NIBSS Instructs Traditional Banks to Disconnect Non-deposit Financial Institutions From the Transfer List

The Nigeria Inter-Bank Settlement System has instructed traditional banks to disconnect Switches, Payment Solution Service Providers, and Super Agents from the Nigeria Inter-Bank Settlement System Instant Payment Outwards System.

This was disclosed by the NIBSS in a circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223 to banks.

According to the national payment infrastructure company, the reason for such a decision is that listing non-deposit-taking financial institutions as beneficiaries contravenes the Central Bank of Nigeria guidelines on electronic payment.

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.

It also stated that while switches, PSSPs, and SAs may process outward transfers as inflows to banks, they “are not to receive inflows as their licenses do not permit them to hold customers’ funds.”

It added, 

• Another regulatory advice in this regard is 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 to the above, kindly delist all Switches, PSSPs, and SAs from your NIP Outward Transfer channels only (not inwards).

According to the CBN, for any financial institution to operate in Nigeria’s payment ecosystem, they must have at least one of the following licenses from the CBN: Switching and Processing, Mobile Money Operations, Payment Solution Services, and Regulatory Sandbox. NIBSS says only MMOs with a minimum of N2 billion capital share can hold customer funds according to the CBN directives.