Banks Instructed to Disconnect Non-Deposit Financial Institutions from NIBSS Instant Payment Outwards System

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In a recent development, banks have received a directive to disconnect Switches, Payment Solution Service Providers (PSSPs), and Super Agents from the Nigeria Inter-Bank Settlement System (NIBSS) Instant Payment Outwards System. The directive, communicated through a circular dated December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223, emphasized that the listing of non-deposit-taking financial institutions as beneficiaries on the NIP funds transfer channels violates the guidelines set by the Central Bank of Nigeria (CBN) on electronic payments.

The national payment infrastructure company, NIBSS, highlighted that including entities such as Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiaries goes against the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria, dated February 2014. The circular pointed out that although switches, PSSPs, and SAs may process outward transfers as inflows to banks, their licenses do not permit them to hold customers’ funds.

The circular referenced another regulatory advice titled ‘Permissible Services and Products of PSSP Operation in Nigeria’, with Ref: BPD/DIR/GEN/CIR/05/004, dated May 11, 2018. In light of these guidelines, the banks were instructed to delist all Switches, PSSPs, and SAs from their NIP Outward Transfer channels, clarifying that this directive applies only to outward transfers and not to inflows.

This move aligns with the regulatory framework set by the CBN and aims to ensure compliance with established guidelines in electronic payment systems, safeguarding the integrity of financial transactions within the Nigerian banking sector.

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