Godwin Shaibu
The Central Bank of Nigeria (CBN) has quietly set the stage for one of the most consequential shake-ups in the country’s financial technology ecosystem.
In a directive that many industry players initially dismissed as a technical update, the apex bank has ordered all payment companies to migrate their Point-of-Sale (POS) terminals to Android 10 or higher.
Join our WhatsApp ChannelWhat sounds like a routine upgrade may soon trigger a wave of market consolidation, capital pressure on small fintechs, and the possible disappearance of thousands of agency banking outlets that millions of Nigerians depend on for cash access.
And at the heart of it all lies a fundamental question:
Can the CBN’s ambitious bid to modernize the payment infrastructure coexist with Nigeria’s fragile agent banking economy?
The Rule That’s About to Change Everything
The CBN’s new standard requires all POS devices operating in Nigeria to run on Android 10 or higher, alongside geo-tagging, location tracking, and migration to ISO 20022 messaging — a global standard designed to improve transaction transparency and security.
It also mandates integration with the National Central Switch (NCS), enabling regulators and banks to better trace transaction data and detect fraudulent activity.
These requirements form part of a wider regulatory campaign to clean up the chaotic POS ecosystem — one that has become the lifeblood of Nigeria’s cash economy since the 2023 cash crunch.
According to data from the Nigeria Inter-Bank Settlement System (NIBSS), POS transactions hit ₦8.3 trillion in the first half of 2024, a 45% increase from the previous year. That explosive growth, however, came with a downside: fraud, untraceable agents, and the proliferation of low-quality devices.
The CBN’s response: upgrade or get out.
Read Also: Will The CBN’s New Rule Stop POS Fraud?
A Market Built on Old Tech
For years, Nigeria’s agency banking revolution thrived on low-cost, legacy POS machines, many of which run on outdated software and lack GPS functionality. These devices, imported cheaply from Asia, enabled fintech startups and micro agents to spread financial services across every neighborhood.
Now, those same devices are facing extinction.
According to industry estimates, over 60% of active POS terminals in Nigeria operate below Android 10, meaning they’ll soon be obsolete once enforcement begins.
Replacing them is no small feat. A standard smart POS terminal that meets CBN’s new criteria currently costs between ₦60,000 and ₦120,000, depending on brand and configuration.
For a small payment service provider (PSP) managing 2,000–5,000 terminals, that translates to a capital replacement cost of ₦120 million to ₦600 million — a sum that could wipe out their profit margins.
The Big Fintech Advantage
While smaller firms scramble, the fintech giants are well-positioned to absorb the shock.
Companies like Moniepoint, OPay, and PalmPay already deploy newer, Android-based POS terminals with GPS and biometric support. For them, the new rule is an opportunity to solidify dominance.
“Smaller PSPs have been the ones pushing inclusion at the grassroots,” says a fintech consultant who advises several agency networks. “But the new hardware requirement is a natural filter — only players with serious capital and operational discipline will survive.”
In other words, the rule could accelerate the consolidation of the payment market, with a handful of big players controlling most of the agent network.
It’s a trend that mirrors what happened in the telecom sector after SIM registration policies tightened. The strongest operators got stronger, while smaller ones disappeared.
READ ALSO: CBN Gives Banks October 31 Deadline To Comply With Payment Messaging Standard
The Unspoken Consequence: Agents on the Edge
For the millions of POS agents who form the backbone of Nigeria’s informal financial system, this policy could become an existential threat.
From street corners in Lagos to remote villages in Taraba, POS agents handle everything from withdrawals and deposits to bill payments and transfers. Many operate with razor-thin profit margins — often earning just ₦50 to ₦100 per transaction.
Now, they face the prospect of paying for new terminals or losing their business entirely.
The ripple effect could be severe. If many small agents drop out, financial access in rural areas could shrink, undoing years of progress in financial inclusion.
The CBN’s Defense: Modernize or Be Left Behind
The CBN’s argument is rooted in logic.
Nigeria’s POS system has become a fertile ground for fraudulent transactions, unregistered devices, and identity theft. By enforcing Android 10+, the regulator can ensure all devices support real-time tracking and more secure SDKs.
The geo-tagging mandate, which requires all terminals to be registered to a specific physical address, is designed to stop agents from moving devices between cities or using them for fraudulent roaming transactions.
The ISO 20022 standard, meanwhile, improves transaction data quality and allows more efficient dispute resolution between banks, fintechs, and regulators.
But while the policy’s intent is sound, the execution risk is massive.
The challenge lies not in what the CBN wants to achieve — but in how fast the industry can afford to get there.
The Economics of Compliance
To appreciate the scale of the challenge, consider this: replacing even half of Nigeria’s estimated 4 million POS terminals would require an investment of around ₦240 billion, assuming a conservative ₦120,000 per device.
That’s the kind of money only a handful of fintechs — or the banks themselves — can deploy without external financing.
For smaller PSPs, this could trigger a cash crunch or force them into mergers and acquisitions with larger competitors.
Meanwhile, agents who rely on their POS terminals as their only source of income might abandon the business altogether — a scenario that could create short-term shocks in cash-dependent communities.
A Risk of Market Concentration
Critics warn that the policy could inadvertently create a new oligopoly, dominated by four or five major fintechs and a few commercial banks.
If smaller PSPs are pushed out, consumers and merchants could face reduced competition, higher transaction charges, and less innovation.
“This is how markets shrink in the name of modernization,” notes a payments policy researcher at a Lagos university. “Regulation without affordability planning always risks stifling the very innovation it seeks to control.”
What Happens Next
Now that the October 2025 compliance timeline is at hand, payment companies are racing to audit their devices, upgrade software, and negotiate new hardware deals with manufacturers.
Some firms are considering leasing models for POS replacements, while others plan to offer subsidies to agents who upgrade early.
The CBN, for its part, appears determined to enforce the rule — framing it as part of Nigeria’s broader digital transformation strategy.
If done right, the reform could usher in a smarter, safer, and more transparent payment ecosystem that boosts investor confidence and consumer trust.
But if done hastily, it could undermine financial inclusion, kill off smaller innovators, and turn the POS market into a monopolistic playground dominated by a few tech giants.
So,
For fintech founders, the message is clear: adapt or disappear.
For POS agents, survival may depend on partnerships with bigger networks.
And for consumers, the coming months could determine whether that POS terminal on the next street corner remains open for business.
The CBN has fired the starting gun on a payments revolution. The question now is: who will still be standing when the dust settles?
