In a recent directive, banks in Nigeria have been instructed to sever ties with Switches, Payment Solution Service Providers (PSSPs), and Super Agents from the Nigeria Inter-Bank Settlement System Instant Payment Outwards System.
The Nigeria Inter-Bank Settlement System (NIBSS) made this known in a circular dated December 5, 2023, referencing Ref: NIBSS/BD/NI/PO/005/051223 to banks.
The national payment infrastructure company emphasized that including non-deposit-taking financial institutions as beneficiaries violates the Central Bank of Nigeria’s guideline on electronic payments.
The circular stated, “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.”
Furthermore, the NIBSS clarified that while switches, PSSPs, and Super Agents may process outward transfers as inflows to banks, they are not authorized to receive inflows as their licenses do not permit them to hold customers’ funds.
Additionally, the circular referenced a regulatory advisory titled ‘Permissible Services and Products of PSSP Operation in Nigeria’, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018. In light of this, banks were urged to “delist all Switches, PSSPs, and Super Agents from your NIP Outward Transfer channels only (not inwards).”
Notably, operators in Nigeria’s payment ecosystem are required to obtain at least one of the following licenses from the Central Bank of Nigeria: Switching and Processing; Mobile Money Operations; Payment Solution Services; and Regulatory Sandbox. Only Mobile Money Operators (MMOs) are permitted to hold customer funds, as per the CBN’s regulations.
