NIBSS Directs Banks to Disconnect Switches, Payment Solution Providers, and Super Agents from NIP Outward System
The Nigeria Inter-Bank Settlement System (NIBSS) has issued a directive instructing banks to disconnect Switches, Payment Solution Service Providers (PSSPs), and Super Agents from the NIBSS Instant Payment Outwards System. The circular, dated December 5, 2023, cites a violation of Central Bank of Nigeria (CBN) guidelines on electronic payment, specifically pertaining to the listing of non-deposit-taking financial institutions as beneficiaries.
Key Points:
- Directive to Disconnect Non-Deposit-Taking Institutions:
- NIBSS has instructed banks to disconnect Switches, Payment Solution Service Providers, and Super Agents from the NIBSS Instant Payment Outwards System. The directive is based on the contention that listing these non-deposit-taking institutions as beneficiaries on the NIP funds transfer channels contravenes CBN guidelines on electronic payment.
- Violation of CBN Guidelines:
- The circular notes that including non-deposit-taking financial institutions as beneficiaries on NIP funds transfer channels is in violation of the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria, dated February 2014.
- Regulatory Framework for Operators:
- The circular emphasizes that switches, PSSPs, and Super Agents may process outward transfers as inflows to banks but are not authorized to receive inflows, as their licenses do not permit them to hold customers’ funds. It highlights the regulatory advice provided in a circular titled ‘Permissible Services and Products of PSSP Operation in Nigeria,’ dated May 11, 2018.
- Delisting Instructions:
- Banks are directed to delist all Switches, PSSPs, and Super Agents from the NIP Outward Transfer channels, while clarifying that the directive pertains to outward transfers only and not inward transfers.
- Licensing Requirements for Operators:
- To operate in Nigeria’s payment ecosystem, operators must obtain specific licenses from the CBN. These include licenses for Switching and Processing, Mobile Money Operations, Payment Solution Services, and Regulatory Sandbox. Only Mobile Money Operators (MMOs) are authorized to hold customer funds, according to CBN regulations.
Conclusion: NIBSS’s directive to disconnect non-deposit-taking institutions from the NIBSS Instant Payment Outwards System underscores regulatory compliance concerns and adherence to CBN guidelines. The circular emphasizes the licensing requirements for operators in Nigeria’s payment ecosystem and seeks to ensure that only entities with the appropriate licenses engage in specific financial activities. The move reflects the ongoing efforts to maintain the integrity and compliance of the country’s electronic payment systems.
