The Central Bank of Nigeria (CBN) has introduced a new directive requiring all Point of Sale (PoS) transactions to be processed through licensed Payment Terminal Service Aggregators (PTSAs). This move is designed to enhance the tracking, management, and security of electronic transactions across the country.
In a circular posted on its website on Thursday, the CBN explained that this directive aims to streamline transaction processing and address previous concerns about centralizing transactions through a single aggregator. Historically, Nigeria Interbank Settlement System Plc was granted a PTSA license in August 2011 to handle PoS transaction aggregation. However, to mitigate issues related to routing all transactions through one aggregator, the CBN granted a second PTSA license to Unified Payment Services Limited on April 19, 2024.
The key points of the new directive include:
Transaction Routing: Acquirers, which are the institutions responsible for processing payments from PoS terminals at merchant and agent locations, must now route all transactions through any of the two licensed PTSAs. These aggregators will be the only channels through which transactions from both physical and electronic PoS terminals can be processed.
Processor Integration: Payment Terminal Service Aggregators are required to send PoS transactions only to processors that are certified by the relevant Payment Scheme and licensed by the CBN. This ensures that transactions are handled by approved and regulated entities.
Configuration Requirements: Payment Terminal Service Providers (PTSPs), who are in charge of deploying and managing PoS terminals, must ensure that their devices and applications are compatible with any PTSA chosen by the acquirers. This will involve configuring the PoS terminals to work seamlessly with the selected aggregator.
Reporting Obligations: Both PTSPs and PTSAs are required to submit monthly reports to the CBN. PTSPs must provide details on the number of merchants and agents they manage and specify which PTSA services are utilized. Similarly, each PTSA must report all transactions processed through their platforms. These reports are to be submitted to the director of the Payments System Management Department within seven days following the end of each month.
Compliance and Enforcement: The CBN has given Payment Service Providers (PSPs) a 30-day period to align their operations with the new PTSA requirements. Failure to comply with the new regulations will result in appropriate sanctions.
The recent directive from the CBN underscores its commitment to improving the efficiency and transparency of electronic transactions in Nigeria. This regulatory update follows an earlier announcement by the Corporate Affairs Commission on July 7, which mandated that all Point of Sale operators in the country must complete their registration by September 5.
By centralizing transaction processing through licensed aggregators, the CBN aims to enhance oversight, reduce fraud, and ensure better financial tracking and management within Nigeria’s growing digital payment ecosystem.
