The Nigeria Inter-Bank Settlement System (NIBSS) has issued a directive to banks, instructing them to disconnect Switches, Payment Solution Service Providers (PSSPs), and Super Agents (SAs) from the NIBSS Instant Payment Outwards System. This move is in compliance with guidelines set by the Central Bank of Nigeria (CBN) on electronic payments.
In a circular dated December 5, 2023, marked Ref: NIBSS/BD/NI/PO/005/051223, the national payment infrastructure company communicated the need for banks to adhere to CBN regulations. The circular specifically mentioned that listing non-deposit-taking financial institutions as beneficiaries on the NIP funds transfer channels is in violation of CBN’s guidelines on electronic payment, as per the February 2014 directive.
It reads: “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 circular highlighted that while Switching Companies, Payment Solution Service Providers, and Super Agents may process outward transfers as inflows to banks, their licenses do not permit them to hold customers’ funds. The NIBSS emphasized that this contravenes the circular titled ‘Permissible Services and Products of PSSP Operation in Nigeria,’ with reference BPD/DIR/GEN/CIR/05/004 dated May 11, 2018.
As per the regulatory advice, banks are urged to delist Switches, PSSPs, and SAs from NIP Outward Transfer channels while ensuring compliance with the guidelines. It’s crucial to note that to operate in Nigeria’s payment ecosystem, operators must acquire one of the specified licenses from the CBN, including Switching and Processing, Mobile Money Operations, Payment Solution Services, and Regulatory Sandbox. Only Mobile Money Operators (MMOs) are authorized to hold customer funds, in line with CBN regulations.
This directive underscores the regulatory commitment to maintaining the integrity and security of electronic payment systems in Nigeria, ensuring that financial institutions comply with prescribed guidelines to safeguard customers’ funds and maintain a transparent financial ecosystem. The circular concludes by urging banks to promptly implement the necessary disconnections to align with regulatory standards.