The Central Bank of Nigeria (“CBN”) has issued a Circular introducing significant regulatory reforms aimed at strengthening competition, improving transparency, mitigating systemic risk, and enhancing resilience within Nigeria’s payments ecosystem. The Circular applies to Deposit Money Banks, Microfinance Banks, Mobile Money Operators, Switching and Processing Companies, Payment Terminal Service Providers, Payment Solution Service Providers, Super Agents, and other licensed participants in the Nigerian payments system.

Key Regulatory Changes

• Ultimate Beneficial Ownership (UBO) Disclosure

All financial institutions with digital payment operations are now required to:

• maintain accurate and up-to-date records of their ultimate beneficial owners;
• disclose the ultimate beneficial ownership of significant shareholders in accordance with applicable AML/CFT/CPF requirements; and
• provide such information to the CBN upon request.

• Mandatory Localisation of Payment Transaction Data

The Circular requires all payment transaction data generated within Nigeria to be stored and managed within Nigeria in compliance with applicable Nigerian data protection laws.

Affected institutions are required to achieve full compliance by 1 January 2027.

• New Market Structure Requirements

To address market concentration and promote competition in the digital payments and financial services ecosystem, the CBN has introduced cross-market share restrictions between consumer issuing and merchant acquiring activities. Specifically:

• an institution (or group of related entities) holding more than 25% market share in consumer issuing may not hold more than 15% market share in merchant acquiring; and
• an institution (or group of related entities) holding more than 25% market share in merchant acquiring may not hold more than 15% market share in consumer issuing.

In addition, regulated entities are required to submit monthly market share returns in the prescribed format, while institutions affected by the concentration thresholds must achieve compliance by 31 December 2026.

Compliance and Enforcement

The CBN has indicated that it will actively monitor compliance with the Circular and may impose supervisory sanctions for any non-compliance in accordance with applicable laws, regulations, and guidelines.

Key Takeaways

The Circular represents one of the most significant structural interventions in Nigeria’s payments industry in recent years. Beyond reinforcing data sovereignty and ownership transparency, it introduces competition-focused measures that may require certain market participants to reassess their corporate structures, strategic partnerships, business models, and expansion plans.

Payment service providers and financial institutions should promptly:

• assess whether their existing market positions may trigger the new concentration and competition thresholds;
• review data storage and cloud infrastructure arrangements to ensure compliance with the localisation requirement;
• confirm that beneficial ownership records are complete, accurate and readily available; and
• develop implementation plans ahead of the 31 December 2026 and 1 January 2027 compliance deadlines.

Our Regulatory Compliance Services team at Chris Ogunbanjo LP is available to advise on the implications of the Circular, conduct compliance gap assessments, and assist institutions in implementing the required regulatory and operational changes.