Contactless payments are a branch of Fintech services involving the settlement of financial transactions without physical contact between the payer and the acquiring devices typically linked to a payment channel.
This article will be looking at contactless payments which have been correctly identified as an innovative payment option for the safe and effective conduct of low-value & large volume payments.
What is the main Regulatory Framework governing contactless payments in Nigeria?
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Contactless payment services are regulated by the Central Bank of Nigeria CBN Guidelines for Contactless Payments in Nigeria passed on the 17th of October,2022.
What is the applicability scope of the CBN Guidelines on Contactless Payments in Nigeria?
The Guidelines apply to the operation of contactless payments in Nigeria.
What are the objectives of the CBN Guidelines on Contactless Payments in Nigeria?
The objectives of the CBN Guidelines are :-
- The Provision of minimum standards and requirements for the operations of contactless payments in Nigeria.
- The specification of the roles and responsibilities of stakeholders involved in contactless payments in Nigeria.
Who are the recognized stakeholders in the contactless payments system in Nigeria under the CBN Guidelines?
The recognized stakeholders in the contactless payments system in Nigeria are :-
- CBN-licensed acquirers.
- Issuers
- Payment scheme operators.
- Licensed card schemes.
- Licensed switching companies.
- Payment Terminal Service Providers (PTSPs).
- Payment Terminal Service Aggregators (PTSA).
- Merchants.
- Terminal owners.
- Customers.
- Any other stakeholder as designated by the CBN.
Can contactless payments be offered with value added services?
Yes, but with the prior approval of the CBN.
Are there transaction limits on contactless payments in Nigeria?
Contactless payment transaction limits do not yet exist but they can be determined from time to time by the CBN.
How are contactless transaction complaints and issues/disputes to be determined?
Contactless transaction customer complaints are to be first directed to the relevant payment industry regulation system before being escalated to the CBN in line with current CBN Dispute Resolution Guidelines.
The Provisions of the CBN circular on Global Standing Instructions (GSI) in Nigeria
The Central Bank of Nigeria (CBN) GSI (Global Standing Instructions) circular was passed on the 19th of January,2022 pursuant to the CBN Global Standing Instructions Guidelines of July 13,2020.
This article will be summarily looking at the Regulatory Framework governing GSIs in Nigeria and will in particular be focused on :-
– The objectives of the CBN circular.
– The provisions of the circular.
– The implications of the CBN GSI circular.
What exactly are Global Standing Instructions?
A Global Standing Instruction is an authorization given by a borrower for the recovery from any of his other accounts maintained with other banks of a loan obligation when due by a creditor.
What are the objectives of the CBN GSI Guidelines?
The objectives of the CBN GSI Guidelines are:-
- Creating a regulatory framework for Identifying and watchlisting recalcitrant loan defaulters.
- Enhancing loan recovery from all eligible and funded accounts in the industry.
- To encourage and improve the culture of credit repayment in Nigeria.
- The reduction of non-performing loans in the Nigerian Banking system.
What are the notable provisions of the CBN GSI circular?
- The frequency of recovery attempts formally restricted under the 2020 CBN GSI Guidelines is now unrestricted.
- The GSI automated loan recovery feature available to all loans in the industry shall remain in place throughout the life of the loans and until they have been fully repaid.
What are the implications of the CBN GSI circular?
The CBN circular has far reaching implications for the loan recovery services sector in Nigeria, the most notable being that loans no longer have to be marked or written off as bad debts.
It also means that loan recovery services have now gone digital through the introduction of automatic debits recovery options across bank accounts unified under a Bank Verification Number by virtue of the binding nature of Global Standing Instructions.