It’s no longer news that the Federal Government, through the Corporate Affairs Commission, has ordered all Point-of-Sale (POS) companies and operators to register their agents and merchants with the commission in line with legal requirements and the directives of the Central Bank of Nigeria. The Commission has set a two-month deadline for point-of-sale operators in the country for registration, latest by July 7, 2024.
Hussaini Magaji, SAN, the Registrar-General/Chief Executive Officer of CAC, met with some fintech companies on Monday 6th May, 2024 in Abuja, during which the agreement was reached. Present at the meeting were representatives of fintech companies, including Opay, Momba, Palm Pay, Moniepoint, Paystack, among others.
Magaji, through his X (formerly Twitter) account said that the measure aims at safeguarding the businesses of fintech customers and strengthening the economy. He also stated that the move complies with “Section 863, Subsection 1 of the Companies and Allied Matters Act, CAMA 2020 as well as the 2013 Central Bank of Nigeria’s guidelines on agent banking.” The tweet partly read, “Hussaini Magaji, therefore, said that the timeline for the registration, which will expire on July 7, 2024, was not targeted at any groups or individuals but genuinely aimed at protecting businesses.
Tokoni Peter, the Special Adviser to Bola Tinubu on ICT Development and Innovation, has pledged to ensure the smooth facilitation of the process in line with the Renewed Hope Initiative of the present administration.
It is important to mention that this directive attracts several pros and cons. As a result of the primacy effect of this, let’s consider the prons first;
1. As earlier mentioned by the Registrar-General of CAC, the mandate aims to check financial fraud, by enhancing transparency and accountability within the financial sector.
2. It aims to curb sharp practices perpetrated with POS.
3. Registering your POS business with CAC gives your business the right to operate. A certificate of incorporation which is obtained after a business is registered gives the business a good reputation and legal recognition.
4. In the world of competitive marketing, registering your POS business with CAC protects your business from name imitation and takeover (business name theft).
5. When a business is registered with CAC, the business obtains a separate legal entity distinct from the owner. Personal liability or responsibility is not involved.
6. Business Legitimacy/Credibility: when a business is registered with CAC, it boosts potential investors/customers trust and confidence. Given that funding is critical in any business, its easier to secure loans or financial assistance from the bank when the business is registered.
Notwithstanding these advantages attributed to the mandate, there are certain disadvantages as well:
1. In a bid to meet up with the 7th July deadline, many POS operators may use their business funds to finance the registration process, given that the registration process was not planned for initially. This may result to depletion of business profits.
2. As a result of the mandate and the pressure to meet up with it, many intending POS operators will be discouraged from starting and continuing with the business.
3. When people are discouraged from starting or continuing with the POS business, the idea or objective behind the business creation which is financial inclusion geared towards bringing the bank closer to the unbanked is negated.
4. Another looming disadvantage is that when POS operators register with CAC, customers might bear the financial brunt incurred by the operator during the registration process i.e. CAC registration fees and dues.
5. Another disadvantage is that certain delay on CAC registration portal during the registration process can hamper a swift process which may result to limitation in implementation.
6. Lack of proper awareness/sensitization: some of the POS operators are not adequately informed about this CBN mandate and deadline, especially those that not educated or exposed to contemporary trends, information and news. This could become a big challenge to implementation.
In conclusion, there is need for adequate and collective sensitization, publicity and flexibility, to ensure that this CBN mandate and exercise is hitch free and achieves the desired results.
