Payments System | Central Bank of Nigeria

Payments System Management Mandate

Vision

To put in place a payment system that is “nationally utilised and internationally recognised”.

Mission

To facilitate economic activities by providing safe and efficient mechanisms for making and receiving payments with minimal risks to the financial system; extending the availability and usage to all sectors and geographical regions, banked and unbanked; and conforming to internationally accepted standards.

Mandate

To license, regulate, supervise and monitor Payments Service Providers.

Introduction

The payment system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other. It, represents the major foundation of the modern market economy. Essentially, there are three pivotal roles for the payments system, namely: the monetary Policy role, the financial stability role and the overall economic role.

The Nigerian Payments System witnessed remarkable achievements in the recent past, with the introduction of several initiatives under the Payments System Vision 2020 as listed below, amongst others:

Implementation of Bank Verification Number (BVN) Scheme to address issues associated with the absence of unique identifier of bank customers across the industry
Issuance of Guidelines on International Money Transfer Services in Nigeria
Issuance of Revised Guidelines for Card Issuance and Usage in Nigeria
Implementation of Industry e-Reference Portal
Abolished fees on cash deposits above the Cash-less policy threshold.
Sensitization campaign on Cash-less policy in preparation for take-off of the Cash-Less Policy initiative in the remaining 30 states of the Federation.
Licensed 10 additional PTSPs to cater for the maintenance of POS terminals
Clearing House sanctions to instill discipline among the participating members.
Conducted compliance monitoring of banks with Payment Card Industry Data and Security Standards (PCIDSS).
Maximum Cap on Cheque
Implementation of Nigeria Uniform Bank Account Number (NUBAN)
Cheque Truncation
Reduction of clearing cycle to T+1 from T+2
Setting of ₦150,000 limit on encashment of 3rd party cheques
Issuance of Guidelines for the Regulations of Agent Banking in Nigeria,
Migration to Europay, Mastercard and Visa (EMV) cards
Help Desk on Card-Related Complaints
Card Fraud Prevention Strategies
Introduction of second-level authentication for card not present payment.
Banks to have real-time online monitoring tools for PIN entry attempts.
Automatic blocking of the card after three unsuccessful PIN attempts.
Set limit for card-to-card transfers, POS and web payments.
Banks segregated the process of PIN handling and card activation.
Proper due diligence should be done to all merchants before POS is allocated.
Enlightenment campaign on protection of PIN/card details for cardholders
Establishment of Nigeria Electronic Fraud Forum (NEFF)
Collaboration with banks, switches, EFCC, NIMC, NCC, PCC, CPC and other institutions to fight e-payment fraud.
Implementation of National Central Switch
Implementation of Mobile Payment
Standards and Guidelines on ATM and POS Operations in Nigeria
Deployment of new RTGS System
Cash-less Nigeria

Introduction of second level authentication for card not present payment.
Banks to have real-time online monitoring tools for PIN entry attempts.
Automatic blocking of card after three unsuccessful PIN attempts.
Set limit for card-to-card transfers, POS and web payments.
Banks to segregate the process of PIN handling and card activation.
Proper due diligence should be done on all merchants before POS is allocated.
Enlightenment campaign on protection of PIN/card details for cardholders
Establishment of Nigeria Electronic Fraud Forum (NEFF)
Collaboration with banks, switches, EFCC, NIMC, NCC, PCC, CPC and other institutions to fight e-payment fraud.

Implementation of National Central Switch
Implementation of Mobile Payment
Standards and Guidelines on ATM and POS Operations in Nigeria
Deployment of new RTGS System
Cash-less Nigeria

1.1 National Payments System (NPS) Objectives

Given the important role that well-functioning payment systems have on monetary policy, financial stability and overall economic activity, the Central Bank of Nigeria has put in place a set of national payments system policy objectives as a broad guideline and framework for all payments system initiatives. In setting out the objectives of the National Payments System (NPS), the goal is to ensure that the system is available without interruption, meet as far as possible all users' needs, and operate at minimum risk and reasonable cost.

1.2 General Legal Framework

The CBN has drafted a Payments System Management Bill to address the absence of law that explicitly and exclusively deals with Payments systems in Nigeria. The CBN Act, as amended in 2007, gives The Bank the implicit powers to oversee and regulate the payments system. Section 47 (1) of the CBN Act provides "that it shall be the duty of the CBN to facilitate the clearing of cheques and credit instruments for banks carrying on business in Nigeria and for this purpose, the Bank shall at any appropriate time and in conjunction with other banks establish clearing houses in premises provided by the Bank in such places as the Bank may consider necessary". Section 47 (2) provides that the Bank shall continue to promote and facilitate the development of efficient and effective systems for the settlement of transactions. Section 17 provides that "the Bank shall have the sole right of issuing currency notes and coins throughout Nigeria ... "Also, the Nigeria Deposit Insurance Corporation (NDIC) in exercising its responsibilities as provided by NDIC Act, 2006 complements the supervisory function of the CBN in the nation's payment system. The extent of this responsibility is the insuring of all deposit liabilities of banks in order to protect depositors against bank failure and instill public confidence in the system.

1.3 Institutional and Organizational Framework

The CBN is the main institution that regulates the Payments System. Banks, discount houses, Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Stock Exchange, payment service providers and switching companies, remain the key players in the Nigerian payments system. The CBN, complemented by the Nigeria Deposit Insurance Corporation (NDIC) provides the necessary oversight function to ensure the efficiency and effectiveness of the payments system.

1.4 The role of Central Bank in the National Payment System

Six major responsibilities of the Bank that are derived from the Act establishing the CBN, as amended. They include:

Act as Banker to banks and provide the smooth operation of payments, clearing and settlement systems.
Act as Banker and adviser to, and as fiscal agent of Government.
Issue currency notes and coins
License and supervise authorized dealers (except stock brokers that are licensed by Securities and Exchange Commission and supervised by the Nigeria Stock Exchange).
Formulate and implement foreign exchange reserve policy.
Hold and manage its foreign exchange reserves.

Furthermore, the Bank is empowered by the CBN Act to formulate and implement monetary policy, to achieve and maintain stability in the general level of prices and make regulations for the proper functioning of a stable market. It is also charged with the responsibility to oversee the operations of deposit money banks and other financial institutions.

1.5 SUMMARY OF PAYMENTS SYSTEM ACHIEVEMENTS IN NIGERIA - 1993 to 2023

Implementation of MICR - 1993
Establishment of NIBSS - 1993
Setting up of Technical Committee on Automation and appointment of consultant for NACS - 1996 to 1997
Full implementation and live operation of NACS - 2002
Reduction of the clearing cycle to T+3 and T+5 for local and upcountry instruments, respectively - 2002
Guidelines on e-banking - 2003
Establishment of switching companies and interoperability of shared ATM/POS - 2004
New Settlement Framework (for Cheque Clearing) - 2004
Cheque Standard and Cheque Printer Accreditation Scheme - 2005
Reconstituted National Payments System Committee and set up technical sub-committee - 2005
Implementation of RTGS System, T24 eFASS and ERP - 2006
Payments System Strategy Team inaugurated - 2006
Establishment of National Central Switch - 2006
Cheque Standard & Cheque Printers Accreditation - 2006
Payments System Vision 2020 - 2007
Harmonization of clearing cycles (upcountry and local) at T+2 (Three working days) - 2008
Deployment of NACS to Port Harcourt Clearing Zone - 2008
Deployment of NACS to Kano, Ibadan and Enugu - 2009
Issuance of Mobile Payment Regulatory Framework - 2009
Guidelines on Transaction Switching - 2009
Guidelines on Stored Value/Prepaid Cards - 2009
Direct Debit Rules - 2009
Cheque cap of ₦10 million - 2010
Migration to EMV Cards - 2010
Guidelines on ATM Operations - 2010
Nigeria Uniform Bank Account Number (NUBAN) - 2010
Issuance of Cash-less policy circular - 2011
Issuance of Guidelines for Card Issuance and Usage in Nigeria - 2011
Licence of six (6) Payments Terminal Service Providers (PTSPs) for deployment and maintenance of POS - 2011
Commencement of charges on cash withdrawal/deposit above the Cash-less policy threshold in Lagos - 2012
Implementation of cheque truncation in Lagos - 2012
Reduction of clearing cycle from T+2 to T+1 in Lagos - 2012
Nationwide implementation of Cheque Truncation - 2013
Reduction of clearing cycle to T+1 from T+2 - 2013
Setting of ₦150,000 limit on encashment of 3rd party cheques - 2013
Licensed ten (10) additional PTSPs - 2013
Issuance of Clearing House sanctions to instill discipline among the participating members - 2013
Deployment of new RTGS and Scripless Securities Settlement System - 2013
Compliance monitoring with Payment Card Industry Data and Security Standards (PCI DSS) - 2013
Issuance of Guidelines for the Regulation of Agent Banking in Nigeria - 2013
Issuance of revised Guidelines for Card Issuance and Usage in Nigeria - 2014
Implementation of industry e-reference portal - 2014
Abolished fees on cash deposits above the cash-less Policy threshold - 2014
Sensitization Campaign on cash-less Policy in preparation for take-off of the cash-less initiative in the remaining 30 states of the Federation - 2014
Implementation of Bank Verification Number (BVN) Scheme - 2014
Issuance of Guidelines on International Money Transfer Services in Nigeria - 2014
Issuance of Regulatory Framework for Licensing Super-Agents in Nigeria - 2015
Issuance of Regulatory Framework for Mobile Money Services in Nigeria - 2015
Issuance of Guidelines on Mobile Money Services in Nigeria - 2015
Implementation of the Global Mobile Payments Monitoring & Regulation System - 2015
Issuance of the Guidelines on International Mobile Money Remittance Service in Nigeria - 2015
Guidelines for the Operation of Treasury Single Account (TSA) by State Governments in Nigeria - 2016
Guidelines on Operations of Electronic Payment Channels in Nigeria - 2016
Guidelines on Transaction Switching in Nigeria - 2016
Circular on the Implementation of Interchange Fee - 2016
Guidelines on Securities Settlement in Nigeria - 2016
Regulation For Direct Debit Scheme in Nigeria (Revised) - 2018
Regulation For Bill Payments in Nigeria - 2018
Regulatory Framework for the Use of Unstructured Supplementary Service Data (USSD) in the Nigerian Financial System - 2018
Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria - 2018
Regulation on Electronic Payments and Collections for Public and Private Sector in Nigeria - 2019
Regulation for the Operation of Indirect Participants in the Payments System - 2019
Guidelines on Nigerian Payments System Risk (NPSR) and Information Security Management Framework - 2020
Revised Standards on Nigeria Uniform Bank Account Number (NUBAN) for Banks and Other Financial Institutions - 2020
Guidelines on Operations of Electronic Payment Channels in Nigeria - 2020
New Licence Categorisation for Nigerian Payments Service Providers - 2020
Receipt of Diaspora Remittances: Additional Operational Guidelines - 2020
Issuance of the Framework for Regulatory Sandbox Operations - 2021
Framework for Quick Response (QR) Code Payments in Nigeria - 2021
Circular on the Regulatory Framework on Open Banking in Nigeria - 2021
New Licence Requirements for the Payments System - 2021
Regulatory Framework on Non-bank Merchant Acquiring in Nigeria - 2021
Supervisory Framework for Payment Service Banks - 2021
Framework and Guidelines on Mobile Money Services in Nigeria - 2021
Guidelines for Licensing and Regulation of Payments Service Holding Companies in Nigeria - 2021
Operational Guidelines for Open Banking in Nigeria Published 2022
Guidelines for Contactless Payments in Nigeria - 2022
Operational Guidelines for Open Banking in Nigeria - 2023
Regulatory Framework for the Agent Banking in Nigeria - 2023
Guidelines for Contactless Payments in Nigeria - 2023