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  ‘FinTech’, a combination of Finance and Technology, has become a buzzword of the decade. The 2008 global economic meltdown and all that led to it birthed several reforms in the banking and financial industry worldwide.
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Experts, governments and professionals began to advocate for more data-driven banking industry, especially data empowered by blockchain, Artificial Intelligence (AI) and the Internet of Things (IOT). To move ahead, it is expedient to define the term ‘Fintech’ for better understanding. The term is a portmanteau for ‘Financial Technology’ which is all about monetary (including gift cards and cryptocurrencies) transactions powered by technology. It can take several forms, ranging from apps, software, or a business that offers digital finance advisory, consulting and lending. Their services revolve around disrupting traditional mortar and clay banking institutions. The services majorly offered by FinTech-wired institutions include money transfer, investing, lending, crowdfunding, cryptocurrency, smart contract, peer-to-peer payments, amongst others. With rising issues associated with cybercrime, glitches in electronic payment and other checkbacks, FinTechs and the government seem to run at two opposing views. Further, many are ignorant of the frameworks that guide FinTechs in Nigeria. In this article, I’m going to do a rundown of these guidelines and regulations.

Central Bank of Nigeria Regulations

The nation’s apex bank is at the heart of regulating and controlling the finance of the nation through laws and guidelines. In the area of regulating the FinTech industry, it  has implemented several guidelines, which include:
  • CBN Guideline on International Money Transfer Services in Nigeria, 2014
This guideline as the title states is directed at digital international money transfer services. Individuals and organizations must be licensed by the CBN.
  • CBN Regulatory Framework for Licensing Super-Agents in Nigeria, 2015
This guideline makes provision four categories of money transfer providers, which are: Foreign International Money Transfer Operators, Indigenous International Money Transfer Operators, Foreign Technical Partners and Local Agents. The objectives of the guidelines are to:
  1. Provide standards requirements for international money transfer service operations in Nigeria;
  2. State legitimate channels for offering international money transfer services;
  3. Create a working environment for international money transfer services to thrive in the country;
  4. State the minimum technical and modus operandi of various stakeholders in the international money transfer industry; and
  5. Broad guidelines for the execution of processes of international money transfer services, from start to finish.
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  • CBN Guideline on Mobile Money Services in Nigeria, 2015
This looks at regulating the operations of mobile payment services and identifying standard requirements expected of any mobile payment solution provider.
  • CBN Guideline on Transactions Switching in Nigeria, 2016
This contains the rights and obligations of switching companies. It looks at ensuring that companies meet the minimum standards for switching, as approved by the CBN.
  • CBN Guideline on Operations of Electronic Payment Channels, 2016
The guidelines contain the basic requirements POS cards and ATM implementers/acquirers must comply with according to Payment Card Industry Data Security Standards (PCI DSS) and the following:
  1. All ATMs shall be able to dispense all denominations of Naira.
  2. For deposit-taking ATMs, acceptable denominations shall be displayed by the deployer.
  3. All ATM systems shall have audit records of transactions to facilitate investigations, reconciliation and dispute resolution.
  • CBN Guideline on Licensing and Regulation of Payment Service Banks in Nigeria, 2018
The objective of these guidelines is to enhance the financial inclusion of small businesses and low-income households so as to access payment/remittance services from high-income environments.
  • CBN Regulatory Framework for Use of Unstructured Supplementary Service Data (USSD) Financial Services in Nigeria, 2018
The Guideline seeks to reduce the risks associated with the implementation and use of USSD technology for offering financial services in Nigeria. Only Mobile Network Operators (MNOs) and CBN licensed entities with a letter of no objection or letter of introduction from the CBN are eligible for the issuance of USSD shortcodes by the Nigerian Communications Commission (NCC).
  • CBN Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria, 2019
This guideline looks at the electronic payment of salaries, pensions, suppliers and taxes, revenue collection and other remittances in Nigeria.
  • Risk-Based Cyber-Security Framework and Guidelines for Deposit Money Banks and Payment Service Providers, 2019
This guideline specifically covers issues bordering on, Cybersecurity Governance and Oversight, Cybersecurity Risk Management systems, Cybersecurity Operational Resilience, Metrics, Monitoring & Reporting and Compliance with Statutory and Regulatory Requirements.
  • Regulatory Framework for Sandbox Operation, 2021
With the increasing need for electronic payment in the fintech industry, the CBN has adopted the Regulatory Sandbox process which looks at testing new, innovative products/services and business models in a regulated system. The guideline is to keep the CBN updated on new innovations in the fintech industry. The guideline identifies rules for disruption and innovations within the fintech industry.
  • Framework for Quick Response (QR) Code Payments in Nigeria, 2021
This is a regulatory guideline for QR service providers so as to ensure safe and standard QR codes for easy and hitch-free payment in the country. Sources: Africaneyereport CBN Featured Image Source: The Exchange Africa
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This article was first published on 29th October 2021

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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