Non-deposit financial institutions to be taken down from fund transfer channels – NIBSS

System has asked banks to delist Payment Solution Service Providers, Switches and Super Agents from its outward payment or transfer list.

The NIBSS disclosed this in a recent circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223 to banks.The country’s payment system explained that listing non-deposit-taking financial institutions as beneficiaries contravenes the Central Bank of Nigeria guideline on electronic payment.

It said, “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.”

It stressed 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.”

NIBSS added, “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. According to CBN regulations in December 2020, only MMOs with a minimum of N2 billion capital share can hold customer funds.

The enforcement of this policy will warrant that Fintechs without any form of banking license will be taken down from the fund transfer channels of banks. Essentially, these platforms will be able to facilitate outward transfers to banks, however, they won’t be able to receive fund inflows. It is expected that the affected Fintechs will seek to acquire banking licenses that will allow them to hold funds.