The Central Bank of Nigeria’s (CBN) new rules on payment data management, including localisation, ownership disclosure, and market capping, are expected to strain the capacity of payment ecosystem operators in the coming months, a challenge many have described as a potential nightmare.
Transition Challenges Ahead
While some operators may have built sufficient capacity to meet the new demands, indications suggest the majority will require significant system overhauls to be ready for the transition, which takes effect on January 1, 2027. With a wide supply gap in high-end technology skills—worsened by a steep increase in emigration of middle-class professionals in recent years—there are fears that many banks will struggle to find the right professionals to manage the transition. Some analysts foresee operators resorting to importing expertise, as data localisation is considered a high-expertise service.
CBN Directives
On Monday, the CBN directed banks, fintechs, and other payment service providers to store all payment transaction data generated in Nigeria within the country, effective January 1, 2027, as part of new measures to strengthen oversight of the payments ecosystem. The apex bank also ordered financial institutions with digital payment operations to disclose the ultimate beneficial ownership (UBO) of significant shareholders and maintain up-to-date ownership records that could be made available to regulators on request.
The directives were contained in a circular issued to deposit money banks (DMBs), microfinance banks (MFBs), mobile money operators (MMOs), switching and processing companies, payment terminal service providers (PTSPs), payment solution service providers (PSSPs), super agents, and other licensed operators. According to the CBN, the Nigerian payments industry has witnessed rapid growth in electronic transactions and digital financial services, leading to the emergence of operators with significant influence across key payment activities.
Market Concentration Concerns
While the growth has improved innovation, efficiency, and financial inclusion, the regulator said it has also created concerns around market concentration, operational dependence, systemic importance, ownership transparency, and the location of critical payment data. “The circular further aims to safeguard the integrity of the Nigerian payments system and ensure the localisation of payment transaction data within Nigeria,” the bank stated.
To address transparency concerns, the CBN directed all banks, payment service providers, and other financial institutions with digital payment footprints to disclose the beneficial owners of significant shareholdings in line with existing anti-money laundering and counter-terrorism financing regulations. The regulator also introduced new market structure rules designed to prevent excessive dominance in both consumer issuing and merchant acquiring businesses.
Market Share Caps
Under the framework, any institution controlling more than 25 per cent of the consumer issuing market within a rolling 12-month period will not be permitted to hold more than 15 per cent of the merchant acquiring market during the same period. Likewise, institutions with more than 25 per cent market share in merchant acquiring activities will be restricted to a maximum of 15 per cent share in consumer issuing operations.
The CBN said all regulated entities must submit monthly market share returns based on prescribed templates and timelines, while affected institutions have until December 31, 2026, to comply with the new market structure requirements. The apex bank warned that compliance with the circular would be closely monitored and that supervisory sanctions may be imposed where necessary in line with existing laws, regulations, and guidelines.
