The Central Bank of Nigeria (CBN) has issued a sweeping regulatory directive aimed at restructuring the nation’s rapidly expanding digital payments landscape. Under a new policy framework, the apex bank has ordered all deposit money banks, fintechs, and payment service providers to disclose their ultimate beneficial owners and fully localize all payment transaction data within Nigeria by 2027.

The far-reaching directives, outlined in a circular signed by Dr. Rakiya Yusuf, Director of the Payments System Supervision Department, are designed to curb market dominance, combat financial crime, and mitigate systemic risks in the financial ecosystem.

Forced Data Localization and Ownership Transparency

In a move that will significantly impact cross-border processors and cloud-reliant tech firms, the CBN has set a strict deadline of January 1, 2027, for all payments data generated within Nigeria to be stored and managed locally. The apex bank stated this is critical to reinforcing compliance with Nigeria's data protection laws and deepening regulatory oversight.

Furthermore, to combat money laundering and illicit financial flows, financial institutions must now unmask and maintain up-to-date records of their Ultimate Beneficial Ownership (UBO). The apex bank noted that this directive aligns directly with national anti-money laundering and counter-terrorist financing frameworks.

Breaking Up Payment Monopolies

The guidelines also introduce aggressive anti-monopoly caps to prevent dominant industry players from controlling the entire value chain. The CBN has established the following market share restrictions over a rolling 12-month period:

• Consumer Issuing Cap: Any institution controlling more than 25% of the consumer issuing market is strictly barred from holding more than 15% of the merchant acquiring market.

• Merchant Acquiring Cap: Conversely, any operator with over 25% market share in merchant acquiring is prohibited from holding more than 15% in consumer issuing.

These caps apply across entire corporate structures, meaning parent companies cannot use subsidiaries to bypass the limits.

Implementation Timeline

The central bank is giving institutions a brief window to restructure their operations. Operators must begin submitting monthly market share returns immediately using newly prescribed templates, with December 31, 2026, set as the final deadline for full compliance with the new market structure rules.

While acknowledging that the booming fintech ecosystem has greatly expanded financial inclusion, the CBN emphasized that structural safeguards are now non-negotiable to protect the stability of the entire Nigerian financial system.

SOURCE: West Arekahme.