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The Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) has filed a lawsuit against the Corporate Affairs Commission (CAC) over its recent directive mandating Point of Sale (PoS) operators to register their businesses. The deadline for compliance, which ended on Thursday, September 5, 2024, has led to significant pushback from operators who argue that the policy is unjust and detrimental to their livelihoods.
AMMBAN’s National General Secretary, Oluwasegun Elegbede, confirmed the legal action in a statement, asserting that the CAC’s registration requirement violates the Companies and Allied Matters Act (CAMA) of 2004. He explained that under CAMA, the CAC lacks authority over individuals not operating as formal companies.
“According to Section 863(1) of the Companies and Allied Matters Act, 2004, the CAC cannot enforce this directive on individual PoS agents who are not registered companies. This requirement is not only wrong but also contradicts the provisions of the law,” Elegbede said.
Elegbede further noted that the case is already before the courts, with a hearing scheduled for later this month. The courts will be asked to interpret CAMA in relation to whether individual PoS agents, operating as sub-agents or branches, are legally required to register with the CAC.
In addressing concerns raised by the CAC, Elegbede said that fraud prevention is beyond the commission’s jurisdiction. He emphasized that AMMBAN has been working closely with law enforcement agencies to combat fraud within the PoS sector.
“Every PoS operator has a Bank Verification Number (BVN) or National Identification Number (NIN), making them fully traceable. No operator can possess a PoS terminal without being tracked by the Nigeria Inter-Bank Settlement System (NIBSS). Their SIM cards and the issuing banks can be used to trace them. There is no hiding place for defaulters,” he added.
Elegbede also highlighted the essential role mobile money agents play in promoting financial inclusion, particularly in underserved rural areas where traditional banking services are scarce. He stressed that the CAC registration fee, which costs approximately N35,000, could cripple the operations of many small-scale PoS operators.
“These are young entrepreneurs trying to support themselves. Imposing a fee of N35,000 could put many out of business. While we recognize the need for regulation, it’s critical that these policies do not stifle the sector’s growth or place undue financial burdens on small operators. We are confident the court will acknowledge the merits of our case,” he said.
AMMBAN’s National Vice President, Dr. Obioha Oti, echoed these sentiments, declaring the CAC’s deadline “null and void.”
“Their deadline is meaningless; they have no legal standing to enforce it,” Oti said.
The Federal Government, through the CAC, issued the two-month registration deadline for PoS companies to register their agents and merchants in accordance with legal requirements and Central Bank of Nigeria (CBN) directives. The directive is part of a broader effort to address the rising incidence of fraud involving PoS terminals and to curb illegal activities like cryptocurrency trading.
According to the Nigeria Inter-Bank Settlement System (NIBSS), PoS terminals accounted for 26.37% of reported fraud incidents in 2023. The CAC believes that enforcing registration will help reduce fraud, kidnappings, and ransom payments facilitated through PoS transactions.
As the legal battle unfolds, the outcome of this case will likely set a precedent for how PoS operators are regulated in Nigeria moving forward.
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