KEY POINTS
- CBN directs payment service providers to track PoS transactions through licensed aggregators.
- A 30-day deadline for compliance has been issued.
- The directive follows concerns over fraud and cryptocurrency trading.
The Central Bank of Nigeria (CBN) has directed all Payment Service Providers (PSPs) to ensure that transactions from Point of Sale (PoS) terminals at merchant and agent locations are routed through an approved CBN Payment Terminal Service Aggregator (PTSA).
The move is aimed at improving the supervisions of electronic transactions in Nigeria and at the same time addressing problems associated with excessive centralization of the PoS transactions under a single entity.
The directive, which comes with a 30-day compliance deadline, was outlined in a circular signed by Oladimeji Yisa Taiwo from the CBN’s Payments System Management Department. However, the circular emphasizes that all PoS transactions must be processed through any CBN-licensed PTSA to achieve better tracking of electronic transactions.
Strengthening PoS transaction monitoring
The circular highlighted the CBN’s goal of improving oversight of PoS transactions in Nigeria. It stated, “To achieve the objective of tracking electronic transactions in Nigeria, the CBN granted a Payment Terminal Service Aggregator license to Nigeria Interbank Settlement System Plc in 2011. Moving forward, all transactions from PoS terminals, both physical and electronic, must now be routed through any CBN-licensed PTSA.”
Furthermore, this development follows the expiration of the 5th September deadline for PoS agents to formally register their businesses with the Corporate Affairs Commission (CAC).
According to Punch, the directive on business registration, introduced to curb fraudulent activities, was recently enforced with the CAC announcing the shutdown of non-compliant PoS businesses.
Addressing fraud and cryptocurrency concerns
The CBN’s new directive also comes amid increasing incidents of fraud involving PoS terminals in Nigeria. According to a 2023 report by Nigeria Inter-Bank Settlement System Plc (NIBSS), PoS terminals were responsible for 26.37% of fraud incidents in the country.
The CBN aims to reduce these cases by tightening control over how PoS transactions are routed and processed.
Additionally, the CBN’s move is linked to broader efforts to limit trading in cryptocurrency and virtual currencies in Nigeria, aligning with the central bank’s ongoing efforts to secure the financial system. Moreover, the mandate that all PoS transactions be routed through licensed aggregators is expected to help monitor and detect suspicious activities more effectively.
Service providers are now required to ensure that their systems comply with these enhanced routing guidelines, sending PoS transactions to processors certified by the relevant Payment Scheme and licensed by the CBN.
