Banks to disconnect non-deposit financial institutions from money transfer channels

The Nigeria Inter-Bank Settlement System (NIBSS) has directed banks to disconnect all non-deposit financial institutions from its transfer list.
 

The NIBSS gave this directive to the banks in a circular dated Tuesday, December 5, 2023, with Ref: NIBSS/BD/NI/PO/005/051223.
 

This means that banks must disconnect Switches, Payment Solution Service Providers and Super Agents from the NIBSS Instant Payment Outwards System.
 

The NIBSS in the circular made it known to the banks that the listing of non-deposit-taking financial institutions as beneficiaries is against the guidelines of the Central Bank of Nigeria (CBN) on electronic payment.
 

The circular reads: “This is to bring to your attention that listing non-deposit-taking financial institutions such as Switching Companies, Payment Solution Service Providers, and Super Agents as beneficiary institutions on your NIP funds transfer channels contravenes the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers, and Taxes in Nigeria dated February 2014.”

According to the national payment infrastructure company, while switches, PSSPs, and SAs may be permitted to carry out outward transfers as inflows to banks, they are not allowed to receive inflows.

The NIBSS added that this is because their licences do not permit them to hold customers’ funds.

“Another regulatory advice in this regard is the circular with the caption ‘Permissible Services and Products of PSSP Operation in Nigeria’, Ref: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018″ it said.

“Consequent on the above, kindly delist all Switches, PSSPs, and SAs from your NIP Outward Transfer channels only (not inwards).”

The NIBSS also said that to be allowed to carry out operation in Nigeria’s payment ecosystem, operators must obtain at least a licence from the CBN.

The licences, it pointed out include Switching and Processing, Mobile Money Operations; Payment Solution Services; and Regulatory Sandbox.

The national payment infrastructure company said this is because it is only MMOs that can hold customer funds, as directed by the CBN.