10 Tips for Starting a POS Business in 2021
POS business does well in local and remote areas with no banks, no ATM outlets, or limited banks’ availability. However, in areas with a reasonable number of banks situated and the population seems to be rapidly growing. There is still a gap in the unbanked population, especially for individuals in rural areas. And this seems to be a gap agency banking is trying to bridge.
POS is also known as Point of Sales, is a retail banking service that allows you to carry out financial transactions away from the indoors of a bank using your debit card and a POS machine. Beyond all these, with the aid of a POS machine and of course, your debit card, you can make bank transfers and also perform cashless transactions – like using your debit card to make payments in boutiques, malls, hotels, eateries, and virtually any business with a functional POS machine.
The agency banking system was kickstarted in Nigeria in 2013, after its guidelines and operations were released by the Central Bank of Nigeria. It has since become another lucrative business opportunity. For a fee or commission, individuals can withdraw a certain amount of money with their debit card without having to use the ATM. This development has led to the reduction of queues in banks. With little capital, you can start a POS business, here is what you need to know before you start:
10 Tips for Starting a POS Business in 2021.
Research is essential when you are starting a POS business. With research, you will acquire the necessary detailed information about the business. Before you venture in, research will help you know the PROS and CONS of the business. This purpose will help you determine the opportunities and goals around the business.
Know Your Target Audience:
It’s important to put into consideration who your target audience is; these are areas you should consider when learning about your customers:
Remote Rural Communities – where there is not an iota of banks and financial institutions.
Near Schools – University and college campuses will be a good advantage in establishing your POS outlet because of the many school transactions students engage.
Places Where ATMs are always crowded or in areas where there are shortages of banks/ATM posts.
POS business thrives well close to markets and banks because of the many transactions carried out in these places. In populous business: premises like supermarkets, malls and large vendors
Draft a Business Plan:
Have a plan, detailing the challenges of running a POS business, how to scale it for growth and requirements for its operations properly laid out. The success of your POS solely depends on a well-thought plan that considers all round details of the business.
Pick a Suitable Name:
Find a good venturing name for your business. It may not necessarily be your name. You can dub your business any name you feel is the best and could be easily pronounced by your would-be customers.
Source for a Good Location:
When starting a POS business, a good location is important. Go for a business area more than a residential area, in a business area your chances of having more customers are higher and will have an impact on your business profit.
Here are some of the key things you should consider before settling for a particular location –
Network: This is because while a location with good network/service will ensure smooth daily transactions, a location with a bad one will give you lots of headaches; And your first-time customers will likely not come back.
Number of competitors: This is a piece of very important information to guide you on what your competition is like. However, you should worry about those that operate in your desired area of operation (that’s where you want to site your pos business). Secondly, those that are closest to your desired area of operation should also be carefully analyzed. Knowing the number of competitors you have in a particular area, you are looking to situate your POS business helps you to be more strategic.
Nearness to Banks: It’s important to analyse your target audience and understand the area. This will help you figure out what you stand to gain and what you stand to lose. In a nutshell, just ensure your site/locate your agent banking service business/pos business stand at a developing area where there’s little or no banks nearby.
Register Your Business:
After you have sourced for a business location, the next important thing is to register as a business. This is one of the mandatory requirements of starting a POS business. It is a requirement imposed by the Central Bank of Nigeria on any individual looking to start a POS Business. The business should be registered with the Corporate Affairs Commission (CAC) as either a sole proprietorship business or a public entity.
Apply Through a Bank For a POS Machine:
The next step is to apply for a POS Machine with the bank; simply approach your preferred bank and let your intentions known. Certain terms and conditions that are consistent with that of the Central Bank of Nigeria (CBN) as regards the business you are about to start would be applicable, and if you accept the terms, then you can start your application. You should have met 90% of these conditions if you have a registered business. Basically, the conditions or general requirements include; Proof of business registration, BVN, Credit Bureau Report, Tax Identification Number, 2 Current account references.
Any recognized means of identification; National ID card, International passport, or voter’s ID. You should note that if you are not using your bank, you’ll be required to open an account with the bank you choose for the POS business.
Get The POS Machine:
Once all the paperwork with the bank is complete, the bank then issues the POS machine to you at a price. We are not certain if you can purchase this machine in the market, but for now, the bank is the only place that can hand you one.
You can receive your POS machine within 7 to 14 days. Some banks like First and Zenith banks can offer you the machine for free depending on certain terms and conditions.
The POS machine is not the only device you’ll be equipped with to get started. You’ll also be issued a mobile phone, a card reader, a barcode scanner, and a PIN which you will use each time you make a transaction for a customer.
Advertise Your Business:
For business exposure, you can start small, word of mouth is effective, especially since your target audience is the rural area. Tell your friends and family what you do. Let them come and recharge their GoTV, DSTV, Startimes, withdraw cash, transfer funds, and pay NEPA bills at your shop, and spread the information. A simple, well-designed banner can also do all the magic. You can get a good banner done around #5,000 depending on how professional the artist is.
Have a strategy:
It’s no news that this business is massively gaining ground, as many people are going into it because of its lucrative nature. Therefore, to succeed, you need to adopt some strategic steps. It could be in your area of service or charges, your design and advertisement.
Even though the capital for starting a POS business is small, having the right information on what you need to do before you venture into, it is important. Having a plan and a strategy puts you ahead of competitors and should be one of the tips you consider when starting your own POS business.