.

Banjo is a tech-savvy writer, travel consultant and environmental activist based in Lagos.