The Central Bank of Nigeria (CBN) has announced new regulations for processing Point of Sale (PoS) transactions across the country, directing all acquirers to route their transactions through any licensed Payment Terminal Service Aggregator (PTSA), a move aimed at increasing transparency and monitoring of electronic transactions.

In a circular addressed to all Payment Service Providers (PSPs), the CBN issued new rules mandating that all transactions from PoS terminals, whether physical or electronic, be routed through a licensed Payment Terminal Service Aggregator (PTSA). This development is intended to ensure effective tracking and regulation of electronic payments in Nigeria.

To achieve its objective of monitoring electronic transactions, the CBN initially granted a PTSA license to the Nigeria Interbank Settlement System Plc (NIBSS) in August 2011. However, recognising the need to diversify and mitigate the risk of relying on a single aggregator, the CBN has now issued a second PTSA license to Unified Payment Services Limited (UPSL) as of April 19, 2024.

As part of the new directive, the CBN has laid out several specific guidelines. Acquirers are required to route all transactions from PoS terminals at merchant and agent locations, whether using physical or electronic terminals, through any CBN-licensed PTSA.

Payment Terminal Service Aggregators must send PoS transactions only to processors certified by the relevant payment scheme, nominated by the acquirer, and licensed by the CBN. All licensed processors must be integrated with both PTSAs, allowing acquirers the flexibility to choose which processor and PTSA to use.

Payment Terminal Service Providers (PTSPs) must ensure that their PoS devices and applications are configured to route transactions through any PTSA, as directed by the acquirer. PTSPs are also required to submit monthly reports to the CBN, detailing the number of merchants and agents they manage, along with the PTSA services used for transactions.

Each PTSA is also required to provide monthly returns to the CBN, detailing all transactions processed through their platforms. These reports must be submitted to the director of the payments system management department within seven days after the end of each month.

The CBN has given all affected parties 30 days to regularise their operations in compliance with the new directive and notify the CBN in writing. Failure to comply with the new rules will attract appropriate sanctions.

This move is part of a broader effort by the CBN to strengthen the nation’s payment infrastructure and increase oversight of financial transactions in a rapidly growing digital economy. By requiring that all PoS transactions be routed through licensed PTSAs, the CBN aims to create a more transparent, accountable, and secure payment environment.

The directive, signed by Oladimeji Yisa Taiwo on behalf of the director of the payments system management department, underscores the CBN’s commitment to enhancing the efficiency and reliability of Nigeria’s payment system.

Central Bank of Nigeria (CBN) has issued a new directive mandating that all Point-of-Sale (PoS) transactions at merchant and agent locations, whether physical or electronic, must be routed through a licensed Payment Terminal Service Aggregator (PTSA).

This directive is part of the bank’s broader efforts to enhance the monitoring of electronic payments across the country.

In a circular released by Oladimeji Yisa Taiwo of the CBN’s Payments System Management Department, service providers have been given a 30-day deadline to comply with these enhanced routing guidelines.

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The central bank emphasized that PoS transactions must now pass through one of the CBN-approved PTSAs, which are responsible for ensuring compliance and security in electronic transactions.

The circular stated, “To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria, in August 2011, granted a Payment Terminal Service Aggregator licence to Nigeria Interbank Settlement System Plc.

“In furtherance of this, the CBN hereby directs acquirers to route all transactions from PoS terminals at merchant and agent locations, through any CBN-licensed PTSA.”

The new policy aims to decentralize transaction routing to prevent over-centralization of PoS operations under a single entity, addressing concerns over transparency and accountability.

Additionally, it aligns with CBN’s continued push to combat fraud and enhance security measures within Nigeria’s electronic payment system.

According to a recent report from Nigeria Inter-Bank Settlement System Plc, PoS terminals accounted for over 26% of fraud incidents in 2023.

This directive also comes just days after the September 5 deadline for PoS agents to register their businesses with the Corporate Affairs Commission (CAC).

The CAC has already begun cracking down on non-compliant operators, shutting down unregistered PoS businesses as part of its enforcement efforts.

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These measures reflect the CBN’s broader initiatives to regulate and secure Nigeria’s payment ecosystem, particularly following concerns over the use of PoS terminals for fraudulent activities and the ongoing efforts to limit trading in cryptocurrencies.

Service providers have until October 12, 2024, to ensure they are fully compliant with the new routing guidelines. Failure to comply may result in further regulatory actions from the CBN.

Federal High Court has ordered that the bank accounts of suspected cryptocurrency users on ByBit, KuCoin, and other platforms have N548.6 million frozen by the Economic and Financial Crimes Commission (EFCC), because of their alleged involvement in naira fluctuations.

The court froze the cash based on September 3, 2024, request that accused two prominent foreign cryptocurrency sites, ByBit and KuCoin, of contributing to the depreciation of the Nigerian Naira, according to Nairametrics.

This development is part of a larger legal and prosecutorial effort by federal government authorities to deal with claims that international cryptocurrency platforms are evading taxes and violating foreign exchange laws.

Remember that in February 2024, two executives of the cryptocurrency platform Binance were detained by Nigeria’s security agency on the basis of information provided by the National Security Adviser.

The information claimed to have involved money laundering and financing of terrorism on specific cryptocurrency exchange platforms.      ]

According to Nairametrics, the EFCC has already filed a lawsuit against Binance and Tigran Gambaryan for $35.4 million worth of money laundering offenses.

ByBit, KuCoin, and several other anonymous cryptocurrency platforms are accused in this most recent motion of facilitating the “price discovery, confirmation, and market manipulation” that led to “distortions in the market, resulting in the naira losing its value against other currencies” by their Nigerian users.

In his affidavit, which Nairametrics exclusively obtained,Okoro Philip,  EFCC investigator,  claimed that Nigeria has made significant progress in recent months towards currency stabilization measures by the Federal Government, as demonstrated by the dollar’s trade on the illicit market at N980 to $1.

He continued by saying that these gains were quickly undone on Thursday, April 18, 2024, when the dollar quickly rose on the black market from N1,250 to $1.

“These fluctuations were primarily driven by activities on platforms such as ByBit, KuCoin, and other similar cryptocurrency platforms,” he stated, citing more intelligence and research.

According to him, the 22 bank accounts listed in the motion and located in different Nigerian banks are owned by eager sellers of USDT who give their naira accounts in exchange for the transfer of the USDT’s naira equivalent.

The argued that the people whose accounts were found are users of ByBit, KuCoin, and other international cryptocurrency platforms.

These people are not allowed to trade in foreign currencies, advertise, bargain, or exchange cryptocurrency for naira at rates that are harmful to Nigeria’s financial system.

The prosecution levied charges against the cryptocurrency platforms, alleging that they wilfully disregarded Nigeria’s anti-money laundering rules and regulations, allowing their users to conduct business secretly.

“ByBit is a cryptocurrency platform that allows users to swap USDT (a digital dollar) for other currencies such as the naira. One USDT is approximately equal to one US dollar. The exchange rates determined by users of these cryptocurrencies adversely affect the value of the naira by artificially lowering its value.”

In the case identified as FHC/ABJ/CS/543/2024, the official stated, “The proceeds of this manipulation go into the account of the willing seller.”