CBN Tightens Grip on Electronic Transactions with New Rules for PoS

The Central Bank of Nigeria (CBN) has announced new regulations for processing Point of Sale (PoS) transactions across the country, directing all acquirers to route their transactions through any licensed Payment Terminal Service Aggregator (PTSA), a move aimed at increasing transparency and monitoring of electronic transactions.

In a circular addressed to all Payment Service Providers (PSPs), the CBN issued new rules mandating that all transactions from PoS terminals, whether physical or electronic, be routed through a licensed Payment Terminal Service Aggregator (PTSA). This development is intended to ensure effective tracking and regulation of electronic payments in Nigeria.

To achieve its objective of monitoring electronic transactions, the CBN initially granted a PTSA license to the Nigeria Interbank Settlement System Plc (NIBSS) in August 2011. However, recognising the need to diversify and mitigate the risk of relying on a single aggregator, the CBN has now issued a second PTSA license to Unified Payment Services Limited (UPSL) as of April 19, 2024.

As part of the new directive, the CBN has laid out several specific guidelines. Acquirers are required to route all transactions from PoS terminals at merchant and agent locations, whether using physical or electronic terminals, through any CBN-licensed PTSA.

Payment Terminal Service Aggregators must send PoS transactions only to processors certified by the relevant payment scheme, nominated by the acquirer, and licensed by the CBN. All licensed processors must be integrated with both PTSAs, allowing acquirers the flexibility to choose which processor and PTSA to use.

Payment Terminal Service Providers (PTSPs) must ensure that their PoS devices and applications are configured to route transactions through any PTSA, as directed by the acquirer. PTSPs are also required to submit monthly reports to the CBN, detailing the number of merchants and agents they manage, along with the PTSA services used for transactions.

Each PTSA is also required to provide monthly returns to the CBN, detailing all transactions processed through their platforms. These reports must be submitted to the director of the payments system management department within seven days after the end of each month.

The CBN has given all affected parties 30 days to regularise their operations in compliance with the new directive and notify the CBN in writing. Failure to comply with the new rules will attract appropriate sanctions.

This move is part of a broader effort by the CBN to strengthen the nation’s payment infrastructure and increase oversight of financial transactions in a rapidly growing digital economy. By requiring that all PoS transactions be routed through licensed PTSAs, the CBN aims to create a more transparent, accountable, and secure payment environment.

The directive, signed by Oladimeji Yisa Taiwo on behalf of the director of the payments system management department, underscores the CBN’s commitment to enhancing the efficiency and reliability of Nigeria’s payment system.