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Gift Arku
Marketing Associate
On December 17, 2024, the Central Bank of Nigeria (CBN) issued a circular introducing stringent new transaction limits for point-of-sale (POS) cash-out operations. This directive, signed by Oladimeji Yisa Taiwo, the Director of the Payments System Management Department at the CBN, sets a daily cash-out limit of ₦100,000 ($65) per customer, a weekly withdrawal cap of ₦500,000 ($325), and a total daily limit of ₦1,200,000 ($780) for POS agents.
This policy follows a related circular from July 2024 that targeted POS agents, emphasising the need for improved compliance and oversight in agency banking. Together, these measures reflect the CBN’s ongoing efforts to streamline financial operations, foster a cashless economy, and combat fraud.
However, they also present significant operational challenges for businesses and individuals across Nigeria. This article explores the implications of the new directive, connects it to earlier regulatory moves, and highlights how Smile ID’s suite of identity verification solutions can help businesses adapt.
The new directive is not just about pushing Nigeria’s cashless agenda but also about addressing the darker side of cash transactions—fraud, money laundering, and other criminal activities. Cash has long been a tool for fraudsters to launder stolen funds and conduct illegal transactions. For instance, stolen funds often move rapidly through various bank accounts, before being cashed out at POS terminals, where the trail goes cold. This anonymity makes recovery nearly impossible.
By capping cash-out limits, CBN aims to reduce the size of “clean” cash fraudsters can access in a single transaction, forcing more transactions to occur via digital channels where movement can be tracked. This step is critical in combating the widespread misuse of POS terminals in facilitating crimes such as kidnapping ransoms and bribery.
For Individuals, High-value consumers are unlikely to be significantly affected, as they primarily rely on digital channels like bank cards, banking apps, internet banking, USSD, or relationship managers for their transactions. However, artisans they work with may feel the impact due to reduced access to cash, which could push more of them to accept payments via bank transfers.
At the lower end of the market, where people rely heavily on POS agents for cash, daily essentials like feeding and transport fall within the cash withdrawal limits. So, while their basic needs may not be affected, they’ll have to rely more on transfers for general/business fund movement.
Imagine a POS agent, Adamu, who operates a bustling kiosk in Kaduna. His customers rely on him for quick withdrawals and deposits, but with the new CBN directive, Adamu faces stricter compliance requirements. To continue running his business smoothly, he must verify his identity, prove the legitimacy of his operations, and ensure his customers' transactions remain secure and compliant.
This is where Smile ID steps in, transforming a potentially overwhelming process into a seamless journey:
Through Smile ID, Adamu can continue to serve his customers confidently, knowing he meets all regulatory requirements while building trust in his community.
The new CBN directive marks a significant shift in Nigeria’s prosperous agency banking scene. While the policy introduces challenges for businesses and customers alike, it underscores the importance of robust identity verification and compliance tools.
This directive also signals the CBN’s determination to address systemic vulnerabilities in Nigeria’s financial ecosystem. By reducing the reliance on cash and enhancing oversight, the policy is a step toward curbing fraud and building trust in digital payment systems. For businesses ready to adapt, Smile ID provides the tools to navigate this transition seamlessly.
Contact Smile ID for help meeting this new directive by booking a demo here.
We are equipped to help you level up your KYC/AML compliance stack. Our team is ready to understand your needs, answer questions, and set up your account.