The Central Bank of Nigeria (CBN) has issued a directive requiring all banks, fintech companies, and other payment service providers to ensure that payment transaction data generated within the country is stored on local servers by January 1, 2027. This mandate was detailed in a circular from the CBN's Payments System Supervision Department, addressed to deposit money banks, microfinance banks, mobile money operators, switching companies, payment processors, super agents, and other licensed payment industry participants.
New Regulations for Digital Payments
The circular, signed by Director Rakiya Yusuf, introduces new regulations aimed at strengthening oversight of Nigeria's rapidly expanding digital payments sector. The measures include data localization requirements, beneficial ownership disclosures, and competition rules designed to foster a more transparent and resilient payment ecosystem. The CBN stated that these reforms are necessary due to the rapid growth of electronic payments and increasing adoption of digital financial services across the country.
Data Sovereignty and Regulatory Oversight
The regulator noted that while digital payment expansion has boosted innovation, efficiency, and financial inclusion, it has also raised concerns about market concentration, operational dependencies, ownership transparency, and management of critical payment data. To address these issues, the CBN mandated that all payment transaction data generated in Nigeria must be stored and managed domestically, in compliance with the country's data protection laws. The circular states: "All Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria." The apex bank said this move will enhance regulatory oversight, strengthen data sovereignty, and ensure sensitive financial information remains under Nigeria's jurisdiction, aligning with a global trend of localizing critical financial data.
New Ownership Disclosure Rules
Beyond data localization, the CBN has introduced stricter transparency requirements for financial institutions. Banks, fintech firms, and payment operators must maintain accurate records of their ultimate beneficial owners and provide this information to the regulator upon request. These disclosure requirements support existing anti-money laundering, counter-terrorism financing, and anti-proliferation financing regulations. The central bank said this measure is part of broader efforts to curb illicit financial flows and improve accountability within the financial system.
Promoting Fair Competition
The CBN emphasized that the reforms are intended to promote fair competition, improve transparency, reduce concentration risks, and safeguard the integrity of Nigeria's payment system. It warned that compliance will be closely monitored and sanctions imposed on defaulting institutions. This directive follows the CBN's earlier requirement for deposit money banks to conduct comprehensive stress tests starting April 1, 2026, with results due by April 30, 2026, signaling a decisive shift in assessing banking sector resilience beyond capital size.
