CBN Orders Payment Service Providers to Implement PoS Transaction Tracking
The Central Bank of Nigeria (CBN) has issued a directive mandating all Payment Service Providers (PSPs) to route transactions from Point of Sale (PoS) terminals at both merchant and agent locations—whether physical or electronic—through an approved CBN-licensed Payment Terminal Service Aggregator (PTSA). This directive aims to enhance the monitoring and tracking of electronic transactions across the country and decentralize PoS transaction routing, addressing concerns over the centralization of these processes under a single entity.
The CBN’s Payments System Management Department, in a circular signed by Oladimeji Yisa Taiwo, stated that service providers have a 30-day deadline to comply with these new routing guidelines. The move is expected to strengthen oversight of PoS transactions and ensure that only licensed processors handle these transactions.
“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 this, 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 PTSA,” the circular read.
Under the new directive, Payment Terminal Service Aggregators are required to route PoS transactions through processors that are certified by relevant payment schemes and licensed by the CBN. The enhanced guidelines come on the heels of a broader regulatory framework aimed at curbing financial fraud, improving transparency in electronic payments, and boosting the integrity of Nigeria’s financial system.
This development follows the recent September 5 deadline for PoS agents to formally register their businesses with the Corporate Affairs Commission (CAC). Despite some pushback and legal challenges, the CAC has begun enforcing this directive by shutting down non-compliant PoS businesses, to tackle the rising incidences of fraud associated with PoS terminals. According to a report by Nigeria Inter-Bank Settlement System Plc, PoS terminals were linked to 26.37% of fraud incidents in 2023.
The CBN’s directive also aligns with its efforts to combat illicit activities, including the prevention of trading in cryptocurrencies and other virtual currencies, which have often been facilitated through unregistered PoS operations.
More details on this new regulatory initiative are expected as the deadline for compliance approaches, with the CBN pushing for a more secure and transparent payment system across Nigeria.
