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Banks have received directives to discontinue the inclusion of Switches, Payment Solution Service Providers (PSSPs), and Super Agents from the Nigeria Inter-Bank Settlement System Instant Payment Outwards System. This instruction was conveyed by the Nigeria Inter-Bank Settlement System (NIBSS) in a circular dated December 5, 2023, referenced NIBSS/BD/NI/PO/005/051223.
The NIBSS emphasized that including non-deposit-taking financial institutions like Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiaries on the NIP funds transfer channels is in violation of the Central Bank of Nigeria’s guidelines 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.”
It further clarified that while switches, PSSPs, and SAs may facilitate outward transfers as inflows to banks, they are not authorized to receive inflows, as their licenses do not permit them to hold customers’ funds. The NIBSS referred to a regulatory advisory circular issued on May 11, 2018, titled ‘Permissible Services and Products of PSSP Operation in Nigeria,’ as additional guidance.
In light of these regulatory guidelines, banks have been instructed to remove Switches, PSSPs, and SAs from their NIP Outward Transfer channels, while the directive does not extend to inward transfers.
To operate within Nigeria’s payment ecosystem, entities must obtain specific licenses from the Central Bank of Nigeria, including Switching and Processing, Mobile Money Operations, Payment Solution Services, or Regulatory Sandbox. Only Mobile Money Operators (MMOs) are authorized to hold customer funds, according to CBN regulations.
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