Nigeria: CBN FX reforms fuel return of foreign card usage

Foreign card usage is gradually returning to Nigeria after years of restrictions, signalling improved foreign exchange liquidity and renewed confidence in the country’s FX market. Recent directives by the Central Bank of Nigeria (CBN) underscore a shift away from blanket controls towards targeted safeguards, reflecting how exchange-rate reforms are reshaping Nigeria’s payments ecosystem.

For several years, international card transactions in Nigeria were curtailed as the country grappled with acute FX shortages, weak external buffers and wide arbitrage between official and parallel markets. Naira debit cards were barred from international use, while foreign cardholders visiting Nigeria faced limited access to local payment channels. Businesses and travellers increasingly relied on cash, informal routes and offshore cards to meet their needs.

The CBN’s latest directive on foreign card transactions is therefore being viewed as part of a broader reform trajectory rather than a standalone compliance update. Since the current CBN management assumed office in September 2023, the apex bank has liberalised the FX market, unified exchange rates and ended monetary financing of fiscal deficits. The clearance of a $7bn FX backlog marked a critical turning point, helping Nigeria regain access to international capital markets in December 2023.

These reforms have drawn positive reactions from global investors and rating agencies. The World Bank has described the measures as bold interventions addressing structural weaknesses, while Nigeria’s sovereign risk spread has fallen to its lowest level since January 2020. Portfolio managers have also noted improved FX liquidity and greater flexibility around profit repatriation as drivers of renewed investor interest.

At the core of the latest foreign card directive is a requirement for banks and non-bank acquirers to deploy multi-factor authentication for foreign card transactions. The CBN says the move is aimed at strengthening transaction security while improving the user experience for international cardholders. The measures are designed to ensure seamless local currency withdrawals, payments and transfers for users of foreign-issued cards, including tourists and Nigerians in the diaspora.

The timing of the directive reflects improved FX conditions. Foreign capital inflows reached $20.98bn in the first 10 months of 2025, a 70 per cent increase over total inflows recorded in 2024 and more than four times the $3.9bn recorded in 2023. With liquidity improving, the CBN has cautiously relaxed constraints on card usage without reopening the door to speculative pressures.

Against this backdrop, several Nigerian banks have begun restoring international transaction functionality on naira debit cards. United Bank for Africa, FirstBank, GTBank and Wema Bank have announced the resumption of foreign transactions, ending a prolonged suspension for customers and signalling confidence that FX liquidity can support controlled outbound spending.

While banks eased restrictions on outbound card usage, the CBN simultaneously tightened the framework governing foreign card transactions within Nigeria. The apex bank said the updated rules are designed to enhance access to funds, strengthen security and improve user experience, while preserving financial integrity.

Details of the new framework

In a circular signed by the Director of Financial Policy and Regulation, Dr Rita Sike, the CBN directed banks and non-bank acquirers to apply multi-factor authentication to withdrawals and online transactions exceeding $200 per day, $500 per week and $1,000 per month, or their naira equivalents. The requirements apply across ATMs, point-of-sale terminals and virtual payment channels.

The circular also mandates institutions to clearly disclose applicable market-driven exchange rates and associated charges, with transactions completed only after users explicitly accept the terms. Banks and acquirers are required to maintain sufficient liquidity to settle transactions, ensure merchants are paid in local currency, and strengthen transaction monitoring systems to detect unusual activity.

In addition, know-your-customer and anti-money laundering controls for merchants handling foreign card payments are to be enhanced. Merchants must ensure proper documentation for suspicious transactions, while institutions are required to report suspicious activity to the Nigeria Financial Intelligence Unit and recalibrate fraud-monitoring systems to reduce false declines on legitimate transactions.

Taken together, the measures reflect a careful balancing act. The CBN is reopening channels for foreign card usage and international spending, but within a framework that prioritises traceability, transparency and system resilience.

Liquidity, confidence and policy direction

The broader macroeconomic context helps explain the CBN’s growing comfort with easing restrictions. According to CBN Governor, Olayemi Cardoso, Nigeria’s external position strengthened markedly in 2025, with the current account surplus rising by more than 85 per cent quarter-on-quarter in Q2. Foreign reserves climbed to about $46.7bn by mid-November, providing over 10 months of import cover.

Analysts say stronger oil export receipts, resilient diaspora remittances and improved trade balances are supporting reserve accumulation and naira stability. FX utilisation data also show rising activity, particularly in services and transfers, indicating a gradual rebuilding of external buffers.

Market operators note that improved liquidity, reduced arbitrage and moderating parallel market premiums have supported banks’ decision to reactivate international card transactions. Analysts add that increased investor participation in government securities, attractive yields and improved FX access for authorised dealers have further strengthened confidence.

For consumers and businesses, the return of foreign card functionality does not eliminate FX risks or policy uncertainty. However, it marks a clear shift from blanket restrictions to more targeted, data-driven controls anchored on liquidity, monitoring and transparency. In that sense, the re-emergence of foreign cards in Nigeria’s payments ecosystem is not just about convenience, but a signal of the evolving direction of FX policy and market reform.