Steps and Procedures on how to Start a POS Business

Hey, I don’t know how you got here but I know you are here because you want to know the steps and procedures on how to start a POS business.

The idea of starting a POS business initiated some few years ago and till now, there are a lot of places that have neither banks nor POS payment points yet, businesses and schools are operating there. On top of that, it is a very lucrative business that requires little start up capital.

These are places that are perceived as the “best locations for starting a POS business”.

In this article, we’ll uncover the secrets in starting a POS business, best location for running a POS payment point, how to get a free POS machine, how to become a FirstMonie agent, how to become an OPAY agent, breakdown of cost and profit in running a POS business, the challenges and why people fail on starting a POS business.

Steps and Procedures on how to Start a POS Business

The answer we’ll provide to the above queries is sure to lift you in running successfully a POS business in Nigeria.

Before we proceed to steps and procedures on how to start a POS business, you must at first know what POS means.

What is POS?

You may have heard people use the acronym “POS” many times.

On streets, in banks, from people, on roadside sign posts etc, you’ve encountered the word POS time without number but never knew the full meaning.

Many of us don’t want to ask people, you think people will laugh at you because they believe it simple enough for anyone to know.

Well, we won’t laugh at you.

POS simply means Point of Sale.

If POS means point of sale, what then is a POS machine?

Relatively, a POS machine is an electronic device that allows the payment of purchased goods and services by customers, especially in local shops and supermarkets.

How Does POS Machine works?

POS machine works exactly like using your android phone to make bank transactions through your bank app, or using the ATM (Automated Teller Machine).

POS machine has a channel where ATM cards could be slotted in and out just like the ATM. So, when a customer says, ‘I don’t have the money at hand but I have it in my bank account’ and you as the seller has a POS machine; simply get the customer’s ATM card, slot it into the POS machine and make your transaction of either debit or credit.

It’s that simple.

But recall that banks had recently restructured the use of POS machines to also do the “Sending and Receiving of Cash” in locations where banks are not available for people.

In otherwords, it is called POS pay point.

Therefore, for the purpose of this article, we’d only concentrate on how to start a POS business (Sending and Receiving of cash) as a pay point.

Hey, I know what you’re asking in your mind already. How do I get a free POS machine?

If I actually guessed well, then let’s proceed.

How to Get a Free POS Machine

Truth be told, there’re companies out there who sale POS machines to their clients but YOU and I shouldn’t care about those companies.

Why should we care when there’re lots of companies giving out POS machines for absolutely free of charge?

All the banks in Nigeria give out POS machines for free. Yes, I said ALL the banks in Nigeria, except the banks that do not want to give out again due to increase in fraudulent activities with the POS business.

Getting a free POS machine is not that tedious as people think it is. In this article, we’re only going to focus on how to get a free a POS machine with First bank and OPAY.

Guidelines on how to get a free POS machine with First bank

Steps and Procedures on how to Start a POS Business

 

To get a free POS machine with First bank in Nigeria, follow the guidelines below;

  • First, you need to rent a shop in a good location (a good location in this context means; a point where people can hardly have access to ATM pay points. But locations near ATM pay points still work though.)
  • Next, you have to become a FirstMonie agent. To become a FirstMonie agent, you MUST open an agent account which is otherwise called a current account with First bank.
  • You’d be asked to deposit a sum of fifty thousand naira (N50,000) into that account (don’t be scared, the N50,000 is still yours. In fact, that’s your running capital)
  • After your location has been visited and accepted by the bank representative, your POS machine request is processed immediately.
  • Finally, in less than a week, you should get your free POS machine from First bank.
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NOTE: getting a free POS machine from First bank is on a condition that, if after 2-3 months and your point of sale is not able to generate a total transaction of Three Million naira (N3,000,000), First bank will immediately retrieve the POS machine from you.

Oh no!! I don’t like to operate my POS business with First bank…is it what you’re saying right now?

Its okay, keep reading and I’ll show you another option. Apparently, it’s the steps and procedures on how to start a POS business with OPAY.

How to Start a POS business with OPAY

Steps and Procedures on how to Start a POS Business

OPAY, is one of the leading platforms in online financial transaction currently owned by Opera.

In the quest to reduce risk and stress in making financial transactions, Opera introduced OPAY.

Guidelines to Becoming an OPAY Agent

Becoming an OPAY agent is quite simple. Follow the guidelines below;

  • Go to Google play store with your android phone, download their app and sign up (the app in Google play store is called OPAY)
  • Next, you have to upgrade to agent and this could be done in two ways;
  1. Do it yourself by uploading your documents like Government issued ID card, Passport photograph and Utility bill like PHCN/NEPA bill
  2. Contact an OPAY customer representative for assistance with this number +234 807 391 2849. Thank me later.
  • Finally, on completion of the steps above, wait for about a week and your OPAY account will be upgraded to an OPAY agent account.

Now, to get a free POS machine from directly from OPAY, your total transaction on your OPAY agent account should reach Three Million naira (N3,000,000) within 2-3 months. Same as First bank.

Are you scared you can’t make N3,000,000 transaction in 3 months? I assure you that you can make even more than that.

Let’s do the mathematics;

If your point of sale is in a good location, you should make nothing less than N50,000 transaction a day.

N50,000 * 30 days = N1,500,000

N1,500,000 * 2 months (90 days) = N3,000,000.

But you could be wondering a location we can really say is a good spot for POS business.

I’ll tell you…

Best Location for Running a POS Business

In POS business, location is one of the key factors in succeeding.

You just don’t go about picking any random location you wish for a POS business.

If you really want to succeed in POS business, then you have to read through the guidelines we’ve laid down below.

We all know that a successful business needs people. So, you need a spot in the following locations;

  • Around tertiary institutions like universities, polytechnics, school of nursing, etc.
  • Location in a business terrain (where a lot of businesses are going on)
  • A busy junction (like T-junction and Y-junction)
  • Even in rural terrains (like villages), where banks and ATMs are no way to be found. But such places must have a good number of people doing businesses there.

I know right now you’d be like “if this business is this simple, why then do people fail in it”?

Let’s find out…

Challenges and Why People Fail in POS Business

No matter how a business yields cash and the income flow looks flourishing, there are downtimes whether you admit it or not.

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Just like every other business, POS business has it good days and bad days, problems and challenges. But I’m not writing this to scare you; rather I’m just being frank and sincere.

Here are some of the challenges in running a POS business;

  • Bad location
  • Lack of sufficient operational capital
  • Depending on the bank or platform you use, poor banking network
  • Placing too much transaction charges on your customers for you to make profit
  • Poor customer relationship

When you put the above points into consideration, you’re sure to attend about 90% success in POS business.

Breakdown of Profit in POS Business

Well, running a POS business is not as profitable as you may hear out there. But I’ll uncover the secrets how people really profit a lot in POS business.

 

 

Breakdown of profit in POS business

Transaction Amount Bank Charges Commission to the Agent
(% of Fee)
1 Deposit (own FirstBank A/C)
1- 50,000 N100 45%
>50,000-100,000 N200 45%
 
 
2 Transfer to Banks
1- 50,000 N100 45%
>50,000-100,000 N200 45%
 
4 Cash Withdrawal
1-20,000 N100 45%
>20,000-100,000 N200 45%
 
5 Bill Payment N100 45%
6 Airtime Recharge Free 2% of Amount

 

With the above breakdown of how profitable POS business is, you should be able to know what range of profit you’d be making once you start your POS business.

If you have a good location that gives you up to 50 transactions in a day, then you should be making N45 * 50 = N2,250.

What a lot of people do is that, they open about 3 shops or even more (It involves a lot of capital though, but you’ll stand a chance of doubling your profit on daily basis).

By running up to 3 shops means you can be making N2,250 * 3 = N6,750 daily. N6,750 for a month is N202,500.

That’s a huge profit, isn’t it?

But that’s not all. You be should also know what it’ll cost you to start a POS business in Nigeria.

Cost of Starting a POS Business in Nigeria

In as much as POS business is perceived as a lucrative business in Nigeria, it also involves a little capital to start.

Here is the average aggregate cost in starting a POS business in Nigeria;

Location ————————— N80,000

Account opening——————————- N50,000 (FirstMonie)

Table and chairs —————————— N15,000

Banners —————————————- N5,000 (Though First bank gives free of charge)

Thermal paper ——————————– N1,000

Sim card & data —————————— N600

Total ——————————————– N 151,600

Well, starting a business that generates over N3,000 daily with just N151,600 is average enough for an average person to start.

Now that you’ve known the cost and profit, steps and procedures on how to start a POS business, we’re looking forward to seeing you succeed in it and please do come back to tell us how it worked.

Bottom Line

I believe this article has been able to explain to your understanding the steps and procedures on how to start a POS business in 2020.

The advice I’d like to give is that, running a POS business involves money so it needs some degree of security in case of robbery.

Think two ways in everything you do. That’s what successful people do. (You should understand what I mean. If you don’t, then contact us using the comment section below or through our contact us page and we’ll be glad to explain further).

The above steps and procedures on how to start a POS business is all you need to start a POS business in Nigeria 2020.

If you need personal advice regarding this business, kindly fill the form below and we’ll receive it in our end and we’ll reach you ASAP.