The Federal Government, through the Corporate Affairs Commission (CAC), has mandated Point of Sales (POS) companies to register their agents, merchants, and individuals within two months. This initiative aligns with legal requirements and directives from the Central Bank of Nigeria (CBN). The decision was reached during a meeting between Fintechs and the Registrar-General of CAC, Hussaini Ishaq Magaji, in Abuja.
Importance of the directive
Despite the ongoing relevance of POS services for quick service delivery nationwide, the use of POS machines for cash transactions has been marred by fraudulent activities. POS transactions have become a focal point for fraudulent practices, contributing significantly to fraudulent activities within the financial system. Registering these systems will empower the government to exert control over POS transactions, potentially reducing fraudulent activities and enhancing transparency.
Context and Background
The directive comes amidst increasing incidents of fraud involving POS terminals and the CBN’s plans to prohibit trading in cryptocurrency or any virtual currency. According to a fraud report by the Nigeria Inter-Bank Settlement System Plc, POS terminals accounted for 26.37 per cent of fraud incidents in 2023. Recently, the CBN halted major fintech firms from onboarding new customers and instructed them to caution against cryptocurrency trading on their platforms. This move was part of an ongoing audit of the Know-Your-Customer process of fintechs, amid concerns about money laundering and terrorism financing.
Stakeholder Perspectives
During the meeting with CAC, the Registrar-General emphasized that this measure aims to safeguard the businesses of fintech customers and strengthen the economy. He cited legal backing from the Companies and Allied Matters Act, CAMA 2020, and the 2013 CBN guidelines on agent banking. The registration deadline, set for July 7, 2024, is not targeted at specific groups but aims to protect businesses. Fintech companies have pledged to comply with the directive for seamless implementation.
Bottom Line
The directive to register POS operators with CAC is a significant step towards enhancing transparency and regulating POS operations in Nigeria. It serves the public interest, and active sensitization efforts should be undertaken to ensure compliance with the new regulations.
