Point-of-sale (POS) services have become an important part of Nigeria's retail and payment environment.
For many small businesses, a POS terminal can do more than simply accept payments. Depending on the authorised services available, it can create additional customer convenience and new business opportunities.
The key is to operate responsibly, understand the services being offered and manage the business properly.
BUSINESS OPPORTUNITY
A POS terminal can become more than a payment device.
With the right authorised arrangements, businesses can use POS services to improve customer convenience and potentially create additional revenue opportunities.
1. What is a POS service?
A point-of-sale terminal is an electronic device that allows customers to make payments using cards and, depending on the provider, other approved payment methods.
POS services can also be used by authorised agents to provide certain financial services on behalf of banks, payment providers or other authorised institutions.
2. Create additional customer convenience
A business that already serves customers from a physical location may be able to use POS services to provide additional convenience.
Easier payments
Customers can pay electronically instead of relying entirely on cash.
More services
Depending on the provider, authorised businesses may offer additional financial or payment-related services.
3. Understand the revenue opportunity
Some POS and agent banking arrangements allow businesses to earn commissions or service income from eligible transactions.
However, businesses should understand the actual commission structure and costs associated with their provider before deciding whether POS services are commercially worthwhile.
THINK LIKE A BUSINESS OWNER
Revenue is not the same as profit.
Consider transaction commissions alongside electricity, internet, staff costs, cash management, equipment and other operating expenses.
4. Choose the right location
Location can have a significant effect on the performance of a POS business.
Areas with strong customer traffic and limited access to convenient financial services may create greater demand.
Consider:
- ✓ Customer traffic
- ✓ Nearby businesses and markets
- ✓ Existing financial service points
- ✓ Security
- ✓ Electricity and network availability
- ✓ Availability of cash
5. Cash management is critical
A POS business can experience different cash-flow demands throughout the day.
For example, customers withdrawing cash increase the agent's electronic balance while reducing physical cash available. Deposits can have the opposite effect.
Good cash-management practices include:
- ✓ Monitor cash levels regularly
- ✓ Monitor electronic balances
- ✓ Avoid keeping unnecessary amounts of cash exposed
- ✓ Reconcile transactions
- ✓ Plan for busy periods
6. Protect your POS terminal
A POS terminal should be treated as an important business asset and financial technology device.
7. Customer trust matters
POS businesses handle customers' money and should therefore operate with a high level of transparency and professionalism.
Clearly communicate applicable charges, confirm transactions before completing them and provide transaction evidence where available.
8. POS can complement an existing business
One advantage of POS services is that they can potentially be added to an existing retail or service business rather than requiring a completely separate operation.
For example, a shop, convenience store or other customer-facing business may be able to provide authorised payment services alongside its primary activities.
POS BUSINESS CHECKLIST
Before starting a POS service
Final thoughts
POS services can provide useful opportunities for businesses that understand their market and operate through appropriate authorised arrangements.
The strongest POS businesses are not simply focused on transaction volume. They also pay attention to customer service, security, cash management, operating costs and profitability.
IMPORTANT INFORMATION
This article is provided by Jamestuns Trading Venture for general informational purposes only. Businesses should confirm the latest requirements, charges and services with their authorised financial service provider before operating a POS or agent banking service.