CBN Ends NIBSS Monopoly on POS Transactions, Adds UPSL

Samuel Mobolaji

The Central Bank of Nigeria (CBN) has broken the monopoly held by the Nigeria Interbank Settlement System (NIBSS) on Point of Sale (POS) transactions by directing that all such transactions be routed through either NIBSS or Unified Payment Services Limited (UPSL). This move introduces competition in the payment processing space, aimed at enhancing efficiency and reliability in POS transactions.

In a circular dated September 11, 2024, addressed to all payment service providers, the CBN ordered that service providers must regularize their operations with Payment Terminal Service Aggregators (PTSAs) and provide written confirmation of compliance to the CBN within 30 days.

The regulatory change follows the CBN’s 2011 decision to grant a PTSA license to NIBSS to monitor electronic transactions in Nigeria. However, concerns over the risks of channeling all POS transactions through a single aggregator led the CBN, on April 19, 2024, to issue a second PTSA license to UPSL. Now, nearly five months after UPSL was licensed, the CBN has formalized the directive for POS transactions to be routed through any CBN-licensed aggregator.

The CBN circular stated, “Acquirers are required to route all transactions from POS terminals at merchant and agent locations, whether on physical or electronic terminals, through any CBN-licensed PTSA.” It further clarified that PTSAs are responsible for sending POS transactions to processors certified by the relevant Payment Scheme, nominated by the acquirer, and licensed by the CBN. This approach allows acquirers the flexibility to choose between different processors and PTSAs.

To ensure compliance, all Payment Terminal Service Providers (PTSPs) must configure their POS devices and applications to route transactions through any licensed PTSA. Additionally, PTSPs are required to submit monthly returns to the CBN, detailing the number of merchants and agents they manage, along with the PTSA services utilized to route transactions.

Similarly, PTSAs must submit detailed monthly reports of all transactions processed through their platforms to the CBN’s Payments System Management Department, no later than seven days after the close of each month.

This directive is part of the CBN’s broader efforts to improve competition, transparency, and reliability within Nigeria’s electronic payment ecosystem.