Case Study Service Delivery Finance & Investment Nigeria Rice

POS networks: a Phygital Approach to Strengthen agribusinesses and Smallholder Farmer Ecosystems

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23 Apr 2026 • 4 minutes read
by
Juan Carlo Intriago Zambrano

What is the innovation?

Point-of-sale (POS) networks are part of agent banking systems usually introduced and regulated by Central Banks to promote financial inclusion, particularly in rural and underserved areas. These networks consist of individuals or small businesses (called POS agents) who provide basic financial services using POS terminals. Agri-SMEs engaging smallholder farmers (SHFs) are increasingly integrating POS networks’ services into their operations, enabling SHF’s timelier access to credit, faster (digitized) payments, and better decision-making by tracking data of service delivery and produce aggregation.

Key challenges addressed

Coscharis Farms Ltd. (Coscharis) engaged up to 5000 out-grower SHFs to increase its sourced unprocessed rice to 23,000 MT/y. Setting up a commercial relationship with such a large farmer base led to several financial challenges to both the company and SHFs. Access to formal financial services remains limited in rural areas, forcing most transactions to be conducted in cash, increasing the risk of theft, fraud, and logistic inefficiencies. SHFs were unable to build their credit history, hindering access to loans required to invest in their farms. The company faced high operational costs in disbursing cash to SHFs for their produce, while also dealing with limited tracking of payments and inventory. In addition, delayed cash payments are usually a side-selling driver, compromising Coscharis’ off-take potential and hence its return on investment. To tackle these challenges, Coscharis engaged the ubiquitous Nigerian POS network to provide SHFs with timely and affordable financial services close to their communities. Moreover, Coscharis supported some individuals to become POS agents, promoting additional sources of income in the communities of influence.

How it works

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  1. Assess SHF’s financial access and needs
  2. Identify the right POS provider and set up workflows: credit disbursements, payment for produce, loan repayments
  3. Support and onboard farmers for POS-enabled payments, including obtaining documentation
  4. Train SHFs on the POS system (with support of POS agents and own field staff)
  5. Ensure cash availability with POS provider ahead of peak payment periods
  6. POS agents pay farmers on-site upon off-take of produce (in coordination with Coscharis’ field staff)

Tips for replication

Context

  • Areas with cash dependency and limited access to bank services
  • Areas where cash handling poses security risks
  • SHFs are unbanked or underbanked
  • Value chains with high volumes of small and frequent transactions

Best practices

  • Digitally integrate internal systems with POS data and workflows to strengthen service delivery and supply chain traceability
  • Map POS density around SHFs to increase service efficiency
  • Facilitate POS transactions in bulk by working with SHFs with some degree of aggregation or organization (e.g., cooperatives)
  • Train and sensitize SHFs on (digital) financial literacy to increase acceptance and reduce fraud risks
  • Perform due diligence to ensure compliance of POS provider with regulations of the banking authority

Enabling conditions

  • Adequate rural infrastructure (power availability, POS network coverage close to farmers) and local POS agent presence
  • SHF’s identification documents and basic know your customer (KYC) readiness
  • SHF trust and cultural acceptance of POS (digital) transactions
  • Sufficient POS liquidity to meet farmer cash-out needs, especially during harvest seasons when payment volumes peak

Business case: (expected) Outcomes for COSCHARIS FARMS LTD.

More efficient transactions

By integrating POS services to its processes, Coscharis streamlined payments to ~8,500 block farmers, making them fast, secure, and directly traceable at aggregation points. Due to this strategy, the company has minimized safety risks by reducing to virtually zero the cash that its field staff has to transport to the farming communities.

More efficient scaling

Coscharis leveraged the POS network to scale up its operations more efficiently. By piggybacking on widespread POS agents and already-deployed terminals (and among other contributing factors), Coscharis expanded and cemented its farmer base from 1250 out-growers in 2022 to about 8,500 out-growers in just 2025.

Better procurement

By ensuring fast, reliable, and transparent payments through the POS network (alongside other factors), Coscharisstrengthened farmer loyalty. This enhanced loyalty allowed the company (alongside other key factors) to aggregate ~18,000 MT of rice in 2025 worth ~3.8 million USD (compared to 850 MT worth ~454k USD in 2022) that were paid mostly through POS agents.

Business case: (expected) Outcomes for POS agents

Increase income

POS agents collaborating with Coscharis, and serving its large farmer base, expanded their customer base by 60%, and increased their transaction volumes by 80%, consequently improving their income stability. Moreover, POS agents became micro-financial hubs in their communities, improving their business viability and status in the rural economy.

Impact Case: (expected) Outcomes for Smallholder farmers

Better financial services

Through the POS integration, ~8,500 block out-grower farmers gained access to better financial services. These farmers also experienced a reduction in the payment time for their produce from 7 days to just 24 hours. Moreover, the payment happened within their own communities, removing travel distances and lowering transaction barriers.

Outstanding Risks and Challenges

  • Required POS infrastructure can present limitations: network failures, power outages, unreliable connectivity
  • POS agents may face system overloads, cash-out constraints due to liquidity problems, or service bottlenecks in peak payment periods
  • Dependence on third-party POS networks limit company’s control over agent behaviour, pricing on fee for services, or network deployment, affecting the sustainability of the model
  • Some SHFs may show trust issues and low digital literacy, slowing the adoption of the POS services
  • Risks of fraud and transaction disputes may pose potential losses for SHFs or the company

Data Sources & Disclaimer

Information is based on IDH’s Inclusive Business Model Analysis (IBA) and Inclusive Business Model Review for Coscharis, including data from Coscharis and 408 farmers (information is available on our methodology for IBA Analyses and Farmer Surveys). Additionally, interviews with company, officers, and farmers have been held since the start of Technical Assistance (2020) during which the innovation is tested and scaled. A longer time span and additional data are needed to verify and quantify impacts.