The Nigerian banking sector has received a new directive this week asking all banks to disconnect non-deposit financial institutions from the Nigeria Inter-Bank Settlement System (NIBSS) Instant Payment transfer list.
The Central Bank of Nigeria (CBN) ordered that switches, payment solution service providers, super agents and other third-party gateway providers will no longer have access to make transfers using the NIP Instant Payment system.
According to the national payment infrastructure company, the listing of non-deposit-taking financial institutions as beneficiaries contravenes the Central Bank of Nigeria guideline on electronic payment.
This system allows instant bank transfers between accounts at different Nigerian banks.
“This is to bring to your attention that listing non-deposit-taking financial institutions such as Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiary institutions on your NIP funds transfer channels contravenes the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria dated February 2014,” the Nigeria Inter-Bank Settlement System Plc (NIBSS) said in a circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223 to banks,
It added that while switches, PSSPs, and SAs may process outward transfers as inflows to banks, they “are not to receive inflows as their licences do not permit them to hold customers’ funds.”
“Another regulatory advice in this regard is the circular with the caption ‘Permissible Services and Products of PSSP Operation in Nigeria’, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018. Consequent on the above, kindly delist all Switches, PSSPs, and SAs from your NIP Outward Transfer channels only (not inwards).”
To operate in Nigeria’s payment ecosystem, operators must get at least one of the following licences from the CBN, Switching and Processing; Mobile Money Operations; Payment Solution Services; and Regulatory Sandbox. Only MMOs can hold customer funds, according to the CBN.
According to the CBN, this move is meant to monitor the activities of non-bank institutions and curb the risks their transactions may pose to the financial system. Regulators want greater oversight on provider transactions as well as consumer data protection with this disconnect.
