The Central Bank of Nigeria (CBN) has directed banks, fintechs and other firms that facilitate payments, to ensure that payments transaction data generated within Nigeria are stored and managed in the country.
The apex bank issued the directive in a circular to Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Mobile Money Operators (MMOs), Switching and Processing Companies, Payment Terminal Service Providers (PTSPs), Payment Solution Service Providers (PSSPs), Super Agents, and other licensed operators in the country’s payments ecosystem, posted on its website on Monday.
The circular, signed by the Director of the Payments System Supervision Department at the CBN, Rakiya Yusuf, also introduced new market structure requirements, ultimate beneficial ownership disclosure requirements and systemic oversight measures in the payments system.
The regulator explained that the new measures were necessitated by the rapid expansion of electronic payments and digital financial services across the country.
Specifically, the CBN said that it has, “observed significant structural developments within the Nigerian Payments ecosystem, characterised by rapid growth in electronic payments, increasing adoption of digital financial services, and the emergence of operators with substantial market presence across key payment activities.”
It noted that while the rapid growth had improved innovation, efficiency and financial inclusion, it had also created concerns around market concentration, operational dependence, ownership transparency and the storage of critical payments data.
Thus, according to the apex bank, the circular is aimed at improving transparency through beneficial ownership disclosure, addressing concentration risk, promoting a fair, competitive, and resilient payments ecosystem.
In addition, it said the circular is aimed at safeguarding, “the integrity of the Nigerian payments system and ensure the localisation of payments transaction data within Nigeria.”
The circular stated: “All Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria.
“Accordingly, all affected Financial Institutions shall fully comply with this requirement effective January 1, 2027.”
On beneficial ownership disclosure, the circular said: “All Deposit Money Banks, Payment Service Providers and Other Financial Institutions with digital payments footprints shall disclose the Ultimate Beneficial Ownership (UBO) of significant shareholders in accordance with applicable extant laws and regulations including Anti-Money Laundering, Combating the Financing of Terrorism and Counter Proliferation Financing (AML/CFT/CPF) regulations. Institutions shall maintain accurate and up-to-date UBO records and make such information available to the CBN upon request.”
The regulator also introduced fresh competition rules aimed at limiting excessive market dominance in the payments industry.
For instance, under the new framework, any financial institution that controls more than 25 per cent of the card-issuing market in a rolling 12-month period will not be allowed to hold more than 15 per cent of the merchant-acquiring market during the same period.
Similarly, operators with more than 25 per cent market share in merchant acquiring activities will be restricted to a maximum of 15 per cent market share in card issuing activities.
The CBN said all regulated entities would be required to submit monthly market share returns based on prescribed templates and timelines.
It further directed affected institutions to take the necessary measures to achieve full compliance with the market structure requirements by December 31, 2026.
The CBN warned that it would closely monitor compliance and impose sanctions where necessary.
“The CBN shall monitor compliance with the provisions of this Circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines,” the circular said.
