On the 5th of December 2023, the Nigeria Interbank Settlement Scheme (NIBSS) released a Directive to Disconnect Switches, Payment Solution Service Providers (PSSPs) and Super Agents from NIBSS Instant Payment (NIP) Outwards System (the “NIBSS Directive”).
For your context
NIBSS itself is a quasi-regulatory firm owned by all licenced banks, discount houses, and the apex regulator in Nigeria, the Central Bank of Nigeria (CBN).
Since its establishment in 1993, NIBSS has been at the forefront of developing crucial payments and settlement infrastructure while also facilitating the entry of new players into the financial services industry in Nigeria, among other functions.
For example, in 2014, NIBSS partnered with the CBN to create, issue, and manage Bank Verification Numbers (BVN).
But before that, an instant payment system was developed by NIBSS in 2011 called NIBSS Instant Payments (NIP). NIP is an interbank payment solution that allows bank account holders to send money between banks in Nigeria in real-time. By design, deposit-taking financial institutions licenced by the CBN to hold funds, such as deposit money banks, microfinance banks, payment service banks, and mobile money operators, should only be integrated into the NIP.
The NIBSS Directive
The NIBBS Directive is informed by the listing of some non-deposit taking financial institutions as transfer destinations on the NIP payment channel, in contravention of their respective licence permissible activities, the Permissible Services and Products of PSSP Operation in Nigeria; REF: BPD/DIR/GEN/CIR/05/004 dated May 11, 2018, and the CBN Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria dated February 2014.
The NIBSS Directive therefore required licenced banks in Nigeria to delist non-deposit taking financial institutions, such as Switches, Payment Solution Service Providers (PSSPs) and Super Agents (non-deposit taking institutions), that are listed as beneficiaries on the NIP outward payment channels.
The Effect of the NIBSS Directive
For the layman, the most obvious effect is that certain non-deposit taking institutions previously listed as transfer destinations on the bank lists will no longer be there.
For the previously listed Non-deposit taking institutions, the effect is that they will no longer be able to receive inflow via bank transfers (provide collection services).
It is important to note that non-deposit taking institutions can still be integrated into NIP for outward fund transfers to deposit taking institutions.
If the NIBSS Directive impacts your Fintech
If the NIBSS Directive impacts your Fintech, you will be required to partner with a deposit-taking institution to be able to provide collection services and be listed on the NIP for the same purpose.
We are available to respond to your questions or address any concerns you may have in connection with the NIBSS Directive. Please direct your questions or concerns to team@tlpadvisory.com
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