CAC Set to Shut Down POS Businesses
The Corporate Affairs Commission (CAC) has announced plans to take drastic actions, including shutting down Point of Sale (POS) businesses that failed to register by the September 5, 2024, deadline. In a public notice released Friday, the CAC expressed concern over inadequate compliance and suggested that some operators might be involved in “unwholesome activities” due to their refusal to register.
This comes amid a legal battle initiated by the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), who have challenged the CAC’s directive in court. They argue that mandatory registration of POS operators is illegal.
CAC’s Position on Registration Compliance
The CAC reiterated its stance on mandatory registration, emphasizing that it had given a 60-day window following a July 7, 2024 announcement in national newspapers. “The Corporate Affairs Commission wishes to remind the public, particularly fintech operators known as Point of Sale (POS) operators, that the 60-day deadline expired on September 5, 2024,” the notice stated.
The commission acknowledged that while some operators complied with the directive, a significant number did not. “Those who have taken steps to formalize their businesses are commended for their positive attitudes. Recalcitrant operators who have failed to adhere to the advice may be engaged in unwholesome activities or have other reasons best known to them,” the notice added.
The CAC warned that it is working closely with law enforcement agencies and other relevant stakeholders to enforce compliance, which may involve shutting down non-compliant businesses and imposing legal sanctions.
Background to the Issue
The registration directive was first issued in May 2024, targeting POS agents of major fintech companies like OPay, Palmpay, and Moniepoint. The initial deadline was set for July 7, 2024, after discussions with POS operators during a meeting in Abuja. According to CAC Registrar-General Hussaini Magaji, the directive aligns with legal requirements and Central Bank of Nigeria (CBN) guidelines.
The deadline was later extended by 60 days to September 5, with a stern warning that non-compliance would result in prosecution and possible business closure.
AMMBAN, however, insists that the registration requirement contradicts the Companies and Allied Matters Act (CAMA), which they claim exempts individuals who are not operating as companies. “The court will have to interpret this section of CAMA to determine if individuals operating as sub-agents, similar to bank branches, must register with CAC,” said AMMBAN’s National General Secretary, Oluwasegun Elegbede.
Rising Concerns Over POS Fraud
The move to enforce registration comes amid rising concerns over fraud involving POS terminals. According to the Nigeria Inter-Bank Settlement System (NIBSS) Plc, POS terminals accounted for 26.37% of fraud incidents in 2023. Additionally, the Central Bank of Nigeria has implemented stricter regulations to curb the use of cryptocurrency and other virtual currencies in the financial ecosystem.
Registrar-General Magaji emphasized that the registration process is intended to protect both fintech businesses and their customers while strengthening the economy. He cited Section 863, Subsection 1 of the Companies and Allied Matters Act (CAMA) 2020 and the CBN’s 2013 guidelines on agent banking as legal backing for the directive.
As the September 5 deadline has passed, the CAC is preparing to enforce its regulations, which could lead to significant disruption for unregistered POS operators. With legal action from AMMBAN underway, the situation remains tense, and the outcome may set a precedent for future fintech regulations in Nigeria and across Africa.