CBN Gives New Directives To POS Service Providers

The Central Bank of Nigeria (CBN) has issued a new directive requiring all Payment Service Providers to route Point of Sale (PoS) transactions through authorized CBN Payment Terminal Service Aggregators (PTSAs).

The new rule, which is set to take effect within 30 days, aims to enhance the tracking of electronic transactions and decentralize PoS transaction management.

In a circular issued by the CBN’s Payments System Management Department, signed by Oladimeji Yisa Taiwo, the apex bank mandated that all PoS transactions, both physical and electronic, be processed through any PTSA licensed by the CBN. These PTSAs must, in turn, ensure that the transactions are routed to processors certified by the relevant payment schemes and licensed by the CBN.

The directive follows the CBN’s recent push for PoS agents to register their businesses with the Corporate Affairs Commission (CAC). The CAC has already begun enforcing this requirement by shutting down unregistered PoS businesses.

“To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria, in August 2011, granted a Payment Terminal Service Aggregator licence 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’s circular stated.

This move is part of a broader effort by the CBN to combat fraud and illicit activities associated with PoS terminals, including preventing their use for cryptocurrency trading.

According to a report by Nigeria Inter-Bank Settlement System Plc, PoS terminals were implicated in 26.37% of fraud cases in 2023, highlighting the need for more stringent oversight in the sector.

The new regulation is expected to strengthen transaction security and create a more transparent framework for monitoring electronic payments in Nigeria.
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