NIGERIA: CBN Issues New Directive for PoS Transactions Routing, Sets 30-Day Deadline for Compliance

The Central Bank of Nigeria (CBN) has mandated all Payment Service Providers (PSPs) to route transactions from Point of Sale (PoS) terminals at merchant and agent locations—whether physical or electronic—through an approved CBN Payment Terminal Service Aggregator (PTSA). 

The directive, issued in a circular signed by Oladimeji Yisa Taiwo on behalf of the CBN’s Payments System Management Department, comes with a 30-day deadline for PSPs to comply with the enhanced guidelines for PoS transaction routing. The move is aimed at improving the monitoring of electronic transactions in Nigeria and addressing concerns over the centralisation of PoS transaction routing under a single entity.

“To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria, in August 2011, granted a Payment Terminal Service Aggregator license to Nigeria Interbank Settlement System Plc. In furtherance of the above, the CBN hereby directs acquirers to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator,” the circular stated.

The CBN also highlighted that PTSAs are now required to process PoS transactions only through CBN-certified processors nominated by acquirers. This is seen as a critical step towards decentralising PoS transaction routing and enhancing transaction security across the country.

This directive comes on the heels of the 5th September deadline for PoS agents to formally register their businesses with the Corporate Affairs Commission (CAC). Despite initial resistance from some agents, including legal challenges, the CAC has begun taking strict measures, including shutting down unregistered PoS businesses.

The push for registration and compliance is driven by rising fraud cases linked to PoS terminals. According to data from the Nigeria Inter-Bank Settlement System Plc, PoS terminals accounted for 26.37% of fraud incidents in 2023. The CBN is also taking proactive measures to prevent the use of PoS terminals for cryptocurrency or virtual currency transactions.

The Central Bank’s latest actions signal a broader effort to enhance the security and regulation of Nigeria's fast-growing electronic payments sector.