A POS business looks simple: put a terminal on a table, let people withdraw cash, collect a fee. The part nobody sees is the float. Your money sits in two places at once, as cash in a drawer and as a balance in an account, and one mistake in either place can erase days of earnings. This guide covers how to set up properly, how to size your float, and where fraud usually enters.
One note first. Rules, fees and limits for agents change, and they differ between providers and countries. Nothing here is a current price or limit. Get written, current information from the provider you plan to use and from the central bank's website.
How a POS business actually makes money
You earn a small fee on each withdrawal, transfer or bill payment you process for a customer. Some providers also pay the agent a share of the charge they collect. Either way, your income depends on volume: many small transactions, handled quickly, all day.
That has two consequences. Location matters more than almost anything else, and your costs (rent, power, data, staff, network failures) are mostly fixed. A quiet spot with high rent can lose money even when you are busy.
Licences, registration and agent status
In general terms, you should not run a POS business as an anonymous operator. Check these points before you buy anything:
- Work with a licensed provider. In Nigeria, terminals and agent accounts should come from a licensed bank, fintech or agent network. Check the provider's licence on the central bank's official website rather than trusting a flyer or a WhatsApp message.
- Identity checks. Providers normally ask for your own NIN, BVN and sometimes proof of address. Use only your own details. Never register on someone else's identity, and never lend your account to others.
- Register the business. Many providers and landlords prefer a registered name. Our guide to registering a business name with CAC covers the steps. Ask the provider whether they require it.
- Local rules. Councils may charge for signage, shop operation or a kiosk site. Ask your local government office or the market association what applies.
- Tax. Keep records. Ask a tax office or an accountant how your income is taxed.
In Ghana, Kenya and South Africa the model differs: mobile money agents in Ghana and Kenya work under telecom-linked or bank-linked agreements, and South Africa has its own banking and agent rules. Check with the specific provider and regulator in your country.
Choosing a provider and terminal
Do not choose only on the lowest setup cost. Compare these things in writing:
| Question | Why it matters |
|---|---|
| Is the provider licensed? | Protects you if funds are held or disputed |
| What are the transaction limits and charges? | Affects which customers you can serve |
| How fast is settlement of money owed to you? | Slow settlement ties up your float |
| How are failed or pending transactions handled? | The most common dispute in this business |
| Is there a support line that answers? | You will need it, usually at a bad time |
| Is the terminal bought, rented or deposit-based, and what happens if you quit? | Avoids losing money on exit |
Many agents run two providers. If one network or app is down, the other keeps you open.
Sizing your float: a hypothetical example
Float is the working money you need so you can pay out cash and still have funds to receive transfers. These numbers are invented to show the method. Replace them with real quotes and your own counts.
Assumptions: You expect about 40 withdrawals a day, averaging ₦15,000 each, and you earn a fee averaging ₦100 per withdrawal after the provider's share.
- Daily cash paid out: 40 × ₦15,000 = ₦600,000
- Gross daily fee income: 40 × ₦100 = ₦4,000
- Daily costs (hypothetical): shop share ₦1,000, data ₦500, power or fuel ₦700, helper ₦1,000 = ₦3,200
- Left before any losses: ₦800 a day
Look at that margin. One failed transaction you have to cover, or one fake alert for ₦15,000, wipes out about 19 days of that example's earnings. This is why volume, low costs and fraud control decide whether the business survives. If your real numbers look like this, it may be better to run it as an add-on to an existing shop than as a stand-alone business.
You also do not need ₦600,000 cash on hand. Because customers pay you back by transfer, your cash recycles. A starting float might be a fraction of a day's turnover, topped up when it drops. Start smaller than you think, watch two weeks of real demand, then grow. Our pricing guide helps you check whether your charges cover your costs.
The fraud risks that hit agents
Fake transfer alerts
A customer shows a screenshot or an SMS saying they paid, and you hand over cash. The money never arrived. Rule: only release cash after the credit shows in your own account app or provider balance. Never trust a screenshot, a text message, or a customer saying "it's coming."
Reversals and wrong transfers
Someone sends money to you "by mistake" and asks you to send it back, or a payment later reverses. Do not refund from your own pocket. Direct them to their bank and, if needed, to your provider. If a large unknown payment arrives, tell your provider rather than moving it.
Stolen cards and card swapping
A customer may be using a card that is not theirs. Be careful with unusual, repeated or very large transactions, and with anyone who is nervous or rushes you. Do not keep customers' card PINs or write them down, and never enter a PIN for them.
Account and agent impersonation
Fraudsters call, pretending to be the provider, and ask for your OTP, PIN or to "verify" your terminal. Real providers do not ask for OTPs. Hang up and call the number printed on your official documents.
Being used for laundering
Some people will offer you a "commission" to receive large sums and pass them on. That can put your account under investigation and expose you to legal trouble. Refuse, and keep a record of the request. If a request feels wrong, ask your provider for guidance.
Robbery and theft
Do not advertise how much cash you hold. Bank excess cash regularly through the day, avoid fixed patterns, and consider where you place the terminal so a passer-by cannot see your drawer.
Daily controls that prevent most losses
- Count opening cash and opening account balance every morning and write both down.
- Log every transaction, even briefly, in a notebook or phone note.
- Reconcile at closing: opening cash plus opening balance, plus fees, should equal closing cash plus closing balance, within your recorded differences.
- Set a cash ceiling. When the drawer passes it, move the excess to the bank.
- Keep personal money out of the float. Pay yourself a fixed amount weekly.
- Check for pending or failed transactions before you close.
Our guide to simple bookkeeping on your phone shows a format you can copy.
Why POS businesses fail
- Dipping into float. Agents borrow from float for rent or a personal need, then cannot serve customers.
- No fraud rules. One or two cash-out losses on fake alerts can end the business.
- Bad location. Too many agents nearby, so each gets few customers.
- Network and power failures. A closed or offline stand sends customers to the next one.
- Counting gross fees as profit. Rent, data, charging, staff and losses come out first.
- Unlicensed or informal setup. Account freezes can lock your float with little notice.
More on early warning signs is in our post on why small businesses fail.
Adjusting for your situation
- Already own a shop or pharmacy: add a terminal; your rent and power are already covered, and foot traffic is built in.
- Starting from scratch with little capital: use a small float, one provider you trust, and a spot near a market, motor park or busy junction. Do not borrow at high interest to fund float.
- Outside Nigeria: look at mobile money agent programmes in your country and apply through the official provider.
Frequently asked questions
Can I use someone else's BVN or NIN to register?
No. Use only your own identity. Using another person's details is fraud and can get accounts frozen and lead to prosecution.
Is POS business guaranteed profit?
No. Margins can be thin, and fraud or failed transactions can produce losses. Test demand and costs first.
How much do I need to start?
It depends on the terminal terms, shop space and float. Get current quotes from at least two licensed providers and a local landlord before deciding.
What should I do if I am scammed?
Report quickly to your provider, keep screenshots and transaction references, and report to the police. Also tell your bank to flag the receiving account.
Next step: this week, visit two licensed providers, ask the six questions in the table, and write down their answers. Then watch foot traffic at your chosen location for three days before you spend anything.
This article is for general information only and is not financial, legal, or tax advice. Prices, rates and rules change quickly, so check current details before making money decisions.