Challenges Associated With Starting POS Business in Nigeria

Last updated on September 14th, 2022 at 02:48 pm

Like every other business, starting a POS business in Nigeria comes with its own challenges. The truth is it’s rare for start-ups not to face one thing or the other in business. Most successful businesses today started from somewhere small and they faced their own obstacles.

The same way we have successful businesses, we also have businesses that have failed. What makes the difference is the fact that one- the successful businesses never quited inspire of the challenges that came their way.

So if you are starting a POS business in Nigeria, be sure that you will face some challenges; at the same time, you have all it takes to overcome them.

In my last posts on POS, I wrote: How to start a POS business in Nigeria.

I also touched on the POS companies and agents in Nigeria.

However, in that post, I didn’t discuss the challenges you may likely face when starting up a POS business in Nigeria.

In the post I will show you common problems associated with starting a POS business and how you can overcome – and keep getting profit.

Let’s dive in…

Challenges people face when starting a POS business in Nigeria

Cost of acquiring POS terminal
Identifying a low competitive location
Delay in the reversal of money
Network issues
Banks/customers problems
Security
Power Supply

Read: 11 Best POS Machine In Nigeria.

1. Delay In The Reversal Of Money

This happens a lot where the card of the person making withdrawal is debited and the refund is not made immediately.

Although this issue used to happen to the banks as well, especially in those days that you will have to fill a form, wait for some days before you can get the ATM deducted from your account when the transaction didn’t go through. Now the story has changed for good from the ATM side of the matter but however, POS operators are still faced with this issue.

Due to the failure in the system in reversing the wrongly debited amount, many customers have stopped patronising the POS agents all over the country.

To avoid this, take time to review these machine vendors and invest in good POS.

Always restart the machine after a long hour of usage.

2. Networking Issues

Networks can pose a lot of problems for POS business startups. I have personally experienced a situation where I had to wait for over 15 minutes just because the post agent was looking for a network to process the information. Poor Network can cause a delay for customers, making them look for alternatives. It can also frustrate the operator as well, especially when there are many customers to attend to.

3. Cost of acquiring POS terminal

Starting capital is always the problem start up businesses face. While it is very easy to put up a kiosk together and locate a safe place, the price of POS can be a challenge for most people who struggle to eat daily. Of course, many companies claim to give out POS for free, but you may have to wait a long time before you can secure one.

To avoid waiting time, you will be asked to pay a certain amount of money

On the other hand, the banks issue POS Machines for free to their agents. However, you must be above 18 years of age and you must meet all of their requirements.

4. The POS Issuing Bank

One of the challenges that we cannot separate from the POS business is the issuing bank. Networks within the banking system itself can stop transactions from going into completion.

If you are familiar with ATMs, you will discover that a machine that is working fine for another bank is not available for your own bank to withdraw or do other forms of transactions.

Although some of these challenges come with Interswhich, it is the bank that causes most of it.

Way around this is to get a good POS Machine and review the issuing companies/banks before purchasing it.

5. Security

Again, I’m not just making this up, my card was once compromised after using it at a POS terminal. This is possible because a POS Machine can easily be hacked especially when the issuing company does not do regular upgrades, install anti malware and antivirus on the machines.

In order not to land in police custody, make sure that the company you are buying a POS terminal from provides anti malware and antivirus for your POS terminal.

6. Robbery

Because of the nature of the POS business, it is prone to attack. Many people out there are only after the money you manage to earn. To avoid this, locate a place close to where securities are and installation.

7. Identifying a low competitive location

Of course this can sometimes be challenging because you don’t want to cite your business at a location with many operators. The lower the competition the higher the number of transactions that will be made and the revenue from the transactions.

8. Power supply

Another problem is getting a source of power to charge the POS Machine. Many places in Nigeria, especially the villages lack good and regular power supply creating a huge problem for POS operators.

9. Customers

Dealing with and handling customers alone is a huge challenge. Many customers have the motive that they can do anything since customers are always right. Many will come with faulty cards, or cards with low insufficient funds, thinking they still have credit. This usually leads to a waste of time.

POS Dispense Error: Common POS Errors and Messages

Using your credit card to pay for goods is arguably one of the simplest things you can do these days. With POS you select your account type, enter your PIN, and make payment! You can use the Point of Sales machine with the majority of Nigerian banks to conduct daily transactions worth up to one million Naira. Additionally, you might request an increase from your bank.

However, It becomes a problem, if the POS device keeps returning “FAILED” results and deducting money from your account at the same time. When the merchant refuses to release the goods, everyone becomes perplexed and some start to argue.

When the merchant refuses to release the goods, everyone becomes perplexed and some start to argue.

This article will give you information on the reasons why POS transactions fail, how to get our money back after a failed POS transaction, and how to report a failed transaction and get a refund on your POS device.

Reasons for Failed POS Transactions

Different factors can cause POS transactions to fail. The information as to why the transaction didn’t go well is typically listed on the “failed” printout that is issued following the unsuccessful transaction.

Here is a list of POS transaction error codes and Messages…

POS Error Codes	Code Text	Explanation
0	Transaction Approved	Successful transaction
1	Refer to Card Issuer	The customer should contact their bank.
2	Refer to Issuer, special	The customer should contact their bank.
3	Invalid Merchant	The merchant should contact the bank/device issuer
4	Pick Up Card	The card has been reported as stolen or lost. The merchant should also retain the card with them and not give it back.
5	Do Not Honour	The card has failed a security check, or the funds have been frozen due to account irregularities/fraud. The customer should contact their bank.
8	Honour With Identification	Successful transaction
9	Request In Progress	The customer should contact their bank.
11	Approved, VIP	Successful transaction
12	Invalid Transaction	An invalid character has been entered. The transaction should be retried with the correct entries.
13	Invalid Amount	An invalid character has been entered. The transaction should be retried with correct entries.
14	Invalid Card Number	The customer should contact their bank.
15	No Issuer	The customer should contact their bank if it exists.
29	File Update not Successful	The customer should contact their bank.
30	Format Error	The customer should contact their bank
33, 54	Expired Card	The card is expired. The customer should get a new card.
34	Suspected Fraud, Retain Card	The card has been reported as stolen or lost. The merchant should also retain the card with them and not give it back.
38, 75	PIN Tries Exceeded	The customer has entered the wrong PIN thrice, should contact their bank.
41	Lost Card	The card has been reported as lost. The customer should contact their bank.
43	Stolen Card	The card has been reported as stolen. The customer should contact their bank.
51	Insufficient Funds	The balance in the account is not enough for the transaction being attempted. The customer should fund the account or try alternative means to pay.
55	Incorrect PIN	The customer has entered the wrong PIN. The card will be blocked on the third wrong attempt.
57	Function Not Permitted to Cardholder	The customer should contact their bank.
58	Function Not Permitted to Terminal	The customer should contact their bank.
62	Restricted Card	The card is restricted due to irregularities in the account. The customer should contact their bank.
65	Exceeds Withdrawal Frequency Limit	Banks have a default transaction frequency limit (the number of transactions permitted in one day). This means the customer has exceeded that limit. Has to wait till the next day. Try alternative means of payment.
82	CVV Validation Error	The customer should contact their bank.
89	Administration Error	The customer should contact their bank.
91	Card Issuer Unavailable	The customer’s bank is currently not available. The customer can wait a bit and retry the transaction.
96	System Error	The customer’s bank is currently not available. The customer can wait a bit and retry the transaction.

What should the merchant (seller) do after a failed POS transaction?

A seller should ALWAYS ensure that a payment has been successful before releasing the items. Some would argue that although the buyer was debited, you haven’t gotten a successful notification or guidance.
The customer’s bank would ask for the slip as proof of the unsuccessful transaction, so merchants should always have POS paper rolls available for all transactions.

What to do after you’re debited for a failed POS transaction

First and foremost, especially if you saw the slip come out of the POS machine, this is not rare and you don’t need to overestimate the likelihood that somebody is trying to defraud you. Sometimes, transactions go wrong and the client is not debited or is instantly credited; that’s okay, keep going.

Here is a step-by-step instructions on what to do in the event of a failed transaction and a delayed credit to your account:

Ensure that you obtain the “failed” slip from the retailer.
Take a clear photo of the slip right away if you have a smartphone. This is due to how rapidly the slip’s print fades.
Send a letter, contact a number, or go in person to your bank to file a complaint with the “failed” slip.
Wait for a resolution.

What happens at the backend after your POS error complaint is logged

To find out if the merchant received value for the transaction, your bank gets in touch with the merchant’s bank.
If the merchant did receive value, your claim is denied because the transaction was not successful.
Your money will be credited back to your account within the predetermined time frame if the merchant does not receive value.

How long does a POS reversal take?

24 – 72 working hours.

How to Track POS Transactions in Nigeria

You must get in touch with your bank and ask for a copy of the statement for the relevant time period if you want to monitor the POS of a transaction that was made with your debit card but not one that you approved. Your debit card’s usage will be detailed on the statement, along with the date and time of each purchase.

You can follow the POS of a transaction made with your debit card in a few different methods.
One option is to get in touch with your bank and inquire about the particular transaction.
Your bank should be able to give you the location and time of processing.
You can also use a phone app or a website to check your account history.
You can check for any transactions that seem suspicious by looking at the list of all recent transactions that have been made during the past few days or weeks.

If you’re still having trouble finding what you’re searching for, get in touch with your bank once more and urge them to look into it further.

POS transaction failed but the amount was deducted from my account

Within 24 hours, the money should be returned to your account. In the event that it doesn’t, you can go to your local branch and file a written complaint stating the transaction date and sum. It will be returned to you within 7 business days. You can raise a “Charge Back” for this purchase by calling phone banking.

There are mainly 4 points of sale technologies: