O
Omoleye Omoruyi
Guest
Nigeria’s Corporate Affairs Commission (CAC) issued a directive to POS operators in the country in May 2024 to register their businesses with the agency. According to it, this step will encourage transparency and reduce fraud, considering that POS terminals were responsible for 26.37% of fraud incidents.
The initial deadline was July 7, 2024, and extended to September 5, 2024. By this time, many POS operators had no idea they were required to register.
In a July statement signed by ‘management’ when the deadline was extended, the CAC portrayed some sort of seriousness: “[POS] Operators who fail or refuse to register at the end of the extended deadline run the risk of losing such businesses and prosecution for aiding and abetting criminal activities.”
As Nigeria grapples with growing financial fraud and seeks to strengthen its regulatory framework, the CAC’s directive, which would impact approximately 1.9 million operators nationwide, born from a collaboration with the Central Bank of Nigeria (CBN), was part of broader efforts to tighten oversight over Nigeria’s agent banking sector.
Following a sharp rise in POS-related fraud cases—reported to make up over a quarter of Nigeria’s total financial fraud incidents in 2023—the government moved to ensure every POS operator is registered and regulated under the Companies and Allied Matters Act (CAMA) 2020.
The CAC set the initial deadline in July 2024, giving operators a 60-day window to complete the registration. However, following appeals from some industry stakeholders, the deadline was extended until early September. By the expiration, however, a considerable number of operators remained unregistered, and the CAC reiterated that enforcement actions, including potential shutdowns, were imminent.
But, more than 54 days later, CAC seems to have forgotten the deadline.
The response from POS operators has been mixed, with many failing to comply, citing obstacles ranging from registration costs to procedural complexity. So, questions remain: will this be another case where an ambitious policy lingers without serious enforcement?
CAC Registrar General – Hussaini Ishaq Magaji
Many POS operators Technext chatted with expressed frustration with the registration process, with some suggesting it is costly and overly complex. The perspectives on the CAC mandate reveal both frustration and concern about the policy’s practical impact on their businesses.
Some operators have complied with the mandate, acknowledging its importance despite the challenges. “Yes, I registered on time,” said one operator from Lagos, explaining that ensuring compliance was a priority to avoid disruptions.
However, others expressed hesitation, with one operator admitting, “I haven’t registered yet; I wasn’t sure if the CAC would enforce this, so I decided to wait.”
The registration process proved a significant obstacle for many operators. A small-scale POS agent explained, “The cost is high. Even though I know it’s essential, the registration fees are beyond what I can afford right now.”
Others pointed to procedural confusion. “I didn’t know where to start, and I don’t have anyone to guide me through the process,” shared another operator, illustrating the lack of clear support and guidance.
When asked if they believed the CAC would follow through on shutdowns, their opinions varied. One operator voiced confidence in the commission’s intentions, saying, “I think they’re serious; they would work with the police, so I can’t afford to take that risk.”
In contrast, others felt scepticism, with an agent from Jigawa stating, “There are so many POS operators. Enforcing shutdowns on all of us doesn’t seem practical.” Another echoed this, suggesting the CAC might only target select businesses to set an example, rather than a widespread enforcement.
Read also: Nigeria Police’s arrest of POS operator over a ₦4 million deposit shows a regulation gap
When it comes to fraud, operators acknowledged the benefits of regulation but questioned if registration alone would address the issue. “It might reduce fraud a bit because if every operator is officially registered, it becomes harder for fraudsters to hide,” said one compliant operator.
Others doubted the directive’s effectiveness, with one stating, “We need better security features in the POS system itself, not just registration.”
POS Operators who were aware of the mandate’s goals expressed mixed views. “Yes, I know it’s supposed to help reduce fraud and make the business more secure,” shared one operator, who noted that formalisation might boost business credibility.
Conversely, others felt the mandate would put smaller agents at a disadvantage. “It’s making it hard for smaller operators like me to continue,” one operator said, underscoring the cost burden and complexities involved.
POS operators in Nigeria
This disconnect underscores one of the biggest challenges of policy implementation in Nigeria: ambitious mandates are often rolled out without adequate support mechanisms for those required to comply.
The issue with the CAC registration mandate is not isolated. Nigeria has a history of ambitious regulations that stall implementation, often due to inadequate infrastructure or inconsistent enforcement.
This issue raises doubts about regulators’ commitment to following through on policy initiatives. For instance, the National Identification Number (NIN) registration drive and recent SIM card registration policies saw deadlines extended multiple times due to logistical challenges and public pushback.
While some policies are enforced in high-density areas, those in more rural or underserved areas often slip through the regulatory cracks.
The approach taken by CAC mirrors this pattern, with the mandate placed but with unclear follow-through on ground support. Although the directive was well-publicised, many operators felt left to navigate the complexities of registration alone, despite partnerships between fintech firms and CAC to ease the process.
This lack of support has fueled a reluctance among operators to comply, leaving many to risk non-compliance.
Critics of the registration mandate argue that it constitutes an overreach by CAC and the CBN, especially given the minimal support provided to agents.
The rapid growth of the POS industry in Nigeria was due to accessibility. Many agents set up operations to meet community demands for basic financial services, especially as bank closures and consolidations in rural areas left gaps.
The mandate, while intended to legitimise and secure these businesses, might inadvertently push smaller POS operators out of business, reducing access in areas where formal banking is already limited.
On the other hand, proponents believe that proper regulation is overdue, noting that unregulated operators pose risks to customers and the stability of the broader financial ecosystem.
Fraud, money laundering, and even ransom payments facilitated through POS systems highlight the need for oversight. For supporters, registration is the first step in a series of regulations that will protect customers and enhance the credibility of the agent banking sector.
All efforts to reach the CAC proved abortive. However, statements from previous public releases underscore their commitment to enforcing compliance.
In their official statement, the CAC noted, “The Commission is working with law enforcement agencies to ensure a comprehensive enforcement and sanction framework.” This could signal possible legal consequences beyond mere shutdowns, especially for operators found to be engaging in fraud or other “unwholesome activities.” Yet, without visible enforcement, the effectiveness of such statements remains uncertain.
Besides, the CAC’s website reveals that more than half of companies with ‘POS’ in their business name are still “UNDER REGISTRATION’ highlighting a delay in registering these POS entities.
The CAC registration mandate raises broader questions about Nigeria’s regulatory approach, especially in the informal economy. POS operators face a precarious future, caught between compliance costs and the threat of shutdowns.
While some operators have chosen to comply, seeing it as a necessary step toward business legitimacy, others remain sceptical, doubtful that it will enforce shutdowns on a wide scale.
The CAC’s mandate reflects the challenges of enforcing policy within a fast-growing, dynamic sector that operates in the grey areas of formal and informal economies.
As the government seeks to rein in fraud and bring more businesses under formal oversight, it will need to address the disconnect between policy and practice, ensuring that regulations are not just set but are also effectively supported and enforced. Without this shift, the directive risks becoming another forgotten policy—an echo in a cycle of unfulfilled regulatory ambition.
In case you missed it: CAC registration: PoS operators sue government as deadline ends yesterday
The post POS registration: Has CAC enforced its deadline or was it just another media announcement? first appeared on Technext.
The initial deadline was July 7, 2024, and extended to September 5, 2024. By this time, many POS operators had no idea they were required to register.
In a July statement signed by ‘management’ when the deadline was extended, the CAC portrayed some sort of seriousness: “[POS] Operators who fail or refuse to register at the end of the extended deadline run the risk of losing such businesses and prosecution for aiding and abetting criminal activities.”
As Nigeria grapples with growing financial fraud and seeks to strengthen its regulatory framework, the CAC’s directive, which would impact approximately 1.9 million operators nationwide, born from a collaboration with the Central Bank of Nigeria (CBN), was part of broader efforts to tighten oversight over Nigeria’s agent banking sector.
Following a sharp rise in POS-related fraud cases—reported to make up over a quarter of Nigeria’s total financial fraud incidents in 2023—the government moved to ensure every POS operator is registered and regulated under the Companies and Allied Matters Act (CAMA) 2020.
The CAC set the initial deadline in July 2024, giving operators a 60-day window to complete the registration. However, following appeals from some industry stakeholders, the deadline was extended until early September. By the expiration, however, a considerable number of operators remained unregistered, and the CAC reiterated that enforcement actions, including potential shutdowns, were imminent.
But, more than 54 days later, CAC seems to have forgotten the deadline.
The challenges of compliance
The response from POS operators has been mixed, with many failing to comply, citing obstacles ranging from registration costs to procedural complexity. So, questions remain: will this be another case where an ambitious policy lingers without serious enforcement?
CAC Registrar General – Hussaini Ishaq Magaji
Many POS operators Technext chatted with expressed frustration with the registration process, with some suggesting it is costly and overly complex. The perspectives on the CAC mandate reveal both frustration and concern about the policy’s practical impact on their businesses.
1. Compliance with registration
Some operators have complied with the mandate, acknowledging its importance despite the challenges. “Yes, I registered on time,” said one operator from Lagos, explaining that ensuring compliance was a priority to avoid disruptions.
However, others expressed hesitation, with one operator admitting, “I haven’t registered yet; I wasn’t sure if the CAC would enforce this, so I decided to wait.”
2. Barriers to compliance
The registration process proved a significant obstacle for many operators. A small-scale POS agent explained, “The cost is high. Even though I know it’s essential, the registration fees are beyond what I can afford right now.”
Others pointed to procedural confusion. “I didn’t know where to start, and I don’t have anyone to guide me through the process,” shared another operator, illustrating the lack of clear support and guidance.
3. Perception of enforcement
When asked if they believed the CAC would follow through on shutdowns, their opinions varied. One operator voiced confidence in the commission’s intentions, saying, “I think they’re serious; they would work with the police, so I can’t afford to take that risk.”
In contrast, others felt scepticism, with an agent from Jigawa stating, “There are so many POS operators. Enforcing shutdowns on all of us doesn’t seem practical.” Another echoed this, suggesting the CAC might only target select businesses to set an example, rather than a widespread enforcement.
Read also: Nigeria Police’s arrest of POS operator over a ₦4 million deposit shows a regulation gap
4. Impact on fraud rates
When it comes to fraud, operators acknowledged the benefits of regulation but questioned if registration alone would address the issue. “It might reduce fraud a bit because if every operator is officially registered, it becomes harder for fraudsters to hide,” said one compliant operator.
Others doubted the directive’s effectiveness, with one stating, “We need better security features in the POS system itself, not just registration.”
5. Understanding the mandate’s purpose
POS Operators who were aware of the mandate’s goals expressed mixed views. “Yes, I know it’s supposed to help reduce fraud and make the business more secure,” shared one operator, who noted that formalisation might boost business credibility.
Conversely, others felt the mandate would put smaller agents at a disadvantage. “It’s making it hard for smaller operators like me to continue,” one operator said, underscoring the cost burden and complexities involved.
POS operators in Nigeria
This disconnect underscores one of the biggest challenges of policy implementation in Nigeria: ambitious mandates are often rolled out without adequate support mechanisms for those required to comply.
Failed efforts at policy implementation
The issue with the CAC registration mandate is not isolated. Nigeria has a history of ambitious regulations that stall implementation, often due to inadequate infrastructure or inconsistent enforcement.
This issue raises doubts about regulators’ commitment to following through on policy initiatives. For instance, the National Identification Number (NIN) registration drive and recent SIM card registration policies saw deadlines extended multiple times due to logistical challenges and public pushback.
While some policies are enforced in high-density areas, those in more rural or underserved areas often slip through the regulatory cracks.
The approach taken by CAC mirrors this pattern, with the mandate placed but with unclear follow-through on ground support. Although the directive was well-publicised, many operators felt left to navigate the complexities of registration alone, despite partnerships between fintech firms and CAC to ease the process.
This lack of support has fueled a reluctance among operators to comply, leaving many to risk non-compliance.
Critics of the registration mandate argue that it constitutes an overreach by CAC and the CBN, especially given the minimal support provided to agents.
The rapid growth of the POS industry in Nigeria was due to accessibility. Many agents set up operations to meet community demands for basic financial services, especially as bank closures and consolidations in rural areas left gaps.
The mandate, while intended to legitimise and secure these businesses, might inadvertently push smaller POS operators out of business, reducing access in areas where formal banking is already limited.
On the other hand, proponents believe that proper regulation is overdue, noting that unregulated operators pose risks to customers and the stability of the broader financial ecosystem.
Fraud, money laundering, and even ransom payments facilitated through POS systems highlight the need for oversight. For supporters, registration is the first step in a series of regulations that will protect customers and enhance the credibility of the agent banking sector.
The CAC’s response
All efforts to reach the CAC proved abortive. However, statements from previous public releases underscore their commitment to enforcing compliance.
In their official statement, the CAC noted, “The Commission is working with law enforcement agencies to ensure a comprehensive enforcement and sanction framework.” This could signal possible legal consequences beyond mere shutdowns, especially for operators found to be engaging in fraud or other “unwholesome activities.” Yet, without visible enforcement, the effectiveness of such statements remains uncertain.
Besides, the CAC’s website reveals that more than half of companies with ‘POS’ in their business name are still “UNDER REGISTRATION’ highlighting a delay in registering these POS entities.
What’s the future like for POS operators?
The CAC registration mandate raises broader questions about Nigeria’s regulatory approach, especially in the informal economy. POS operators face a precarious future, caught between compliance costs and the threat of shutdowns.
While some operators have chosen to comply, seeing it as a necessary step toward business legitimacy, others remain sceptical, doubtful that it will enforce shutdowns on a wide scale.
The CAC’s mandate reflects the challenges of enforcing policy within a fast-growing, dynamic sector that operates in the grey areas of formal and informal economies.
As the government seeks to rein in fraud and bring more businesses under formal oversight, it will need to address the disconnect between policy and practice, ensuring that regulations are not just set but are also effectively supported and enforced. Without this shift, the directive risks becoming another forgotten policy—an echo in a cycle of unfulfilled regulatory ambition.
In case you missed it: CAC registration: PoS operators sue government as deadline ends yesterday
The post POS registration: Has CAC enforced its deadline or was it just another media announcement? first appeared on Technext.