The Nigerian Interbank Settlement System (NIBSS) recently released a new policy mandating banks to remove non-deposit taking fintechs from the National Instant Payments (NIP) funds transfer system. This impacts players like switching companies, payment processors and super-agents facilitating transfers through channels like USSD, mobile apps and web.

As per the NIBSS circular, allowing such fintechs that lack banking licenses to receive transfers contravenes 2014 CBN guidelines on electronic salary, pension, supplier and tax payments. While they can still process outward transfers to banks, the inability to receive payments significantly disrupts operations.

Key Takeaways

• New NIBSS policy requires banks to remove non-licensed payment processors and fintechs from bank transfer systems like USSD, mobile and web apps by order of CBN guidelines.
• Affects major switching companies, super-agents and other payment facilitators handling billions in transactions that now cannot directly receive transfers.
• Small merchants and business owners relying on these fintech networks face significant payment collection disruption without alternate arrangements.
• Quickly obtaining microfinance, mobile money or commercial banking licenses now crucial for continuity as NIBSS strictly enforces policy.
• Signals increased oversight on fast-growing fintech sector to mandate consumer protections, capital requirements, and regulatory compliance.

Major Implications

• Leading Nigerian payments processing fintechs handling massive transaction volumes must scramble to acquire banking licenses or tie-ups to avoid major revenue losses.
• Small businesses left most vulnerable due to heavy dependence on now blacklisted fintech networks for collecting customer payments.
• Friction introduced across payments ecosystem as unlicensed facilitators redirect processes through licensed banks they previously bypassed.

Business Continuity Planning

• Racing to secure microfinance, mobile money operator or commercial banking licenses is imperative for blacklisted fintechs.
• Strategic partnerships with licensed banks is an interim solution to remain in key transfer channels like POS and mobile apps.
• Failure to rapidly adapt risks enterprise collapse and ceding ground to licensed competitors.

The information provided in this publication aims solely to educate readers generally. It does not establish an attorney-client relationship with our law firm or constitute legal counsel. Please contact us directly for any specific legal assistance required.