OPay is a prominent player in Nigeria’s dynamic financial technology sector, offering a wide range of services, including its popular Point of Sale (POS) terminals.
These terminals have gained significant traction across the country, facilitating digital transactions and contributing to financial inclusion.
However, amidst the numerous advantages, Nigerian businesses must be aware of potential drawbacks before adopting OPay POS.
This article provides a comprehensive analysis of the disadvantages, empowering businesses to make informed decisions and navigate the complexities of this technology.
#1. Regulatory and Policy Issues
Operating a business in Nigeria requires careful consideration of the regulatory landscape, and using OPay POS is no exception.
POS operators must navigate a complex web of regulations set by the Central Bank of Nigeria (CBN) and other authorities.
Agent Banking License
The CBN mandates that all POS operators register under the Agent Banking framework.
This involves partnering with a licensed financial institution, such as a bank or payment service provider approved by the CBN, and submitting necessary documentation, including valid identification, proof of address, and a business registration certificate.
Operators must also sign an agreement with the financial institution outlining their roles, responsibilities, and compliance expectations.
CAC Registration
In addition to obtaining an agent banking license, POS operators must register their businesses with the Corporate Affairs Commission (CAC).
This registration ensures the business has a unique and approved name and meets regulatory requirements for taxation and compliance.
CBN Guidelines
The CBN has established specific guidelines for POS operators under its Regulatory Framework for Agent Banking and Agent Networks in Nigeria.
These guidelines cover various aspects of POS operations, including transaction limits, Know Your Customer (KYC) procedures, and record-keeping.
Adhering to these guidelines is crucial for maintaining compliance and avoiding penalties.
EMTL Levy
The Federal Government of Nigeria has implemented a ₦50 levy on electronic money transfers exceeding ₦10,000 conducted through fintech platforms, including OPay.
This levy, introduced under the Electronic Money Transfer Levy (EMTL) in the Finance Act 2020, applies to transactions above the specified threshold and is collected by the Federal Inland Revenue Service (FIRS).
While the levy aims to generate revenue for national development, it adds to the cost of financial transactions for businesses.
Regulatory Burden vs. Financial Inclusion
While regulations are essential for ensuring accountability and stability in the financial sector, they can also create a significant burden for small businesses, especially those operating with limited resources.
This burden can hinder the adoption of POS systems by smaller businesses, potentially limiting the reach of financial inclusion efforts.
Moreover, the proliferation of unlicensed POS agents, or “umbrella agents,” raises concerns about non-compliance with regulations and the potential for fraudulent activities.
Striking a balance between regulation and fostering financial inclusion remains a key challenge for the Nigerian POS market.
#2. Transaction Fees and Charges
OPay emphasizes the affordability of its POS services, highlighting low transaction fees.
However, businesses should carefully examine the fee structure before committing to OPay POS.
Transaction fees are based on the amount being processed, and these fees can vary significantly depending on the type of transaction.
Here’s a breakdown of the fee structure for different transaction types:
- International Transactions: 4% per transaction
- Payout/Transfer (OPay wallet): ₦5 per transaction
- Payout/Transfer (other banks/MMOs):
- ₦5,000 and below: ₦10 per transaction
- ₦5,001 and ₦50,000: ₦25 per transaction
- ₦50,000 and above: ₦50 per transaction
- Bill payment: Based on commission
You should factor these fees into your financial planning to avoid unexpected costs and ensure profitability.
Also, the CBN’s recent directive on cash-out limits may incentivize POS agents to increase cash-out fees to compensate for potential revenue loss .
#3. Network Connectivity Challenges
Reliable network connectivity is fundamental for seamless POS transactions.
However, OPay POS users may experience connectivity issues, especially in areas with limited network coverage.
Network failures can disrupt business operations, leading to failed transactions, processing delays, and customer dissatisfaction.
While OPay claims to have a robust infrastructure and maintain stable network connections, businesses should be prepared for potential disruptions and have alternative solutions in place.
#4. Transaction Failures and Downtime
Despite advancements in POS technology, transaction failures can occur due to various factors, including network issues, hardware or software malfunctions, and incorrect network settings.
These failures can result in financial losses for businesses and cause inconvenience for customers.
While OPay offers customer support to address transaction failures, resolving these issues can be time-consuming, potentially affecting business operations.
But I must give them, OPay’s reliable network uptime has proven to be a significant advantage during periods of bank outages, offering businesses a more dependable platform for processing transactions.
#5. Security Concerns and Fraud
Security is a critical aspect of any financial transaction, and OPay POS is no exception.
While OPay emphasizes its commitment to security and fraud prevention , businesses should be aware of potential vulnerabilities.
OPay’s KYC system has faced scrutiny for its lax registration processes, which could make the platform susceptible to fraudsters.
The increasing use of POS terminals has also attracted the attention of hackers and cybercriminals who exploit vulnerabilities to steal card data and perpetrate fraud.
To mitigate security risks, OPay offers an account and card blocking feature that allows users to quickly secure their accounts in case of theft or loss.
Users can dial *955*131# to block their account or *955*132# to block their card and should contact OPay customer support immediately.
OPay also implements security measures such as data encryption and compliance with the Payment Card Industry Data Security Standard (PCI DSS) to protect user information and ensure secure transactions.
#6. Customer Support and Service Quality
OPay provides various customer support channels, including a helpline, in-app customer service, and WhatsApp.
However, the quality of customer support can be inconsistent.
Some users have reported difficulties reaching customer support, experiencing delays in issue resolution, and encountering unhelpful or incompetent representatives.
To improve customer service, OPay has been actively working on enhancing its support channels and processes.
The company has established a network of 17 physical customer service centers across Nigeria to provide face-to-face support for users who prefer in-person interactions.
OPay also offers a 24/7 online customer service center with self-service resources, live chat with customer service agents, and a dispute reporting feature within the app.
On top of that, OPay has a service level agreement that includes a 48-hour transaction dispute resolution and 24/7 customer support availability.
Customer Service as a Differentiator
Consistent and reliable customer support is a crucial factor for businesses when choosing a POS provider.
The ability to quickly resolve issues, receive timely assistance, and have access to knowledgeable support staff can significantly impact business operations and customer satisfaction.
Businesses should prioritize customer service quality when evaluating POS options and consider the potential impact of inconsistent support on their daily operations.
#7. User Reviews and Feedback
User reviews provide valuable insights into the actual experiences of businesses and individuals using OPay POS.
While many users appreciate the convenience and functionality of OPay POS, some have expressed concerns and negative feedback.
Some users have reported issues with OPay’s app, such as difficulties with transfers, occasional system errors, and frustration with the lack of push notifications for transactions.
Others have mentioned concerns about customer service responsiveness and the need for improvements in issue resolution.
As a business, consider both positive and negative feedback when evaluating OPay POS and weigh these user experiences against their specific needs and expectations.
Opay Alternative POS Options in Nigeria
If Opay sounds nothing like your cup of tea, there are other options.
See, the POS market in Nigeria is competitive, with various providers offering a range of features and services.
As such, you should carefully evaluate these alternatives, comparing their strengths and weaknesses to make an informed decision based on their specific requirements.
I have put together a table to help with this.
| POS Provider | Key Features | Potential Benefits | Potential Drawbacks |
|---|---|---|---|
| Moniepoint | User-friendly interface, fast transaction processing, competitive fees, reliable customer support | Ease of use, affordability, efficient transactions, reliable service | Limited functionality compared to OPay, potentially fewer value-added services |
| PalmPay | Contactless payment functionality, wide agent network, integrated financial services | Faster transactions, wider reach, convenient payment options | Limited adoption of contactless payments, potential for higher transaction fees |
| Paystack | Supports various payment methods, online and offline payments, developer-friendly APIs, strong fraud protection | Versatility, comprehensive payment solutions, secure transactions | May have higher transaction fees compared to Moniepoint, potentially less widespread agent network |
| OPay | Versatile payment solutions, integrated financial services, low transaction fees, fast and secure transactions, different POS terminal options (Mini POS: N8,500, Traditional POS: N35,000, Android POS: N50,000) , mini POS functionalities (check-outs, withdrawals, deposits, airtime/data top-ups, bill payments, and other mobile banking services) | Payment flexibility, access to various financial services, affordability, efficient operations | Potential for network connectivity issues, transaction failures, and inconsistent customer support |
OPay and PalmPay have a combined market share of over 50% in the agency banking market in Nigeria, highlighting their strong position in the industry.
Conclusion: Weighing the Risks and Benefits
OPay POS offers undeniable benefits for Nigerian businesses, including facilitating digital transactions, expanding financial inclusion, and providing access to a wider range of financial services.
However, businesses should carefully consider the potential disadvantages, such as regulatory hurdles, transaction fees, network connectivity challenges, transaction failures, security concerns, and customer support issues.
One of OPay’s key competitive advantages lies in its transaction speed and reliability, particularly during periods of bank outages or network disruptions.
The company’s robust infrastructure and focus on network uptime have positioned it as a dependable platform for businesses seeking consistent transaction processing capabilities.
Conduct thorough research, compare alternative POS options, and carefully evaluate the features, fees, and service quality of each provider.
Read also:
- Top 10 Best POS Machines in Nigeria
- How To Start POS Business In Nigeria
- Moniepoint vs Palmpay: Which One Is Best?
