The Nigeria Inter-Bank Settlement System (NIBSS) has directed banks to delist Payment Solution Providers, Switching Companies and Super Agents from the NIBSS Instant Payment (NIP) Outward System.
NIBSS gave this directive in a circular with Ref: NIBSS/BD/NI/PO005/051223 to banks in the country.
The reason for this directive is that connecting such non-deposit financial institutions to the funds transfer system would be contravening the Central Bank of Nigeria guidelines on electronics payment.
The circular had the wordings below:
“This is to bring to your attention that listing non-deposit taking financial institutions such as Switching Companies (Switches), Payment Solution Service Provider (PSSPs) and Super Agents (SA) 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. For clarity, Switches, PSSPs and SAs may process outward transfers as inflow to Banks but are not to receive inflows as their licenses do not permit them to hold customers funds.”
With this directive, all Fintechs without a banking or micro-finance bank license would now be limited in how they operate. They cannot receive inflows directly except domiciled in a bank. The directive goes on to do a listing of the affected operators. Some of the affected operators in the list include big players like Paystack, Flutterwave and Interswitch.
It is unclear how this new directive would change the fintech landscape in Nigeria. This new regulatory directive might push many of the players into seeking micro-finance bank licenses, in order to continue doing business, uninterrupted in Nigeria.