In a noteworthy move, the Nigeria Inter-Bank Settlement System NIBSS Directs instructing banks, financial institutions, and other entities to disconnect switches, payment solution service providers (PSSPs), and super agents from its Instant Payment Outwards System (fund transfer channels). This directive, conveyed through a circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223, specifically targets Deposit Money Banks, merchant banks, switches, mobile money operators, payment service banks, microfinance banks, mortgage banks, payment solution service providers, super agents, and others.
NIBSS Directs clarified that including non-deposit taking financial institutions as beneficiaries on NIP funds transfer channels goes against the guidelines set by the Central Bank of Nigeria (CBN) on electronic payment of salaries, pensions, suppliers, and taxes in Nigeria, dated February 2014. The circular states, “Switches, PSSPS, and SAs may process outward transfers as inflows to banks but are not to receive inflows as their licenses do not permit them to hold customers’ funds.”
This directive directly impacts financial technology companies (Fintechs) that have been appearing on the NIBSS Instant Payments (NIP) platform as banks, utilizing practices that generate reference numbers resembling bank accounts and leveraging core-banking applications. With the new directive, Fintechs engaging in such practices will no longer be able to create accounts that appear in the lists of banks when customers attempt to credit them. Notably, outward fund transfers will still be operational.
It’s crucial to highlight that Fintechs collaborating with banks, generating dedicated accounts carrying the bank’s name, remain unaffected by this directive. However, Fintechs utilizing customized names are likely to experience significant impacts due to this change. This development reflects a regulatory response aimed at aligning practices with established guidelines, potentially reshaping the landscape for Fintechs involved in fund transfer activities. Stakeholders in the financial sector are closely monitoring the implications of this directive on the evolving dynamics of electronic payments in Nigeria.
For more news visit https://arritoneconsult.com.ng/blog
For more educational post visit examhood.com.ng