The Central Bank of Nigeria (CBN) has issued a new directive requiring all Payment Service Providers (PSPs) to route transactions conducted through Point of Sale (PoS) terminals via licensed Payment Terminal Service Aggregators (PTSAs).
This move aims to enhance the monitoring and regulation of electronic payments across Nigeria.
Under the new regulation, PSPs have a 30-day deadline to comply by implementing improved routing protocols for both physical and electronic PoS transactions. This directive is part of the CBN’s broader strategy to decentralize PoS transaction management and address concerns over the concentration of these transactions under a single entity.
In a circular signed by Oladimeji Yisa Taiwo, representing the CBN’s Payments System Management Department, it was mandated that all PoS transactions must be processed through a PTSA licensed by the CBN.
The circular stated:
“To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria, in August 2011, granted a Payment Terminal Service Aggregator license to Nigeria Interbank Settlement System Plc. In furtherance of the above, the CBN hereby directs acquirers to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator.”
The CBN also emphasized that PTSAs are required to transmit PoS transactions only to processors certified by the appropriate Payment Scheme, as nominated by the Acquirer and licensed by the CBN.
This announcement comes after the expiration of a previous deadline on September 5th, which required PoS agents to formally register their businesses with the Corporate Affairs Commission (CAC). Despite challenges in court, the CAC has begun shutting down non-compliant PoS businesses.
The CBN’s increased focus on regulating PoS operations arises amid growing concerns over fraud incidents involving PoS terminals. According to a report from the Nigeria Inter-Bank Settlement System Plc, PoS terminals accounted for 26.37% of fraud incidents in 2023.
