Nigerian banks have received a circular from the Nigeria Interbank Settlement System Plc (NIBSS) instructing them to remove non-deposit-taking financial institutions, such as switching companies, payment solution providers, and super agents, from their NIP fund transfer channels.
The NIP channels encompass USSD, mobile banking apps, PoS, ATMs, as well as web and internet platforms.
The NIBSS circular warned that, “listing non-deposit-taking financial institutions such as switching companies (switches), Payment Solution Service Providers (PSSP), 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.”
The circular clarified that while the financial institutions will be barred from receiving inflows, they were permitted to process outflows as inflows to banks.
“For clarity, Switches, PSSPs, and SAs may process outward transfers as inflows to Banks but are not to receive inflows as their licenses do not permit them to hold customers’ funds,” it added.
The policy enforcement aims to remove Fintechs without banking licenses from banks’ fund transfer channels. Under the new arrangement, the platforms are expected to facilitate outward transfers to banks but won’t be able to receive fund inflows.