The Nigeria Inter-Bank Settlement System (NIBSS) has ordered banks in the country to take down every non-deposit-taking financial institution from their NIP fund transfer channels.
This directive was contained in a circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223 to banks.
The NIBSS noted that having these non-deposit-taking financial institutions such as Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiary institutions on the bank’s NIP funds transfer channels contravenes the Central Bank of Nigeria (CBN) guidelines on electronic payment.
The directive cautioned that while switches, PSSPs, and SAs may process outward transfers as inflows to banks, they “are not to receive inflows as their licences do not permit them to hold customers’ funds.”
Opay, Palmpay, Carbon and many other fintech companies used by Nigerians may be affected by the fresh directive.
The circular reads: “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 added, “Another regulatory advice in this regard is the circular with the caption ‘Permissible Services and Products of PSSP Operation in Nigeria’, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018. Consequent on the above, kindly delist all Switches, PSSPs, and SAs from your NIP Outward Transfer channels only (not inwards).”
The implication of this policy when enforced means that affected platforms will be able to facilitate outward transfers to banks, however, they won’t be able to receive fund inflows.
However, the Fintechs may apply for appropriate licenses to keep them in business.